4 min. read
According to a New York Times article by Steven Johnson, the main thrust of blockchain technology is to solve for digital identity. Bitcoin did this indirectly with currency; a decentralized ledger (1) tracks and identifies every bitcoin, (2) which makes bitcoin scarce and (3) establishes digital currency as an asset class.
However, according to Johnson, bitcoin was simply the spark for something much more ambitious — an identity layer for the internet:
“Given that identity was not baked into the original internet protocols, and given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility. Now it is an attainable goal.”
Johnson highlights parlance, and that’s important. Crypto proponents now disparage “self-sovereign” as an archaic term, a relic of Bitcoin’s anarchic and libertarian roots. After all — they argue — the sector has outgrown its early anti-government stance. “User-controlled” identity, is a better, more palatable term.
Indeed, how you say it is often more important than what you say. Industry players are starting to avoid “ICO:” it sounds like “IPO,” and that’s something entirely different. “Token launch” or “token sale” is preferred, at least until regulators turn the lights on and offer concrete definitions and precedent — although they’re starting to screw the bulbs in.
Similarly, “cryptocurrency” has been replaced by “cryptoassets.” They’re not currencies, they’re not butting up against fiat — they can play nice. They’re just assets, like oil, gold, or corn. The sector’s terminology has softened; the narrative has shifted toward something that’s familiar.
And why shouldn’t it? Blockchain technology isn’t really that hard to understand. Sure, merkle trees and elliptic-curve cryptography might require a literal trip down the rabbit hole, but the right analogies lead to simpler explanations and a better story: “blockchain technology allows untrusted parties to agree on a single source of truth, without trusting a third party.”
There, that sounds harmless.
The problem is that we’ve already been here, in 2014 and 2015. That was when enterprise blockchain providers like R3 and Digital Asset got their start, pushing for “blockchain technology” without “bitcoin” — co-opting a libertarian fantasy for a neatly carpeted corporate back-office.
This didn’t really work out too well. Five years later, enterprise blockchains have seen limited traction (but lots of press releases).
There are a couple of key issues with enterprise blockchains:
- Public blockchains aren’t meant to be controlled by any one party: If you’re a bank that wants a central middleman, a blockchain won’t help all that much (but a distributed ledger might).
- Enterprise distributed ledger implementation is hard: Back office workers want to keep their jobs, so don’t sell them something that you hope will get rid of them. Also, big corporations have been sold successive technologies that have created something of an IT labyrinth behind the scenes — a distributed ledger might cost more in the short term than it saves in the medium- to long-term.
- Not everyone wants a blockchain: See bullion banking, and then talk to me about a fully transparent distributed ledger.
Still, none of these reasons are that fundamentally good to end the conversation. In other words, if blockchain technology really were the end-all and be-all of IT solutions, it would have been implemented already. So why hasn’t it been?
I would argue that cryptocurrencies, cryptoassets, blockchain technology — whatever you want to call it — are first and foremost a political argument, and not a technological one.
Source: Taylor Pearson
Let’s look at it again: “blockchain technology is a way to get multiple, untrusted parties to agree on a single source of truth, without trusting a third party.” Sure, there’s some tech in there, but what we’re really talking about is a new way to agree on something — to come to a conclusive and communal definition of a truth.
If this technology proves viable, and — importantly — truly decentralized, then we’re entertaining the idea that centralized bodies stand to lose immense amounts of power.
Making “blockchain technology” more palatable, then, is not just a way to promote broader understanding of the technology, but actually the only way to insert a very disruptive subversion into broader culture. Recall that blockchains — like bitcoin — are most effective with big network effects, and recall that central loci of power are generally opposed to relinquishing their power. So, why not work within them — or at least pretend to — until a critical mass of users has been established?
The thing is that blockchains really don’t work well within existing bodies. Blockchain technology — taken to its logical extreme — doesn’t really fit any sort of traditional models of governance and power structures. Decentralization (if possible, although that’s certainly a point of contention among the technology’s thought leaders) of (1) nodes, (2) miners, and (3) governance is a radical idea that actually sounds more socialist than libertarian.
But number 3 is so damn compelling; can we reimagine how individuals govern themselves by way of clever game theory? Will it blend?
That’s a big question, and a really big deal. But it’s not exactly a friendly question. What blockchain technology is really asking is whether we can restructure our existing social orders. The question that we — builders, investors, and users — should be asking is whether we really want to.
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