Blockchain, Bitcoin and Post-Capitalism
The Internet has changed humanity’s attitude to knowledge and data. One can compare its cultural impact with the Gutenberg printing press, which gave rise to a new Renaissance consciousness in medieval Europe. But the novelty of the Internet is not only cultural.
Before the advent of the Internet, the institution that processed the highest level of information about society was the state. This is no longer the case today. The influence of the Internet on our political and economic concept of the world is growing every day, when we prefer to inform ourselves through social networks rather than traditional ways.
It is no coincidence that the development of digital technologies arose out of social necessity. IBM’s first customer back in 1879 was the U.S. government. They used tabulating machines for faster processing of information about the census and elections. Thanks to these protocomputers, it was possible to reduce the processing of census data from 7 years to 2 years. A network is an add—on that responds to a higher degree of transcendence. And as we move into the information society, it begins to occupy roles that historically belonged to the state.
Bitcoin is the first cryptocurrency that allows you to securely transfer value over the Internet. Before the advent of Bitcoin, if someone wanted to send just 1 cent to another person, it was almost impossible to do it using computers. The cost of bank fees made this impractical.
According to the data of Coinmarketrate.com Bitcoin is a free protocol created with the cooperation of hundreds of programmers around the world, which created the first form of programmable money, making a huge contribution to the potential of the Internet for mediation in the economic life of any person.
The most important innovation that Bitcoin has brought is not economic, but political. This is a currency that works without intermediaries. There are neither banks, nor the state, nor corporations, nor any institutions that concentrate power in the form of a pyramid to control its functioning. And this was achieved thanks to the innovation underlying the functioning of Bitcoin: the blockchain.
Central banks as primitive computers
Currency is a technology that solves the problem of getting two strangers to trust each other in an economic transaction.
When one person passes a banknote to another, they may not trust each other, but they know how to recognize which stamps and signatures should be on the banknote to guarantee the validity of the transaction.
The banknote is issued by the central bank. This institution is the arbiter of trust in society. In any economic transaction, both sides simply trust a third party — the Central Bank.
These institutions were created because until now there was no technological way to guarantee trust between equals without centralized arbitration. In order to ensure their role in society, these institutions seek to monopolize their market (prohibiting the use of other currencies), and operationally focus on two tasks:
- They check counterfeit banknotes (distinguishing true information from false, which in computer science is called “information processing”);
- They accumulate precious metals or other currencies that guarantee the backup of banknotes circulating in the economy (information storage).
In a sense, central banks are primitive computers running on printing mechanisms. Their native form of software is a contract (or banknote).
The big mistake of central banks is that, in the end, the body certifying events usually consists of one head — the president, whose signature determines both the reliability of the recorded facts and the rules of the game established for the economy. If this person is not qualified or informed enough to make reasonable decisions, the consequences for society can be (and often are) sad.
The systematic crises afflicting the global economy are caused by the ego at the top of the hierarchy.
The advent of Bitcoin
In 2009, in a simple 9-page article, a man under the pseudonym Satoshi Nakamoto presented a way to avoid the need for a third party to arbitrate trust. The legitimacy of the theory is based precisely on the anonymity of its author. So far, it has not been possible to identify the author behind the economic theory that has a serious chance of receiving the Nobel Prize.
So what does the Satoshi report say?
The technology used by banks is an accounting book. A record of how much money comes in and how much goes out of the bank’s cash register. And blockchain is like a big ledger that tracks every transaction made with Bitcoin on the network. But blockchain, instead of being hosted on a super node of the network, is located on every node that connects to the network. All Bitcoin transfer machines have a copy of the blockchain and are synchronized so that the latest version is always available to everyone.
Like the ledger lines, blockchain is a structure consisting of blocks, each of which contains data on a given number of transactions (X Bitcoins have moved from address A to address B). In addition, each block points to the address of the block that precedes it. Therefore, they “chain” the block to the block (hence the chain).
It is thanks to this chain model that events can be ordered in time in the blockchain, given that it is a data structure that must be maintained in a network where millions of events occur asynchronously.
The document in which Satoshi Nakamoto presented Bitcoin
The Institutional Impact of Blockchain: the End of Mediation?
Thanks to its ability to arbitrate trust between two people without the need for a centralized institution, blockchain provides the network with a solution that can make all pre-existing forms of bureaucracy obsolete.
Professions such as accountants, notaries and bankers were necessary to maintain the functioning of the state as a social technology that allows people to organize themselves in a reliable legal framework.
In the blockchain era, none of these professions has a reason to exist: from anywhere in the world and without the need for special permissions, anyone can record an event, such as a transaction in the blockchain, and confidently guarantee (thanks to the computational work associated with the block chain) that the event occurred at the specified time (temporary label).
Blockchain is a universal system and global jurisprudence where it is possible to register economic and political events of all types and sizes. And since it has no central authority, he destroys everything that is known about institutions: no one is an intermediary for anyone.
Mediation is the exploitation of a person by a person. Whether it’s access to capital or access to rights, human institutions compel the majority to perform tasks, while a few enjoy the profits they receive.
Unlike industry, which depends on material, information is not a scarce, but an abundant commodity. In conditions of abundance, verticalism and efficiency do not matter. Efficiency and the search for meaning in the midst of all this noise come to the fore. That’s why the nature of organizations can change in the digital paradigm.
In a world where there is no mediation, a person’s relationship with his creative potential is changing. His work ceases to be a service to authority and inevitably begins to appeal to his immediate environment, to his peers. We will begin to see new forms of human organization.
New forms of human organization
Bitcoin is the first autonomous distributed organization without a central authority, which in just over a decade has created an economic value exceeding $415 billion. This organizational model is not comparable to corporations or the state, it is a novelty in itself.
Just as cryptocurrencies replace the functions of money, new bureaucratic applications can be implemented on the blockchain. One of the most interesting may be an application that helps to confirm identity in a decentralized manner. A kind of digital passport that opens the door to a new form of global citizenship, where the network can begin to take shape as a transnational space that receives increasing sovereignty and legitimacy from its members.
In this “country” it is impossible to stop migrants at the border. The Internet, which operates with the help of computers and free software, does not require permissions either to use the tools it offers or to introduce new innovations into its structure. This is the gateway to our evolution as a species.
In the face of this potential, it is often pointed out that the state still has power over one power element: the monopoly on force. But here, too, the network created by Bitcoin presents an alternative that deserves attention: its computing capabilities surpass a thousand of the most powerful supercomputers in the world (combined).
The most powerful encryption and decryption machine in the modern world no longer belongs to any government. This makes the blockchain a liberating force from traditional control mechanisms based on physical force.
If the possibility of human progress is a real destiny, then we must assert that function precedes form, that code controls hardware, and that ideas prevail in reality. Blockchain is, first of all, an idea expressed in software, and its influence is already changing the dynamics of the functioning of both the Internet and international finance.
The maturation of these technologies may take time, but their inevitability quickly becomes apparent to those who are attentive and receptive. And in the face of the everyday decisions we face every day, it becomes clear that the best way to change the world for the better is to choose the tools that bring us closer to the world we want to live in.
Never before has the opportunity to make such profound changes in the world been so close to every citizen. The Internet has always been a symbol of progress and technology. Many centuries ago, it was the technology of knitting nets that allowed the fisherman to multiply his catch for the benefit of all.
For a modern entrepreneur today, this is a new space that can destroy any wall, connect humanity on a global scale. This will inspire him to really consider the possibility of something that will surpass his entire story.