Blockstream sidesteps these problems by using a technique it calls “pegged sidechains.” Essentially, you create a new blockchain with its own sandbox and rules. You are not playing directly with bitcoins, but you can move them in and out of your new alternate universe; the standard-issue bitcoins back the money circulating on your sidechain. Blockstream is structured as a for-profit company that intends to build and support sidechains as an open-source platform; its backers cite the Mozilla Corporation, which sponsors Firefox and associated projects, as their model.

The technical details that make sidechains work are intricate; there’s a white paper you can read for more. (In the land of the blockchain, behind every startup there’s a white paper.) Right now, though, that’s all there is: as one of Blockstream’s developers explained in a recent interview on Reddit, “We’re already working on a testing prototype, but it’s hard to tell when those will be ready. For a fully operational sidechain it’s even harder to tell.”

The other approach to building a blockchain-based finance world is to leave Bitcoin behind and start your own blockchains from scratch. That’s what a college-dropout entrepreneur named Vitalik Buterin is doing. Last summer — not long after turning 20 — he launched Ethereum, a Switzerland-based nonprofit; an online auction raised about $15 million (in bitcoin, of course, so hang an asterisk on that sum) by selling 60 million units of “ether.”

“Bitcoin is very good for transferring money, but it was not designed as a foundational layer for any kind of protocols to be built on top,” Buterin explained as he introduced Ethereum at a Bitcoin conference last year. “That’s what I hope to bring to the world of crypto-currency.” Ethereum has its own built-in programming language that Buterin imagines powering a world of apps as rich as the panoply of Web apps that Javascript enabled. Ether, Buterin and his collaborators promise, will be the “cryptofuel” powering this world, eventually providing “one-click app install” for “law, cloud storage, prediction markets, trading decentralized hosting, your own currency.”

Ethereum team. Photo by DECENTRAL.

But wait, don’t click yet! Ethereum’s vision — a new Internet organized around programmable blockchains instead of servers — is awfully complex, and one does not simply build such a thing overnight. The strategy here is for Ethereum to build the tools programmers need to make the blockchain power everything. Buterin’s idea list includes crop insurance, gambling, reputation systems, decentralized social networks — “and perhaps maybe even Skynet.”

Ethereum is equal parts fascinating and kooky; some observers fear that the Skynet joke masks a deeper political danger, while others just see it as an over-ambitious, boil-the-ocean project that will founder on the rocks of implementation. As Bitcoin lead developer Gavin Andresen wrote on his blog, “I suspect they’re trying to do too much — ‘complexity is the enemy of security’ — and will end up either radically reducing the scope of what they’re trying to do or will get tired of playing whack-a-mole with security and DoS [denial-of-service] vulnerabilities.”

Another well-funded effort that’s working outside the Bitcoin tent is Ripple Labs, a San Francisco startup that’s building a digital currency-based platform for banking services. Ripple began life as an altcoin named OpenCoin and has evolved into a protocol for transactions that operates a little more loosely, and quickly, than Bitcoin. (Bitcoin transactions can take as long as ten minutes to be verified; Ripple promises to take just seconds.) In the short term Ripple’s developers see it powering international remittances, moving money around the world cheaply and quickly. Down the road, its creators envision more innovative applications — such as a system for the music business that rolls together artists’ rights management and royalty payments, with a blockchain securing the complex ownership data to automate all of the who’s-owed-what.

Micropayments! The concept predates the Web, yet the reality remains elusive. Meanwhile, though, crowdfunding a la Kickstarter has become commonplace. There’s a blockchain for that, too: Mike Hearn, the TradeNet visionary, has spearheaded it in the form of the Lighthouse Project, which lets you run a crowdfunding campaign (using bitcoins, of course) on your own, instead of through an intermediary such as Kickstarter. Lighthouse isn’t yet available, but Hearn describes it as “virtually done.” He sees the open-source software not only as a means for individuals and organizations to raise funds, but also as a prototype for how citizens of the future could support public goods and services — without all the messy governments and taxes such efforts currently require.

Not that anyone expects said governments to roll over so easily. Every dream of ousting the incumbent money regime faces the very real possibility that the disruptees will put up a nasty fight. Which is why projects to reform finance inevitably mutate into schemes to reinvent wider swaths of our social and informational system — beginning online.

