The Truth Machine: The Blockchain and the Future of Everything

 Inviolable property registries, which people can use to prove that they own their houses, cars, or other assets;

 Real-time, direct, bank-to-bank settlement of securities exchanges, which could unlock trillions of dollars in an interbank market that currently passes such transactions through dozens of specialized institutions in a process that takes two to seven days;

 Self-sovereign identities, which don’t depend on a government or a company to assert a person’s ID;

 Decentralized computing, which supplants the corporate business of cloud computing and Web hosting with the hard drives and processing power of ordinary users’ computers;

 Decentralized Internet of Things transactions, where devices can securely talk and transact with each other without the friction of an intermediary, making possible big advances in transportation and decentralized energy grids;

 Blockchain-based supply chains, in which suppliers use a common data platform to share information about their business processes to greatly improve accountability, efficiency, and financing with the common purpose of producing a particular good;

 Decentralized media and content, which would empower musicians and artists—and, in theory, anyone who posts information of value to the Net—to take charge of their digital content, knowing they can track and manage the use of this “digital asset.”

Blockchain technology could help achieve what some commentators are calling the promise of “Internet 3.0,” a re-architecting of the Net to assert the core objective of decentralization that inspired many of the early online pioneers who built the Internet 1.0. It turned out that simply giving networks of computers a way to share data directly wasn’t enough to prevent large corporate entities from taking control of the information economy. Silicon Valley’s anti-establishment coders hadn’t reckoned with the challenge of trust and how society traditionally turns to centralized institutions to deal with that. That failure was clear in the subsequent Internet 2.0 phase, which unlocked the power of social networks but also allowed first-mover companies to turn network effects into entrenched monopoly power. These included social media giants like Facebook and Twitter and e-marketplace success stories of the “sharing economy” such as Uber and Airbnb. Blockchain technologies, as well as other ideas contained in this Internet 3.0 phase, aim to do away with these intermediaries altogether, letting people forge their own bonds of trust to build social networks and business arrangements on their own terms.

The promise lies not just in disrupting the behemoths of the Internet, however. Lots of large, twentieth-century, for-profit companies believe this technology can help them unlock value and pursue new money-making ventures, too. Some see big opportunities, others a major threat. Either way, many incumbent businesses now feel compelled to at least experiment with and explore the development of this technology to see where it goes.

In finance, the very industry that Bitcoin was designed to make redundant, bankers are waking up to the possibility that blockchain-related technologies could replace the cumbersome processes by which securities and money are transferred, cleared, and settled between banks. Using a reliable, distributed ledger that a consortium of banks can update simultaneously in real time could reduce back-office costs and unshackle large amounts of new capital for investment. That’s great news for investment banks such as Goldman Sachs, but not so great for custodial banks like State Street or clearinghouses like the Depository Trust & Clearing Corporation, whose business model is based on handling those back-office functions. Still, the institutions on both sides of that disruption story all feel compelled to engage in research and development in this field.

R3 CEV, a New York–based technology developer, for one, raised $107 million from more than a hundred of the world’s biggest financial institutions and tech companies to develop a proprietary distributed ledger technology. Inspired by blockchains but eschewing that label, R3’s Corda platform is built to comply with banks’ business and regulatory models while streamlining trillions of dollars in daily interbank securities transfers.

The non-finance corporate world is also getting engaged. Hyperledger is a distributed ledger/blockchain-design consortium looking to develop standardized, open-source versions of the technology for businesses to use in areas such as supply-chain management. Coordinated by the Linux Foundation, it brings together the likes of IBM, Cisco, Intel, and Digital Asset Holdings, a digital ledger startup led by former J.P. Morgan powerhouse Blythe Masters.

One mark of the business world’s enthusiasm is seen in the trajectory of media company CoinDesk’s Consensus conference, the marquee annual event for businesses interested in blockchain technology. It went from a turnout of 600 at the inaugural conference in 2015 to 1,500 attendees in 2016 to 2,800 in 2017 with a further 10,500 registered viewers of an online livecast. The attendees in 2017 came from ninety-six countries, and a cross-section of more than ninety sponsors and exhibitors was broad enough to include consulting firm Deloitte, the research arm of Toyota, the Australian government’s trade office, and Cryptonomos, a startup marketplace for digital tokens.

But lest you think this technology has been entirely consumed by corporate suits and international development staffers, the months during which we worked on this book also coincided with a get-rich-quick mania that dwarfed even the 2013 surge in Bitcoin’s price. This gold rush, spawned by a new blockchain-based crowdfunding tool for startups that’s known as the ICO—initial coin offering—had all the hallmarks of the dot-com bubble of the late 1990s. Much like two decades earlier, the boom was characterized by both a risky, speculative furor and a sense that underneath the money madness lay a transformative new technology and new business paradigm.

The startups behind this ICO trend are touting a host of new decentralized applications that could disrupt everything from online advertising to medical research. Integral to those services are special tokens that are pre-sold to the public as a way to both raise money and build a network of users—kind of like Kickstarter, but in which contributors have the potential to make quick money in secondary trading markets. At the time of writing, the highest amount raised by one of these pre-sale ICOs was $257 million by Protocol Labs, which sold a token called Filecoin that’s designed to incentivize people to provide hard-drive space for a new decentralized Web. While it’s quite possible that many ICOs will fall afoul of securities regulations and that a bursting of this bubble will burn innocent investors, there’s something refreshingly democratic about this boom. Hordes of retail investors are entering into early stage investment rounds typically reserved for venture capitalists and other professionals.

