Reading these two books:
Blockchain Revolution, by Don Tapscott and Alex Tapscott (Penguin, 2016)
Ethereum, by Henning Diedrich (Wildfire Publishing, 2016)
thanks to Primavera De Filippi and Pindar Wong and Henning Diedrich
Blockchain is a very interesting technology both because of its revolutionary computer science architecture and because of its possible future applications in business, commerce, culture, the arts, mobility, government, and social life.
We can distinguish, at first glance, between the technical architecture of the Internet and the presentation design of the Internet, or between the systems and applications levels.
The Internet which has boomed in the last 20 years developed in its commercial use, or at the application and presentation levels, without much conscious thought being given to issues like security, privacy, peer-to-peer transactions, intellectual property rights, digital rights management, creativity, entrepreneurship, the handling and cultivation of value, and many other important issues. These issues have been addressed more recently in service, business, social media, and presentation add-ons to the Internet, and handling these issues well is often an uphill battle against previous, more basic, applications design.
Regarding original Internet technical architecture, Henning Diedrich comments: “At its beginnings, the Internet was very much about security, if on a deeper level, and without that it could not have been successful. The same is true for privacy. We are just used to it now that an HTTP connection to a computer is usually NOT opening it up for anyone to read the whole computer. Port 80, for HTTP, is often the only one allowed, that’s how secure the connection is deemed to be, as opposed to many other ways to communicate over the Internet. The Internet also is inherently peer-to-peer, and also decentralized, and that’s what made it special and grow so well. In all that, the blockchain is rather invoking the Internet’s early glory for a new iteration on a higher (value) level.”
Alan N. Shapiro: The Internet that we have at the presentation design level is an Internet of information, communication, privately owned databases, and assumptions about where data physically resides. The website or database resides on a physical server.
This existing Internet has expanded the logic of the previous stage of capitalism (the further proliferation and adjustment of advertising, consumerism and business models) rather than freshly initiating the next future stage of capitalism (genuine decentralization, bottom-up self-organization, transformation of what money is, peer-to-peer interactions, more creativity and autonomy, free-flow between form and content).
The new architecture of the blockchain introduces advanced computer science concepts of totally trusted transactions, the public ledger, virtual replication to near-infinity of all records and histories, the notion of the Smart Contract, the unification of principled agreement among contractual parties and execution of the agreement, and the Decentralized Automonous Agent or Organization.
Trust in technology will compensate for the lack of trust that generally exists in our competitive society. The blockchain is mirrored tens of thousands of times on every computer in the world which participates as a software client in the blockchain of blockchains known as Ethereum.
The blockchain is decentralized and has a transaction ledger. It is a different kind of database with a special kind of stored procedure mechanism. By copying everything to everyone, there is no copying (the problem with the conventional digital architecture is that everything can be copied).
Total validation replaces the centralized control of the “middlemen” like banks who currently profit too much from their institutional guaranteeing of the enforceability of transactions.
The possible applications of the blockchain can be roughly divided into two areas.
Banks and financial institutions see the blockchain as a way to drastically improve the quality of their information storage, transaction operations, and data consistency/integrity: lower cost, better security, perhaps greater speed (when considering the lesser role of settlement and manual correction).
Henning Diedrich comments: “Blockchains are very limited in data volume and transaction speed. The cost might well be very much lower, and the speed improved when including the speed of settlement and the skipping of a manual correction stage. Preventing honest mistakes (the security part in my view) will be a big business, where tens of thousands of clerks will lose their jobs — but that is only using the blockchain to make sure that everyone has the same facts on their books for deals. It eliminates the necessity of clearing a settlement. So blockchains shine via the trust aspect, and due to their being faster in the sense that less errors make data processing faster. There does not have to be a double check and correction phase anymore.”
More visionary thinkers and a new wave of entrepreneurs, venture capitalists, and startup companies see the blockchain as the initiator of many radical changes inaugurating the next Internet and the next stage of capitalism. This new Internet is the ledger of “value,” not of information. “Value” will be natively produced in the virtual-digital space (or in virtual/real hybrids or cooperations), rather than the online space being merely the recording device for “values” which are produced in the already existing offline world.
