Bitcoin 2.0: Is a political revolution inevitable?

Sunday 16 March 2014

The dialogue has switched fluidly to ‘Bitcoin 2.0’. These technologies aim to take the fundamentals of Bitcoin and extend their application. This shift in dialogue is indicative of a healthy ecosystem; technology should be constantly evolving and those involved must continue to innovate and experiment.

The speed with which this is happening can be surprising, especially when compared to other industries, where restrictions and regulations are rife. In this largely unregulated market we should expect to see the rapid innovation that comes with a lack of interference.

Pioneering bitcoin




If bitcoin is now the Wild West

then we can expect Wild-West style growth

Regulators are still ignoring the technological innovators,

even as financial regulation creeps in.

 

   

Three leading experiments working to extend the application of Bitcoin’s fundamental technology are Ethereum, Mastercoin and Bitshares. The technological innovators steering these projects are Charles Hoskinson (Ethereum), David Johnston (Mastercoin) and Dan Larimer (Bitshares). They recently sat down for an interview together.

In that discussion a comment by Dan Larimer stood out. On the direction of Bitshares he notes:

“Where I am going is a world where all interaction with our fellow man is entirely voluntary, where you no longer need to rely on government to settle disputes. In fact, decentralised technologies will make governments entirely irrelevant, ineffective at being able to do anything.

Because we now have… the ability to communicate with everyone in the world and the ability to reach a global consensus about who owns what and how they settle disputes and how to do co-ordinated decentralised justice without having to rely on taxation or force… It’s going to be an amazing new world.”

At a fundamental level what he is talking about is the complete disintermediation of the existing political and financial order. All ‘Bitcoin 2.0’ style experiments, at some level, are striving towards this.

For those who recognise the value proposition of spontaneous order, it sounds glorious. It’s certainly a worthy goal. However, the existing power structure is probably going to take issue with this, which begs the question: can blockchain-based technologies ever reach their full potential without a political revolution?

Blockchains and Printing Presses

Bitcoin has been compared to the printing press. It’s a strong comparison. The printing press was revolutionary technology and it subverted the incumbent power structure of the time: the Church.

There are other important similarities. Both the blockchain and the printing press are inventions and both represent the combination of several different inventions and innovations.

The printing press removed power from the most powerful institution of its time

and made distribution of that power virtually impossible to control.

Blockchains promise to do the same.

After the printing press

The invention of the printing press was a key factor in the Protestant reformation and the breakup of Europe's religious unity.

The printing press ushered in an extended period of violence in European history. By decentralising the flow of and access to information, a direct relationship with God was possible; the Church was cut out of the loop. A series of violent, bloody, religious wars ensued, lasting over 100 years. Although largely unconnected, these conflicts were influenced by the religious change of the period and the printing press directly contributed to this.

After the blockchain

The blockchain holds similar promise for change. Does it hold similar promise for violence and conflict?

Possibly.

It will certainly take away and redistribute all kinds of power and control

from society’s most powerful and centralised incumbents.

When initiating great change, Gandhi notes that: ‘they’ will ignore you, laugh at you and fight you before you win.

If we take this to be true then we can expect the existing power structure to fight us at some point. Caught up in the excitement of the blockchain’s greater promise there is a tendency to gloss over the fighting part: what it will look like and how long it will last?

Sure, at the end, the blockchain wins. The printing press and the reformation demonstrate this. It’s the interim period, where they fight us, that is too readily dismissed. It’s completely reasonable to imagine that they are going to fight with greater ferocity than anyone dare think. We will continue to develop blockchain-based technologies in earnest, as we should. Whether we want the change that this new technology is going to bring is irrelevant; it has already happened and it can’t be undone.

But no one should ever underestimate the opponent. The enormity of the social change will bring blockchain and those developing them into conflict with the centralised powers in this transition from centralisation to spontaneous order and it will do so in a very real way.

The existing power structure has huge resources and everything to lose. If you thought the record industry reacted irrationally and with malice to its disruption, just wait for this response.

Tristan Winters


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