Redeem the Net! — distributed data and identity

There’s a whole tribe of blockchainiacs who see their new technology as the key to fixing deep-rooted problems that have plagued our online lives for decades. In this view, the Internet’s founders made a key error at its inception: When they laid the network’s foundations, they failed to include a reliable system for personal identity, which could in turn serve as the basis of a payment economy. Into this void leapt the privately owned social networks of our era — Facebook, Twitter and company — which have happily offered their services as guarantors of our digital identities, as long as they get all our data.

What if, when we wanted to be sure of who we were dealing with, we relied instead on distributed computing power and the magic of crypto? Today a host of small companies and projects are jockeying to usher pieces of this world into existence. A lot of the efforts focus on Twitter rather than Facebook — probably because it’s much easier to clone a network that delivers brief messages than one that serves as the hub for all things social.

These new crypto-Twitters eliminate the middleman central server that every large-scale social service today requires. They don’t store the content of messages themselves in the blockchain ledger — that wouldn’t work, since each user would end up storing the entire global database of messages. Instead, the blockchain verifies all the contributors’ identities, their relationships to the messages under their names, and the integrity of the messages.

Twister, an open source project led by a developer in Brazil named Miguel Freitas, is one such effort, announced a year ago. Designed to encrypt private posts safely against NSA snoops and repressive governments, and to authenticate public posts using a blockchain to verify authorship, Twister is still in early development. Freitas says he’s already seen a flurry of interest from users in China.

Trsst is a similar anti-censorship project that aims to provide tools for “secure blogging on the open web,” for both private and public posting, using encryption and a novel blockchain-inspired scheme for guaranteeing the integrity of a blog’s posts (called, naturally, “the blogchain”). Michael Powers launched Trsst in 2013 with a $65,000 Kickstarter and shipped an alpha version of the software last year; he says he’s now working on rebooting the project with a new focus on mobile users.

Then there’s the Alexandria Project, which you could think of as a kind of tamper-resistant seal for tweets. A technical-proof-of-concept effort from a company called Blocktech, it promises to provide “a ledger for an unalterable record of history.” Its tools will “preserve the integrity of the historical record” by helping users create collections of tweets that are cryptographically “sealed” to ensure that they haven’t been edited.

As Bitcoin’s Andresen suggested about Ethereum, many of these projects will vanish into the, er, ether long before they reach that threshold. Security flaws will stymie them; usability problems will cripple them; they will sink in the mire of large-scale software development. Even those projects that persevere and prosper will need to prove their utility. Why go to all this extra trouble to do stuff online? Sure, you could use the Alexandria software to, say, document all the tweets surrounding a big protest that a government might wish to pretend never happened. But for most everyday purposes, blockchain techniques might be overkill.

Then again, there are still tons of public and private needs that the Internet has failed to serve. For instance, Thor Muller, a writer-entrepreneur who has written lucidly about the distributed-ledger concept at the heart of Bitcoin, imagines the benefits of applying the blockchain to the records of public court proceedings — liberating them from the antiquated storage methods the U.S. still relies on, and making them widely and reliably available. “It’s not going to happen at the level of the federal government any time soon,” Muller says. “But maybe with the state courts you could leapfrog all that.”

Crypto-utopia, yo! — distributed everything

The blockchain could swap out our existing financial and information systems, but the most ardent blockchainiacs go further: they foresee what Ethereum’s Stephan Tual calls a “decentralization singularity.”

In this scenario, the irresistible power of crypto-fueled disintermediation dissolves and rebuilds our whole society. “Decentralized autonomous organizations” emerge, cryptographically hatched and blockchain-fueled, and replace today’s companies and enterprises. Governments can’t tax transactions they can’t see; so maybe they’ll just vanish, as they do in Neal Stephenson’s The Diamond Age. Those government services we might actually want and need? Well, we can always use the blockchain to crowdsource them.

This is where the decentralization hand-waving really gets frenetic. But the ideas can also be unsettlingly cool, in a William Gibson-ish sort of way. Of course, whether this libertarian fever-dream looks enticing or terrifying to you — whether your reaction is “Why can’t we have that now?” or “What are they thinking?” — will probably depend on where your pre-blockchain-era political sympathies lay.