A very important next step in the theoretical research and reflexion here is to unpack and explain what is meant by “value” in this context. This is where cultural, semiotic and anthropological theories which connect with economics can be very… well… valuable. I will begin (in a future essay) with the discussion of “use-value,” “exchange-value,” “sumptuary value,” and “sign value” in Baudrillard’s For a Critique of the Political Economy of the Sign.
The blockchain is the correct networking architecture for the age of smart devices and smart objects.
It will create a true peer-to-peer sharing economy without the middlemen of banks, credit card companies, and governments.
It will encourage and make easier the conversion of the symbolic wealth of artists and creative people into monetary wealth, providing new ways for them to sustain themselves economically from their creativity. (see my essay “As Creators Make Money, They Will Transform What Money Is”)
This will be a further development of the online transformation of what money is that is already happening with crowdfunding and tipping, and with the practice of popular successful games selling advantages in the game for real-world money. The virtualization of money enables money to flow more freely.
The Decentralized Autonomous Organization (DAO) or Agent (DAA) acquires resources, seeks to attract more value to itself, carries out transactions, sees to the satisfaction of its own needs, self-evolves new software code sequences, and maintains itself. The DAO consists of a set of complex Smart Contracts.
In the Smart Contract, rules and procedures are spelled out in the code and algorithms. Human parties to the contract must comply during execution of the agreement or face penalties which have been agreed upon from the start. The contract is the payment (or the money). It is not something to be separately “fulfilled” in a “step two.” It does not depend on someone doing the separate act of payment. Execution is guaranteed. Money becomes automatically mobile.
Intermediaries for financial transactions are no longer needed. The code is decentralized and distributed. It does not run on any specific physical computer and it cannot be stopped or shut down.
The Automobile Industry can reap four huge benefits from implementing blockchain technology.
First, the assembly of the car involves an extremely complex Supply Chain Process, the managing of components and parts and modules from many different sources in the manufacturing steps and aggregation. The implementation of blockchain technology can make the management and logistics of the Supply Chain Process much more efficient. It can especially ensure trust in every detail and every sub-assembly and transport, and the elimination of the danger of couterfeit parts.
Second, the highly advanced technology of the self-driving or autonomous car can be overseen and administered with much greater reliability utilizing the trust protocol and cryptographic algorithms of the blockchain. The connected car will coordinate blockchain technology together with geo-location and cellular networking. Security provisions will ensure the integrity of the data that enters and leaves the Car of the Future. A much more closely coupled relationship between information and physical car components will be established (analogous to the more general intimacy between the Ledger of Things and the Internet of Things).
Third, the car company deploying blockchain technology becomes a major player in the computer and information industries themselves, since the customer is no longer only someone to whom one has sold a car, rather he or she is also a generator of valuable data which is useful to the consumer economy as a whole.
Fourth, the conception of the self-driving or autonomous car as a Decentralized Autonomous Organization or Agent in the context of blockchain technology opens up tremendous and varied possibilities for the continuation into the future of the high-end experience of sophisticated advanced technologies which the luxury car maker furnishes to its customers. (This gets into the issue of the self-owning car and the blockchain. I will elaborate more on this in a future essay.)
The social and ecological dimensions of self-driving cars, combined with the Autonomous Agent AI intelligence which blockchain applications will addend, will allow the car company to acquire government contracts. The state will requisition fleets of autonomous vehicles to enact and serve social- and community-oriented, yet high-comfort, mobility experiences and logistical requirements.
Corresponding to the singular technological advancement of the driverless capability of the car is the distributed trust network of the blockchain. This decentralized yet networked Artificial Intelligence matches, on the “holistic” or general or systemic level, the specific improvement of the transfer of driving from the sphere of the “economic positional good” of my-freedom (and accidents) to the sphere of automatic performance.
Without the integration of the blockchain into the support systems of the driverless car, the project of the smart machine in the transport industry remains incomplete.