Posts Tagged ‘disintermediation’
by adminadam in articles
Peter Schiff, chairman of SchiffGold, CEO of Euro Pacific Capital, Inc, and host of The Peter Schiff Show, fearlessly ventured into the heart of Liberty Plaza during the Occupy Wall Street protests to try and find common ground with the people there. What I love most about this video is not Peter’s bravery in facing the 99% as a more-or-less unapologetic member of the 1%, rather I admire his tenacity and consistency in the conversations with folks who seem to believe, and in fact are likely to have been pigeon-holed as believing that the main reason for the inequality and injustice in our country lies in corporations taking in too big of profits. So as you watch know that there is some oversimplification going on. But ask yourself: Is it the Occupy protesters who are engaging in oversimplification, or is it the media that is oversimplifying their arguments? (I’ll give you a hint: Not all of the Occupy protesters are anti-capitalist!)
As Peter explains, corporate taxes are always passed onto consumers or taken out of workers’ pay. Thus, corporate taxes discourage growth and development in the economy. Personally, I believe growth and development in the economy are a good thing.
Unhindered growth allows for innovation. Just look at the smartphone in your pocket. Any state-run phone company would produce half the product for twice the cost, and it would take twice as long at that! In 1913, there was only one telephone that you could get, and you couldn’t even buy it; you had to rent it from AT&T, which was a state-regulated monopoly.
Fortunately for us, the Market always finds a backdoor or a workaround to allow innovation to continue. It’s just that sometimes these black-or-grey-market innovators find themselves in court for their unsanctioned attempts to increase our choices and our freedoms.
In the telephone market, competition began creeping in in 1956, when the courts overruled an FCC ban on Tom Carter’s Hush-a-Phone, a device which snapped on to a telephone and made it possible for the user to speak in a whisper. That was perhaps the first step in the dissolution of the telephone monopoly.
The Hush-a-Phone decision paved the way for 110 and 300 bit per second acoustically-coupled computer terminals, like the one shown below.
Carter eventually won a decision against AT&T that allowed customers to connect any device to the AT&T network, without the previously required “Protective Coupler”. That was the Carterfone Decision of 1968. This lead to today’s near total deregulation of telephone equipment in the US, something on which the rest of the world followed suit. The communications regulatory bodies in those countries clearly saw the benefits of allowing their citizens to connect new devices which allowed for both voice and data to be transmitted.
Without this kind of deregulation, it’s possible the Internet would have remained a slowly-moving, bureaucratically-controlled project, restricted to use by the oligarchs in government and large corporations, and a select few who could afford to pay for access to the overpriced, shoddy service they would have certainly provided.
By contrast, in our modern-day, largely capitalistic internet ecosystem — although tempered by some degree of cronyism — we now have reliable, high-performance, internet-connected, bluetooth/wifi/NFC-enabled, secure and sleek smartphones for as low as $35, not to mention the infrastructure (internet backbone, up to 13 Gbps) on which to operate them. Don’t believe me on the price? Just check out what Mozilla has done with their Firefox OS phones, meant for emerging markets like Brazil, India, and the Philippines.
The Cherry Mobile Ace Firefox OS Phone featured below was released in December of 2014 for 1499 PHP — Philippine Pesos — approximately $33! But wait, it gets better. Their sale price was 999 PHP, only $22 for a fully-useable, well-designed smartphone!
Personally, I want as many people in the world as possible to be able to purchase and own devices such as the Cherry Mobile Ace. It is a form of empowerment through technology that nary a socialist would promote if they understood that only through deregulation can such things come to pass. They would have to relinquish political power and their thirst for it in order to allow such empowering trends to fully develop. I truly admire anyone with the courage to let go of their vice-grip attachments to such delusions of grandeur as “empowering the masses” by means of appropriating other people’s hard earned money.
Enterprising Entrepreneurs Empower Everyone
Consider what you can do because of Market Innovation and Market Innovators:
- Phone and text your friends, families, and business partners for free using things like WhatsApp
- Send, receive, and manage your money without a bank account or a government ID or anyone’s permission using Bitcoin and a Bitcoin wallet app (there are many options!)
