The Committee [of Atomic Scientists] was established in the wake of the “Szilárd petition” (July 1945) to United States president Harry S. Truman opposing the use of the atomic bomb on moral grounds, which was signed by 68 scientists who had worked on the Manhattan Project. A majority of scientists working on the Manhattan Project did not know entirely what they were creating at the time. [From Wikipedia, emphasis mine.]

Let’s get real. In terms of the cumulative effect on people’s lives the blockchain’s potential far surpasses that of a weapon whose power is confined to the physical world. This is because any fundamental improvement to the ability of the human race to organize constitutes a historical turning point. Cryptofinance is the next chapter in this millenia-old saga and we are witnessing the birth of something that can define the world we live in for the next fifty generations.

Is this going to be a happy world of equality, inclusion, and achievement or one riddled with horrible conflict, inequity, and abuse? Once you recognize the society-transforming power of blockchain technology, you must necessarily consider where it takes us — its implications to the ethics of the resulting society. Ethical questions are coming up already: blockchain enables clandestine use of monetary value to any imaginable purpose (case in point: assassination markets). But this is only going to become more and more pertinent as this technology becomes more widespread. In my view the questions this brings up must become a topic for a wide and inclusive discussion both for survival of this technology and for its use to a beneficial and productive end.

Like many who are excited about blockchain, I see it as having a potential to fix some serious problems in modern society: atrocities quietly committed by economic powers, global apartheid, rigged elections, decision-making stalemates, governance crises. I am simply tired of people’s inability to use power well. I believe if we can organize in a fair, global, inclusive, and sustainable way, then a lot of the problems we face today could be solved just by virtue of people having a proper voice in the face of conventional power. Decentralized systems can ensure that people have that voice.

I also believe that cryptofinance is the natural next step to empower through decentralized global capital mobility projects of enormous size, those that require cooperation of millions of people across the globe. Such projects are currently not feasible because of severe inefficiencies that bog down large groups and also because dominant powers are both unable and unwilling to facilitate organizing at such scale. Yet, as a species we face exactly the type of problems that require this type of organizing capacity: climate change, resource depletion, overpopulation. A global economy based on blockchain technology can offer unprecedented levels of efficiency and buy-in needed to establish cooperation at the scale required.

However, I also think that cryptofinance has significant obstacles to overcome before it can mature to become a true backbone for human organizing. I am referring to something I call the conundrum of power, which goes something like this: a system designed to counteract power imbalances can be used to create them.

The main political motivation behind decentralized trustless financial technology is to curtail the current government’s power to control financial transactions and define organizational patterns. This motivation underlies four main areas of innovation: (1) anonymity and transaction obfuscation, to make it impossible to find and attack the transacting parties directly; (2) decentralization, to make it impossible to co-opt or attack the system as a whole through a central entity; (3) strong encryption, to make it impossible for a powerful outsider to see what goes on; and (4) distributed organization, to create organizational structures that are resistant to interference.

Bitcoin and other cryptocurrencies are quickly emerging as stores of real, usable, and effective economic value that aims at counteracting widespread misuse of centralized political power. The protections erected around the freedom to use this value without restriction make transactions virtually impossible to trace or control. Consequently, the flip-side of the cryptocurrency movement is that such value can be used to motivate people to forego important ethical norms with little or no risk.

Consider three specific examples: assassination markets that offer rewards for inflicting physical harm on individuals; DDoS markets that use cryptocurrency to attack freedom of speech and make online commerce impossible; and key cracking markets that offer payment for brute force attacks on the very security on which the blockchain is built. And add to that child pornography, the weapons trade, ransom viruses — all the ways in which value can be used and acquired in a parasitic way.

It is well-known in social science that people are much more likely to commit violence and injustice against victims they don’t see. Blockchain provides an environment where anonymity is prevalent and physical presence cannot be felt. If issues of unethical behavior are not addressed early and effectively, the blockchain space will easily become a fertile ground for widespread abuse.

In the modern centralized world, those misusing their power can, at least in principle, be Wikileaked and ousted (a recent example is the resignation of the Icelandic prime minister due to a high profile leak), or simply shot by an angry mob with Soviet-made AK-47s. In the cryptoworld, however, amassing large amounts of cryptocurrency can lead to similar abuses of power but our ability to counteract them is severely limited.

Cryptocurrency can be used to incentivize any activity whatsoever, including the bad stuff. Currently, we hope to address this problem by disrupting the unethical activities on a case by case basis. DDoS attacks are prevented through further decentralizations, making DDoS markets useless. Brute force password cracking is made harder through stronger encryption technology. The problem of assassination markets can be in principle addressed by colluding to make the sources of information confirming such events on the blockchain unreliable.

Despite being able to envision specific solutions for every example, we foresee no ability to prevent unethical behavior at the root of it: those who offer rewards for such activities are well hidden by the protections awarded by cryptotechnology. This means that we may never run out of new examples and new problems to solve.