Not to be outdone, Bitcoin, the granddaddy of the cryptocurrency world, has continued to reveal strengths—and this has been reflected in its price. Despite a bitter fight between developers and the “miners” that validate transactions on the Bitcoin network, a feud that led the currency to split into two separate coins with different software codes, bitcoin’s price surged to a record high of $11,323 in late November 2017, taking its market capitalization to almost $190 billion according to CoinDesk’s Bitcoin Price Index. That marks a price gain of more than 4,800 percent since The Age of Cryptocurrency was published in January 2015 and a return of almost 19 million percent since bitcoin was first tradable on a semi-liquid exchange in July 2010. If you’d invested $6,000 in bitcoin, you’d be a millionaire right now. Such results give credence to cryptoasset analysts Chris Burniske and Jack Tatar’s description of bitcoin as “the most exciting alternative investment of the 21st century.”

In essence, the blockchain is a digital ledger that’s shared across a decentralized network of independent computers, which update and maintain it in a way that allows anyone to prove the record is complete and uncorrupted. The blockchain achieves this with a special algorithm embedded into a common piece of software run by all the computers in the network. The algorithm consistently steers the computers toward a shared consensus on what new data to add to the ledger, incorporating all manner of economic exchanges, claims of ownership, and other forms of valuable information. Each computer updates its own version of the ledger independently but does so by following the all-important consensus algorithm. Once new ledger entries are introduced, special cryptographic protections make it virtually impossible to go back and change them. The computers’ owners are either paid in a digital currency, which incentivizes them to work on protecting the system’s integrity, or they do their work as part of a commitment to a consortium agreement. The result is something unique: a group of otherwise independent actors, each acting in pure self-interest, coming together to produce something for the good of all—an immutable record that everyone can trust and that’s not managed by a single, centralized intermediary.

A bunch of computers managing data with fancy math tools might not seem like a big deal. But as we’ll explain in the next chapter, record-keeping systems, and specifically ledgers, are at the heart of how societies function. Without them we wouldn’t generate sufficient trust to enter into exchanges, to do business, to build organizations and form alliances. So, the prospects of improving that core function and of not having to rely on a centralized entity to perform it have profound implications.

This model should enable true peer-to-peer commerce, eliminating middlemen from all sorts of business operations. And because it has the capacity to inspire trust in our data records so that individuals and businesses can engage in the economy without fear of being duped, it could herald a new age of open data and transparency. Essentially, it should let people share more. And with the positive, multiplier effects that this kind of open sharing has on networks of economic activity, more engagement should in turn create more business opportunities.

Blockchains point the entire digital economy toward something people are calling the Internet of Value. Whereas the first version of the Internet allowed people to send information directly to each other, in the Internet of Value people can send anything of value to each other, be it currencies, assets, or valuable data that was previously too sensitive to transmit online. If the first phases of the Internet created huge opportunities for wealth creation and new business models by helping people jump the fences and get on the playing field, this next one promises to remove the fences altogether. In theory, it means that everyone with access to a device and the Internet can participate directly in the global economy. Thus, the hope is that we will greatly expand the pool of open-source innovation from which all sorts of powerful ideas will emerge.

Think of how disintermediation has already transformed the global economy in the earlier Internet era and you get a sense of how sweeping this next phase could be. Consider, for example, how the outsourcing of technical advice, Web design, and even accounting services disrupted jobs in Western countries and fostered economic growth in places like Bangalore, India. Or think of how Craigslist, which allowed people to post ads for anything at zero cost on a site that had global reach, completely decimated the classified ads business and, ultimately, shuttered hundreds of local newspapers. If blockchain technology lives up to its promise to decentralize and disintermediate so much of our economy, these prior disruptions may seem minuscule by comparison.

As we’ll discuss in the pages ahead, there’s still much work to do to get this technology ready for prime time. In fact, it may never be scalable to the size needed to make a difference. Nonetheless, people across every industry are coming to recognize its potential power. They’re starting to realize that resolving trust barriers could allow all of us to do more with what we have: to deploy our assets, our ideas, our creativity into whatever productive endeavor takes our fancy. If I can trust another person’s claims—about their educational credentials, for example, or their assets, or their professional reputation—because they’ve been objectively verified by a decentralized system, then I can go into direct business with them. I can give them a job. I can collaborate on a joint venture. I can share sensitive business information with them. All without having to rely on middlemen like lawyers, escrow agents, and others who add costs and inefficiencies to our exchanges. These kinds of agreements are the stuff of economic growth. They fuel innovation and prosperity. Any technology that reduces friction and makes such collaborations happen should benefit everybody, in other words.

Still, there’s nothing to say this will assuredly play out in a way that’s best for the world. We’ve seen how the Internet was co-opted by corporations and how that centralization has caused problems—from creating big siloes of personal data for shady hackers to steal to incentivizing disinformation campaigns that distort our democracy. So, it’s crucial that we not let the people with the greatest capacity to influence this technology shape it to suit only their narrow interests. As with the early days of the Internet, there is much work to be done to make this technology sufficiently safe, scalable, and attendant to everyone’s privacy concerns.

Blockchains are a social technology, a new blueprint for how to govern communities, whether we’re talking about frightened refugees in a desolate Jordanian outpost or an interbank market in which the world’s biggest financial institutions exchange trillions of dollars daily. By definition, getting blockchain technology right requires input from all sectors of society. You can treat that as a clarion call to take an interest, to get involved.

Конец ознакомительного фрагмента.

Текст предоставлен ООО «ЛитРес».

Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.

Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.