- Record videos and take pictures
- Mix and remix almost any kind of media
- Share and sync files with anyone
- Learn new skills on Khan Academy and through MOOC’s (massive online open courses)
- Get weather alerts
- Get important health information and even diagnose diseases
- Call on your neighbors to defend or aid you in times of crisis through apps like Peacekeeper
- Navigate to new areas easily
- Give and get rides through Uber
- Rent out your home with Airbnb
- And so much more!
All of this on a $22 device. And whether we ever stop to think about it or appreciate it, the credit is due to Free Market Capitalism: People being incentivized to work and provide valuable products and services to one another of their own volition. People doing business without being hindered by regulations or sucked dry by the tax man for some vaguely-defined and for-all-intents-and-purposes bankrupt social contract. Just look at our public schooling systems, modeled as they were after Nazi Germany to encourage compliance, complacency, and the production of anti-intellectual, subservient factory workers. Part of our “Social Contract” is that we are forced through taxes to support keeping children locked down in destitute and soul-crushing environs for hours on end until they are 18 years old. It just drives me nuts. It’s why I celebrate, again, the creeping in of some forms of subversive innovation, creative destruction a la charter schools, for instance, or people that manage to provide a good learning experience at home for their children. It’s why I celebrate kids who do the bare minimum in school while finding ways to pursue their passions and careers independently in the few hours they are left each day. Innovation is not commanded, nor is learning imparted through coercion. To cite Plato:
Bodily exercise, when compulsory, does no harm to the body; but knowledge which is acquired under compulsion obtains no hold on the mind.
So who is responsible for this mess? The lobbyists and the lobbied are quite suspect. Increasingly, for me, the activists and the politically-active mainstream are too, though. What ‘revolution’ can this incest between the rulers and the ruled conceivably spawn after all? Is the system ‘working’? Have things gotten tangibly better because of the state? It’s a question not-often explored; more often than not it’s denied or dismissed. It seems, instead, that the assumptions and presuppositions of the state are reinforced at every turn. It’s all about 6- and 8-year political dynasties, and our blind faith in the process: We can fix it, next time we’ll win, it’s their fault not ours, and on and on.
It takes a brave and steeled soul indeed to lock eyes with the system and keep on walking. To walk on, to traverse that mental landscape is to say, “Democracy has failed”. And let’s be honest, it has. It’s time to move on. Plutocrats and Peasants is what we are. To be a politician is to be a bought-and-sold man. And to believe so fervently in the potential of another politician, another movement, to pin our hopes on some new Inflatable Jesus Figure each election cycle, are we not succumbing to Uncle Tom Syndrome? I have begun to view and treat Democracy Lovers as I do 12th-Man Football Fanatics. Let them believe they are making a difference, but avoid them like the plague at dinner parties. You’re better off pitching ice to Eskimos.
Reason is not automatic. Those who deny it cannot be conquered by it. Do not count on them. Leave them alone.—
It’s very frustrating living in a world where Anarchy is a dirty word, thought to mean property-destruction by Angsty Anarcho-Communists, and where Democracy and Environmentalism are God and the infidels and iconoclasts are burned at the stake. We certainly have massive socioeconomic and ideological inertia propelling the prevailing, dysfunctional, political machine, but we also have a budding trend of disintermediation, divergent thinking, open-sourcing-of-everything, and a renewed optimism in the world.
It becomes apparent when looking at many of the volunteer-based projects which have benefited humanity, say Wikipedia, or the Linux Operating System. But there are True Capitalists who continue to raise the bar too: Elon Musk is one example. An electric car that goes 0-60 in three seconds, a rocket ship that can take off and land vertically, and a proposal for a “Hyperloop” vacuum-sealed, elevated, maglev transportation system that will ferry people from L.A. to San Francisco in half-an-hour — all from one man. Did I mention he plans to travel to Mars himself in one of his rockets? What an amazing icon, the likes of which Hank Rearden of Atlas Shrugged might choose to associate with from time to time (when he’s not crafting even better steel that is…). And then there’s the shadowy innovators, Satoshi Nakamoto, for instance. Gave the world Bitcoin, the payment protocol for the 5 Billion Unbanked of the World, plus a currency that is virtually (algorithmically) guaranteed to be a store of value better than gold — bless his/her heart!