Ethereum’s creators, for example, foresee a world in which autonomous blockchain-based entities pick up where governments and corporations have failed and lead us into a glorious future. The people behind the Scotland-based Maidsafe are similarly thinking big: They aim to rebuild the whole Net along peer-to-peer lines. Under their scheme, we all store our data, encrypted of course, on one another’s machines; we all share our processing power; and we pay one another for the privilege. The server farms will fall fallow, and the Internet will get back its inter-ness. (Maidsafe, to be clear, does not use a blockchain, but its encrypt-and-decentralize approach makes it a fellow traveler with the blockchainiacs.)*

The hurdles these visions would have to overcome are those any blockchain-decentralization scenario faces: the challenge of finding people to begin using and moving their own assets into new, unproven systems; the “discovery problem” — figuring out how users of anonymous, crypto-secured networks can find one another to transact business; and the fear that all this crypto-secured, anonymous-transaction-based tech will simply power illegal enterprises and antisocial activities.

So is the blockchain really 1994 all over again — or just frothy over-investment in harebrained technodreams? One warning sign: Many of the most ardent blockchainiacs are venture capitalists. One hopeful sign, for believers: Crowdfunding, which didn’t exist in the ’90s, can fuel a thousand experiments, and many entrepreneurs are using digital cash itself to propel new ideas.

Still, the near future will more likely be prosaic than revolutionary. That’s the prediction of Tim Swanson, author of Great Chain of Numbers: A Guide to Smart Contracts, Smart Property, and Trustless Asset Management, a thorough e-book surveying the post-Bitcoin financial landscape. “Most of the actual use cases, especially with blockchains in general, will be very mundane and will be related to proof of existence, so things like notary services” or audit trails for asset trades, Swanson recently wrote.

A blockchain-powered economy is most likely to take root far away from the U.S., many observers believe — either in the developing world, where there’s less of a reliable financial system in place, or in places where property rules and contract law have shaky foundations (think Russia or China). Wherever it starts to take off, it will face the twin hurdles of complexity overload and government pushback.

The blockchain literature is packed with graduate dissertations from the Rube Goldberg school of systems design — ideas that not only borrow from Bitcoin but also patch together big hunks of Bittorrent, Tor, and other concepts in a desperate effort to attain distributed autonomy. Meanwhile, the record of Net history shows, over and over again, how reliably we users run screaming from hard things and default to convenience.

As a commenter named “Johnbr” argued in response to a VC’s description of the blockchain “application stack,” “Actual people aren’t Byzantine general thought-experiments”:

The reason one keeps stuff in a central database is not just for trust and value, but also because large-scale applications that don’t use a central database model are exponentially harder to get right, and keep properly synchronized, to be able to do valuable work in a timeframe that humans find acceptable.

Maciej Ceglowski presenting on Webstock 2014. Photo by webstock.

That all makes plenty of sense. But the profoundest objection to the blockchain-powered future I’ve heard is not technical but philosophical. It comes from Maciej Ceglowski, the writer-developer and founder of Pinboard. Earlier this year, in a dazzling talk titled “Our Comrade the Electron,” Ceglowski lamented that “we’ve centralized the bejesus out of the Internet.”

I wanted to know what Ceglowski thought of Our Friend the Blockchain. Did it raise his hopes of reversing that situation? Could it move the digital world down an alternate road of privacy, peer-to-peer empowerment, and freedom?

He emailed me with a depressing but persuasive reply: It’s the wrong fight on the wrong turf.

“There is a tendency in computer-land to seek technical solutions to political problems,” Ceglowski says. “In my opinion, the focus on the blockchain (and related ideas) falls into that misguided category. The idea that we should look to algorithms and technology to reclaim our freedoms is fundamentally undemocratic. It presupposes a technical elite who would ‘fix the Internet’ for everyone else. While I can see how this appeals to romantic ideas of hacking the system, I see it as a dangerous trend at worst, and a distraction at best.

“We are terrible at predicting the social outcomes of technological innovation. There’s no reason Bitcoin-like distributed systems would be immune from that rule. I say let’s wise up and actually fight this battle on the level where it belongs.”

Ceglowski’s argument is surely worth braking for as we race down the blockchain road. A world in which math secures all our property, communications and identities looks cool. Maybe it will solve some of our problems. It might even be better than what we have now.

The question to ask is, do these blockchain-based enhancements of our technologies end up giving us more freedom and initiative? Or will a world of “distributed autonomous organizations,” empowered financial algorithms and bots that own themselves only hem in our human sphere of control?

It could be exciting to sit back and watch the future drive itself. But it might be smart to keep our eyes on the road and our hands on the wheel.

*Sentence added 1/23/15 to make clear that Maidsafe is not a blockchain-based project.

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