It follows that blockchain can support a social system that is, in fact, much worse than what we have today, one in which power abuses will become more prevalent and a lot harder to address. But a much more likely outcome is that these possibilities will make legitimacy of the blockchain movement impossible to justify. This would simplify the task of attacking it by, say, making a case for outlawing cryptocurrency exchanges. This will also slow down innovation because developers and businesses are dependent on fiat investments. These investments will dry up if ethics issues become wide-spread. Finally, those who encounter these issues will leave the space — the talent and enthusiasm will evaporate.

Some people are already thinking about this. I was impressed to learn that Augur, realizing that it was possible for prediction markets to facilitate artificially-motivated unethical acts, introduced a feature to report specific markets as unethical. Without a doubt, if CoinFund offers an investment vehicle to traditional investors, we face the problem and responsibility of accounting for ethical issues in the projects we fund. Augur will be pleased to know that the fact that it has this feature makes this task a whole lot easier. Yet, with the approaching wave of completely decentralized fundraising, evaluation of investments with respect to ethics will become only more difficult over time.

The potential of blockchain to facilitate an oppressive and unbalanced society is not limited to the potential of abuse based on economic power. Certain features of blockchain systems can lead to future social inequality and erosion of usability. As adoption grows there will be more people using the network who are not as well versed in the pitfalls of security as the early adopters. This latter group currently holds a privileged position in knowing how to prevent hacks, keep private keys safe, and prevent unintended and irreversible operational mistakes. But what about people around the world who might suddenly have to start using this technology as a necessary alternative to their country’s dysfunctional economy? Will they be put in danger simply because they might not know how to create strong passwords? Will a system in which transactions are irreversible turn small mistakes into huge problems and make uninitiated users fodder for abuse?

One who sees blockchain only as a small alternative economy of limited scale might not view any of this as a problem. But when we consider the long-term investment of time, effort, money, and trust, or imagine a distant future unrestricted by preconceived limitations of scale, we cannot dismiss these issues as irrelevant.

So it occurs to me that the very properties that make blockchain so promising today — free use of financial power and an uncompromising security model — can lead either to its downfall through ease of mainstream legal attack, erosion of innovation and lower usability at large scale, or, even worse, to a structure with an incredible built-in potential for awful systemic and social problems. Consequently we must all put our oversized heads together to come up with a way to address these issues.

The solution may be as simple as creating a unifying set of principles that can be voluntarily adopted by organizations that operate on the blockchain. This would take a form of a general document that outlines a set of ethical problems a blockchain-based solution may face with guidelines for solving them. A recently announced DAO rating system is an example of this kind of approach.

Personally, however, I don’t think that merely writing down a set of principles would do it. After all, there are too many possibilities for abuse empowered by decentralized systems that don’t fall into the jurisdiction of a specific smart contract or DAO. Is it possible that a set of ethics-oriented controls can be embedded into the blockchain at a lower level? What would that look like?

If I were to suggest that a community-based, fair, and inclusive governance model be encoded into the entire blockchain, will cryptoactivists chop me up and serve me in salad for merely using the word governance? But I also wonder if there are others who think this might be a good idea but are reluctant to talk about it.

The truth is, governance of some sort is entirely unavoidable. If not made explicit, decision-making will simply migrate to whoever best knows the technology or has the most bitcoin or possesses the most hash-rate. This is far from the kind of consensus-based freedom to which we all aspire.

So, can a decentralized model be devised that would allow the community to intervene when significant abuse is detected? One where the entire community, not one particular entity is involved in making decisions? Can we go as far as making provisions for blockchain addresses to be blocked if they are used for something that is widely recognized as unethical, for example in a ransom virus or a smart contract implementing an assassination market? Can this be done safely and in a way that can not be attacked or co-opted?

The answer is not clear. I suspect it would be really hard and might be quite unpopular. But I do believe that if it were done, it would achieve several important goals. On one hand it would ensure long-term growth and adoption, free from the burden of ethical concerns and economic power imbalances. On the other hand, it will become a powerful weapon in counteracting the inevitable resistance from the mainstream power structures.

This latter point is of huge importance to me personally. If the blockchain community can demonstrate that we have a way to deal with ethical issues internally, then in the eyes of the mainstream we become a full-fledged entity rather than a mere fringe phenomenon. A governance structure that ensures this will not make us weaker, as some might think, but quite the opposite: others will want to negotiate with us, rather than dismiss us altogether. Community-based fair and inclusive decision-making mechanisms that are implemented at the core of blockchain protocols will raise the political stakes to an entirely new level.

All of us here who think of blockchain technology as I do — as a way to counteract the abuse of government and economic power that is so prevalent in society these days — might want to consider that the essential issue is not government per se, but rather centralized government that is both vastly empowered and entirely unmotivated or unable to find good solutions that work for everyone. In considering worthy alternative ways to organize society, the question of governance inevitably arises. Issues of blockchain ethics are the first signal of, I believe, many to come. They demonstrate the need to think hard and deep about sane, inclusive, decentralized, legitimate, and secure blockchain governance models.

I propose that this post serve as beginning of a wider dialogue on this topic and hope it does not die in your inbox or your reading list. While I am not attached to the opinions I hold about the possible solutions to these problems, I feel very strongly about asking and addressing these questions in an open and public way. Please join me.

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