There are other ways to pursue peace, order, and prosperity for our lands and our communities. The Wikipedia volunteers, Linux developers, Elon’s, and Satoshi’s of the world are building it in fact. By contrast, all statist systems, whether they be socialist, fascist, republican, or monarchistic, reek like last week’s trash. They rest upon the nullification and disenfranchisement of the individual, as opposed to his empowerment. To take from Ayn Rand again:
The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities.
If I grow a company from the ground up, hire 100’s of people, a board of directors, offer stocks, and make a profit, am I evil? A popular idea in our world today is that yes, I am inherently evil, that profit is inherently exploitative of, most certainly, my employees, but likely the environment, and the rest of my society as well. What do people think is done with profits anyways? Surely they are never reinvested into R&D, or employee bonuses, or invested in other startups. No. Not a chance.
Check out Peter Schiff here pretending to be a democrat at the North Carolina DNC. What should be done about these evil corporate profits, he asks!
Profits incentivize and propel future business ventures. If you think profits are truly evil, then what you should probably do right now is this:
And while you’re at it, what are you reading this blog post on? Go ahead and destroy that device too if it’s not the iPhone that you just destroyed. Apple made over $50 Billion in profit last year. That’s pretty fucking evil, ain’t it?
Surely the fat cats at the top are keeping all that money for themselves, right? No, actually. Forbes did a breakdown of how Apple is using its huge cash reserves — all from profits — in order to evolve and stay relevant as a company:
Apple’s balance sheet shows $97.6 billion in cash. … That money is going to be used to increase the security that the supply chain offers Apple.
… Apple’s immense cash reserves allows not only an investment in new technology, but they can literally buy the complete run of a specialist part for a number of years, locking out the competition.
It’s because of these profits, the profit motive, and Apple’s tireless innovation, that you have a shiny new iPhone in your pocket. No one else could have done it cheaper. Take away that “extra” cash, and we’re stuck with iPhone 4’s. Nobody wants that. Really!
I find this baseless demonetization of profits tiresome. But, there is another more pernicious form of ignorance to contend with: That people readily dismiss how businesses compete to buy labor. Our naivete in this area leads to the creation of policies which fundamentally harm both minority groups and individuals: i.e., Minimum Wage Laws.
Because markets go where labor is cheaper, artificially increasing demand (i.e. price) for a given unit or hour of labor results in local businesses leaving for greener pastures. “Edgar the Exploiter” is a lovely and heart-wrenching depiction of this effect, the result of our ignorance of basic economics:
Artificially raising labor costs through minimum wages hurts low-skill, impoverished, and minority workers the most. This is why I was against the $15 minimum wage law in Seattle when it was proposed. The law would simply gentrify the service industry, eventually getting to the point that only rich white college kids could work legally.
Instead of lofting idealistic legislation into the congressional fighting pits, as in the example of Minimum Wage regulations, and hoping our proposal comes out on top, we should deregulate the markets so that more people can participate in them. Innovation and wealth-creation cannot be commanded. We should stop trying to limit the market from doing what it does best: Provide us with exactly what we need for a low cost.
If we could also address the issue of suppressed interest rates (which discourages people from saving) and Quantitative Easing via the Federal Reserve (which gradually erodes our purchasing power) the world would be a better, freer, and wealthier place. Alas, you can’t have it all.
But there are some things we can do to expedite the transition to a freer and more just world, routing around the broken political system. We should explore continuous, subversive innovation via disruption, disintermediation, decentralization, and democratization. Examples of this path include:
- Donating to and improving upon Wikipedia and Khan Academy to facilitate the democratization of information around the world.
- Using OpenBazaar to buy/sell goods online in an uncensorable, pseudonymous, distributed marketplace with Bitcoin. The is subversive grey-market activity which serves to deny the state its sales tax revenue and also deregulate the products on the market. In removing 3rd parties from transactions, it disintermediates banking and financial networks too.
- Using 3D printers in local Maker Spaces to print toys, tools, guns, and more using open-source blueprints. This is an example of democratization and disintermediation in manufacturing.
- Patronizing farmer’s markets and paying in cash or bitcoin. This removes middle-men and empowers small business owners.
- Working under the table saves both you and your employer money and serves to disrupt income taxation.
All social services, up-to-and-including Government itself can be decentralized and disintermediated. Taking advantage of any of these or the above opportunities will enhance social and economic opportunities for you and your community while enhancing your freedom:
- Defense and Security can be procured locally through neighborhood-watch organizations, private security firms, and the Peacekeeper App. Private security markets would benefit from deregulation and increased Free-Market Competition first, however. This eliminates the need for a public police force or — in the case of Detroit — fills a power vacuum with members of your own community who are passionate about protecting people.
- Charities and Health Care Sharing Ministries can provide the majority of health care coverage for communities, especially once their members are liberated from taxes.
- Smart Contracts written via the Bitcoin Protocol can be used to replace intermediaries in many levels of government, to rein in corruption, and to guarantee accountability.
Basically, do all that you can to engage in and promote voluntary exchange. And pull others into it. This is the most effective way of ‘agitating for change’, as the progressives would say, to deregulate industry and technology. This will, in turn, enrich the whole world.
Liberate the economy and the state will fade into irrelevance. We think the state is an institution of social service, that it’s there for our own good. But perhaps it’s not the morally-superior, altruistic conglomerate of thinking and resources that it’s made out to be. Murray Rothbard said it best in “What the State is Not”:
We are not the Government; the Government is not us. Society and the State are not the same thing. The rise of democracy has conflated the two further. Consider: If 70% of our democracy approved a measure to murder the remaining 30% it would technically be a democratic decision, justified by the internal rules of the philosophical framework. It would not be considered murder, however, as the ‘subjects’ of the state effectively are the State. Consider how in Nazi Germany the extermination of the Jews was a legal and government-sanctioned act. Statism projects that, as appendages of the state, the ‘murdered’ actually killed themselves. The system is full of such internal contradictions.
“Never forget that everything Hitler did in Germany was legal.” — Martin Luther King, Jr.
When we get down to it, the state is simply the institution occupying a given territorial area which has a monopoly on force and violence. If it commits some social good, then that is ancillary to its existence. The state need be nothing more. It exists through and because of coercion alone: The violent enforcement of the borders, the appropriation of the territorial residents’ wealth through taxation, and the metering out of pre-appropriated, universal human rights to its subjects via the legislature and the laughably-named ‘Justice System’.
Just like as in War, there are no Winners in Statism. It is a zero-sum game. One policy, one person, must come out on top. Compare it to Socialism’s theory of economics, which incorrectly posits that economic activity is a zero-sum game. Of course, if that were true in economics we would have no more value in the world than we did when only 1,000,000 humans roamed the Earth. It is silly to think of 7 billion people — and the product of all their activity — having no more worth than a measly million hunters and gatherers, don’t you think?
Ironic then, isn’t it, that so many Statists proclaim Capitalism to be a dead-end, when really the State is the one that’s dead in the water. Capitalism is a force for good; Statism a parasite. Free Market innovation is the reason we have a world of such wondrous stability and abundance. And luckily for us, there will always be people who wish to build and consume new and better things.
Let’s get the State out of the way. Engage in counter-economics. Obfuscate your wealth. Avoid taxes. Avoid the “Man’s Money”. State your preference for Bitcoin or barter. Shrink the State, or obviate it by innovating around it.
You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.—
The sooner you do — the sooner you opt-out and start participating in these new, disintermediated models of reality — the sooner we will all be free.
Let us hasten the demise of the State.
If you would like to further educate yourself in economics, Marginal Revolution University has a wonderful, free, and accessible course entitled “Everyday Economics“. (Yet another Capitalist Innovation; and yes, you can pay for more content later if you wish. It’s up to you!)
Contents of “Everyday Economics” include:
- The notion of the Hockey Stick of Human Prosperity, a visualization of the explosive expansion of wealth in more recent human history
- Increased life expectancy as a measure of human prosperity
- Reduced mortality and increased average height, hygiene, sanitation, and technology as measures of human prosperity
- The origins of prosperity, lessons from “The Wealth of Nations”, and other insights from Adam Smith
- How wealth has shifted from being the exception to being the norm
We didn’t used to try to figure out what causes poverty, as we do today. We used to try to figure out what causes wealth. This was Adam Smith’s goal. And you can learn about it for free. Pretty swell, huh?
Please click the “Donate BTC” button up top or the green shield icon below to donate Bitcoin to me if you like my writing. In exchange I promise I’ll have a book someday that you can buy and read..!
by adminadam in home
A Brief Treatise on the Futility of Mainstream Political Action and the Promise of Smart Contracts and Cryptographic Governance
Before I touch on new techniques available to the aspiring political entrepreneur I would like to set the scene with a bleak but informative view of the poverty of our modern, mainly American, political system (not to exclude anyone!).
Public opinion has no statistically-significant impact on public policy in the United States, whereas special interests can block any bill they dislike whilst, more often than not, getting the OK from congress for their own bills.
Unless you are one of the power elite your vote, your political opinion doesn’t matter.
And while the creator of this video would have you believe that there are ways to fix this broken system, I view things more cynically. I would like to make corruption illegal, don’t get me wrong. But I have a feeling that a movement to do so would be co-opted. I see that power elites corrupt and undermine popular political movements and figures on the daily. I see that they control the media and manipulate and sculpt our attention, too. They do this, as Noam Chomsky described, by encouraging lively debate within narrow bands of opinion:
“The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum – even encourage the more critical and dissident views. That gives people the sense that there’s free thinking going on, while all the time the presuppositions of the system are being reinforced by the limits put on the range of the debate.”
Thus we are diverted from meaningful, profound discussions on a full-range of important issues. Instead, we seem to either A) partake in the spectacle of superficial, divisive debates orchestrated by Puppet Authority Figures on either delimited side of the argument, B) switch to thinking about the next pressing issue, “in other news…”, or C) take hit after hit of interminably-juicy celebrity gossip. The populous is dumb and it has been made dumb with brutal efficiency. But this is not the only reason that I have doubts about the promised, this-time-it’ll-be-different, Represent-Us Revolution, the plan for which you might be led to peruse if you watched until the end of the above video.
Let’s take a moment to review the basic situation here in America, and then I’ll tell you why I am not going to bother with this or any other mainstream progressive reformist movement for political change in the foreseeable future:
- Like they say in the video, politicians have been bought and sold for at least 40 years in the United States. The people that run the country are in bed with the people that run the largest corporations, and only the power elite get their policies enacted with anything more than a jackpot-lottery-ticket-winning success rate. We are dealing with a more-or-less self-sustaining, self-correcting system, a well-oiled machine.
- The American people are uneducated and ignorant of the workings of the machine. In fact, they are prevented from getting an education — at least insofar as they are given no regular opportunities to get exposure to nuanced, unbiased debates on wide-ranging, un-preselected topics. Americans don’t necessarily inherently value intellectual pursuits or learning in general either as far as I can tell. And yet we are impoverished not only in terms of knowledge and understanding…
- The American people are impoverished through excessive taxation (upwards of 50%) and the intentional and unchecked inflation of their currency by the Federal Reserve Banking System; hence, they have not the money or time to care about fomenting political change. Our mental and financial resources are drained in other nefarious ways as well, like through the attention-grabbing, counterproductive drug war.
- America is constantly at war — no, it’s not just with drugs — and the dispossessed (on both sides of the world) are the ones footing the bill.
- We know that if we speak out about corruption, warmongering, taxation, coercion, the broken health-care system, or the destruction of the environment, that we are more likely to be scrutinized by Five Eyes Intelligence Agencies. Although we may not care on average as Americans that we are being spied upon, Edward Snowden and others have worked tirelessly to bring it to our attention. Those that do care and are politically and technically savvy enough perhaps know better now the extent of the surveillance and understand better the design of the Panopticon, feel its chilling effects more profoundly in their bones. It is a scary time to promote and make plans for radical, political and economic deviations from the status quo. But that fear… Perhaps it is the sign that we are entering new territory. So what would moving forward actually look like?
On to the root of the issue of how to — or how not to — create change:
The problem with Occupy, the Tea Party, Revolution.us, and the next dozen yet-to-be-shouted-from-the-rooftops Movements fed up with the status quo is that their solutions regularly rely upon established practices, methods, and institutions. They march, write, phone-in, text, plead, promote, proselytize, fund-raise, and propose legislation. Surely for their supporters, seeing a Movement Member interviewed on the nightly news is exhilarating. And it happens to some extent — perhaps just enough to satisfy this need for a broad-enough-but-still-divisive rhetorical theater in the media as Chomsky described. But my problem with these movements isn’t the limited penetration they achieve into the information-feeding troughs of the average American television viewer or web surfer. My lack of faith in their projects has little do to with their paltry track records for bringing about lasting change, in fact.
My problem lies in the reliance on third-parties in general. By third-parties I mean other groups or individuals on whom the success of the movement, or the achievement of a redress of grievances, relies. Ultimately, if some vaguely socialist democratic movement, let’s say, were to gain power, overthrow and oust the power elites, fix the broken law/financial/environmental/societal system on their own terms, what would it amount to? Obviously we can assume their victory means just what I said, that they’ve achieved what they wanted. But now we’re left with another problem, if not a bigger problem: There is a new power elite, a new administration, a new congress, a new constitution, new third-parties, and new points of failure. Reading Ursula K. LeGuin’s The Dispossessed serves as a firm reminder of the necessity of constant revolution in radical political projects. All these movements, these configurations of human capital, sadly — no matter how virile, impassioned, or disciplined — suffer from the tendency in human-dependent systems towards a centralization of power. Ultimately, this leads to their decay. I — and I believe I speak for many of my readers as well — grow weary of this kind of karmic political cycle, the investment of large sums of energy, getting the ball rolling, only to have its energy siphoned off steadily in an entropic process of attrition and a cutting of supply lines for the movement. So I ask myself if there is a better way to structure our political system. But then I have problems with democracy itself, you see… The whole thing may need to be reworked. But allow me to explain…
What’s the problem with democracy?
It’s not only about centralization and corruption for me. Here’s my problem with democracy: In the first place, in a majority-rule country like ours, at most half of the country (consider especially how few people actually vote) is able to elect the representatives and enact the policies favorable to it. Secondly, those representatives are not bound by contract to deliver on their election promises. And we could even forgive their transgressions — on both sides — those voters who were duped, those elected officials prevented from carrying out ‘the will of the people’ in one way or another. The point being no one need take the blame; this system functions (if you can call it functional) with or without consent, with or without consensus, but more often than not without either in terms of the what the whole country wants. And our media have us believing that this is the best we can do. We swallow this lie and preach it to the heathens that suggest anything else might be better. Meanwhile we swim with sharks in the shark tank, trying to lobby and protest the measly scraps of food we manage to procure as we twist and turn to avoid being eaten ourselves…
Are you telling me there is a way to 1) guarantee that policies get carried out and 2) prove that consent has been obtained from all constituents? Is there a system less vulnerable to fraud, less dependent on malleable and often unscrupulous political intermediaries?
Enter smart contracts. This is what I believe we will use to obviate corruption even if we also succeed in making corruption illegal. So support revolution.us if you want to, but know that we have the tools today to start to programmatically restructure politics or even build alternative, parallel political and legal systems. Cryptographic Governance will allow us to make the shift from being reactive to being proactive in trying to fight corruption. So how does this work, and what are smart contracts?
Let’s let Andreas Antonopoulos, Bitcoin Protocol Champion Extraordanaire, begin. Note this is a highly technical intro; rest assured, further elucidation of the ramifications of what’s being said is forthcoming.
Of course, only in the last 20 seconds or so of this verbose description of smart contracts do the non-monetary applications of this Bitcoin protocol contract scripting language receive mention.
Effectively, what Andreas is saying is that wills, trusts, and other types of agreements can be encoded using this new programming language found in the Bitcoin Protocol to be carried out without (and despite) human intervention given that certain constraints are met.
While we will want to apply this technology to politics, his first example of how a financial transaction can be secured and managed automatically through a smart contract is illustrative:
Basically, amount $XXXX will be transferred from Company A to Company B IF AND ONLY IF:
- Company A signs the transaction to release the funds
- Escrow Company C signs off on the transfer, verifying Company B has fulfilled their end of the bargain and that Company A has the available funds in their wallet
- The transaction is dated after January 1, 2015, and
- The NASDAQ is at 2500 points
A will could be carried out along the same lines, and with it the deeds to an estate transferred, a hitherto encrypted message to the heirs unlocked, and the deceased’s collected private records expunged from all electronic databases, assuming an approved doctor’s death certificate has been uploaded to proofofextistence.com according to predefined criteria.
I think you can see where this is going. Any policy, the rules of governance of any entity, business or political, if they can be defined clearly enough, can be made to execute “no matter what anybody wants to happen.” To paraphrase from Andreas Antonopoulos, the diffuse power inherent in these decentralized technologies is much less corruptible than centralized power. The mayor would no longer keep the keys to the city, but would be given access to them IF AND ONLY IF. You can imagine myriad things as well, I am sure. But just for fun let’s say the mayor gets to use the mayoral limousine IF AND ONLY IF his klout score is above 80, his budget is in the black for the year, and 3 or more proof-of-existence photos of him playing with children in the park have been uploaded to the town webpage during the last 30 days. (A bit silly of a set of definitions, for sure, but that’s what the citizens of Ogdenville decided on!)
This is the world that you and I and our community members can build, leaving the oligarchs out of it. We will not wrest control from the power elites; we will innovate around them (without their permission). This is the future of bitcoin-secured smart contracts and cryptographic governance that I envision.
Take a look at a few noteworthy projects already up-and-coming in this space:
- Counterparty is a platform for free and open financial tools on the Bitcoin network. Counterparty tokens can be used for a wide range of purposes and act as their own cryptocurrency, while still running on the Bitcoin blockchain. Unlike ordinary bitcoin, custom tokens can be used to issue dividends, confer voting rights, as electronic tickets, access to content, and more. Counterparty offers multisignature wallet addresses, which require signatures from more than one Bitcoin private key in order to spend their funds, allowing for flexible consensus-building systems to be built.
- Ethereum calls itself a “platform for decentralized applications” and promises to make writing smart-contracts simple and efficient. One such fascinating project to emerge from the Ethereum-sphere is Augur, a “fully-decentralized, open-source prediction market platform, intended to revolutionize forecasting, decision making, and the manner in which information consensus is collected and aggregated”. Read more about Augur at augur.net. Etherparty is an intriguing user-friendly platform written using Ethereum to make writing smart-contracts easy for non-programmers.
- Blockstream is another project and future platform with similar goals to Counterparty and Ethereum: Making smart-contracts and digital asset management easy and secure. They plan to use a feature of Bitcoin called sidechains to create two-way pegs between bitcoin and other assets or tokens. These assets and tokens in the sidechain can be comprised of anything: digital ballots, contracts, representations of other real-world currencies, the sky is the limit. The main-selling point with Blockstream is the tie-in with Bitcoin’s superior network hashing power — something that makes Bitcoin prohibitively expensive to attack.
- Colored Coins and the Open Asset Protocol is another protocol for tying assets and digital keys to a subset of bitcoin to be transacted over the Bitcoin network. Applications include companies issuing shares in the form of ‘colored coins’, which could then be traded frictionlessly through the Bitcoin infrastructure. Also, a bank could issue colored coins backed by a cash reserve. People could then withdraw and deposit money in colored coins, and trade those, or use them to pay for goods and services. The Blockchain becomes a system allowing us to transact not only in Bitcoin, but in any currency by linking it to a set of colored coins. Additionally, locks on cars or houses could be associated with a particular type of colored coins. The door would only open when presented with a wallet containing that specific coin. This protocol is already being utilized by NASDAQ to “expand and enhance the equity management capabilities offered by its Nasdaq Private Market platform”. This will allow for greater efficiency in the issuance, transfer, and management of private company securities within the Nasdaq ecosystem.
Other noteworthy projects include:
- Lighthouse for decentralized crowdfunding (think: uncensorable, distributed community project donation pages),
- Open Bazaar for decentralized online marketplaces (think: uncensorable, distributed farmer’s markets),
- Maidsafe and Storj for secure P2P information storage (think: Dropbox but no one can spy on you or take down your data; it is distributed in encrypted shards and spread throughout the internet), and
- BitLendingClub and BTCjam for microloans to/from anyone anywhere in the world.
The future is looking pretty bright all of a sudden. But it is incumbent upon us — particularly those of us with the skills and resources available — to help build out these systems and make it happen. We need to maintain and improve upon our already-powerful open-source, cryptographic algorithms. We need to fight to encode privacy and our god-given human rights into the very fabric of the world. Edward Snowden said so himself. It is actually part of what spurred him on in divulging the crimes of the NSA and other government agencies:
“While I pray that public awareness and debate will lead to reform, bear in mind that the policies of men change in time, and even the Constitution is subverted when the appetites of power demand it. In words from history: Let us speak no more of faith in man, but bind him down from mischief by the chains of cryptography.”
[From Glenn Greenwald’s new book, No Place to Hide: Edward Snowden, the NSA, and the U.S. Surveillance State]
Snowden’s goal for us is to create a more free and equal internet. In an earlier interview with Laura Pointras, Snowden explained:
“The shock of this initial period [after the first revelations] will provide the support needed to build a more equal internet, but this will not work to the advantage of the average person unless science outpaces law. By understanding the mechanisms through which our privacy is violated, we can win here. We can guarantee for all people equal protection against unreasonable search through universal laws, but only if the technical community is willing to face the threat and commit to implementing over-engineered solutions. In the end, we must enforce a principle whereby the only way the powerful may enjoy privacy is when it is the same kind shared by the ordinary: one enforced by the laws of nature, rather than the policies of man.”
By implementing these new cryptographic systems, we may move one step further towards what Snowden envisioned: distributed and secure math-based ecosystems that enhance our privacy and allow us to innovate further in all areas — in government, in finance, in communications and journalism, etc. Even if you inherently trust our government — kudos to you for reading this far, by the way — I would argue that the price of non-action here is great: Dictators around the world, future corrupt leaders of America, they all stand to benefit if citizens are denied these tools.
Another of my idols in this space is singer/songwriter/activist Tatiana Moroz, creator of the song, “The Bitcoin Jingle” (see further below). She speaks about the importance of these new kinds of projects in liberating us. In her talk just below, she describes her journey of hope and betrayal, a tale of a loss of innocence, a growing political cynicism. She fell first for presidential candidate Dennis Kuchinich, and then later for candidate Ron Paul, only to be disappointed at their negligible impact (some would say the negligible impact they were allowed to have) in American politics. She later learned about how the Federal Reserve controls and fuels the political machine under which we suffer. But then she found a new source of hope and light in the currency and technology platform known as Bitcoin.
Although I enjoy her talk immensely, concerning the creation of the first pro-artist digital currency, Tatiana Coin — amongst other innovations and insights she shares — it’s not strictly necessary to watch till the end. [Jump to the 19:00 minute mark for the meat of the discussion on smart contracts.] I think you get it. I think you see that people are talking. People like Tatiana, Andreas, and Edward are fired up — and they want you to join in the fight. Greater transparency in government, a reigning in of corruption, proper implementation of secure protocols, the funding of important projects, the re-installation of our civil rights, and perhaps most importantly: the fueling of people’s curiosity and desire to experiment, to live in a wondrous and endlessly-fascinating world. That is their call. And that is the promise of smart contracts and cryptographic governance.
The Bitcoin Jingle, by Tatiana Moroz
1. Gilens and Page, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” Perspective on Politics, 2014. http://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
2. Washington Post, “Rich People Rule!” 2014.
3. Washington Post, “Once again, U.S. has most expensive, least effective health care system in survey,” 2014.
4. Forbes Opinion, “The tax code is a hopeless complex, economy-suffocating mess,” 2013.
5. CNN, “Americans pay more for slower Internet,” 2014.
6. The Atlantic, “American schools vs. the world: expensive, unequal, bad at math,” 2013.
7. Sunlight Foundation, “Fixed Fortunes: Biggest corporate political interests spend billions, get trillions,” 2014.