Currency – dollars, euros, renminbi, etc. – has been a constant in human civilization for thousands of years, and thus an unlikely place for a civilization-shaking revolution. Beyond function, the one thing any currency utilized on a large scale has in common is a creation by a powerful centralized authority, usually a government or large bank. While this monopoly has enabled expansive global trade in modern times, it has a profound defect: control is often in the hands of a few powerful people and institutions in national governments and the financial world.
Enter cryptocurrency, most famously Bitcoin. With humble beginnings as a theoretical paper that made the rounds of some aggressive and brilliant hackers and other misfit technologists, Bitcoin was devised as a currency system that would never need the participation of a government or financial institution to flourish.
To understand the revolutionary nature of what Bitcoin’s creators envisioned, step back and think for a moment about the role of government and financial institutions in the currency you use every day. Why did we ever need a massive central authority just to trade between ourselves in the first place? Well, if you know personally everyone you trade products and services with, then you’re ok. However, what happens when you want to trade with someone you’ve never met before? How can you trust that you won’t be taken advantage of?
Large institutions step in at this point and provide that trust. Take out a dollar from your pocket right now and note that while it might say “In God We Trust,” it’s not God that guarantees your money but another powerful entity mentioned on that bill: the Federal Reserve. If it weren’t for the Fed, that dollar wouldn’t be worth the paper it’s printed on; but because it does, you can use it anywhere with anyone without problem.
How did Bitcoin’s creators solve for this? How could you possibly guarantee trust between strangers with no central authority to guarantee a trade? The solution was blockchain, a novel technology that allows for a kind of radical, system-wide transparency set up in a such a way that trust emerges organically. In a blockchain network, all the information of a full network is available to each “node” in the network when needed. Bitcoin’s creators took advantage of this and created their currency with blockchain tech, so that any holder of Bitcoins could “see” the full state of the Bitcoin currency system whenever necessary. When a person wanted to pay for a service with Bitcoin, validation for the trade came via other Bitcoin users, who competed with each other to legitimize the trade, which earned the validator(s) additional Bitcoins. Thus, trust between strangers was achieved via complete transparency, as a malefactor could be swiftly punished, and good trades won stamps of approval from the system at large. People can enter into a Bitcoin transaction confident that a single corrupt transaction would require corruption of the entire system. This is comparable to you knowing that for that $5 bill in your pocket to suddenly lose its worth, the entire Federal Reserve would have to disappear overnight.
Consider the achievement here and you’ll understand why people are so giddy over blockchain technology. The people behind Bitcoin had zero access to billions of dollars, massive deposits of gold, support from a powerful government, or any other traditional mechanism for guaranteeing the financial validity of a currency. And yet on their own they built civilization’s first global currency free of large institutions due simply to a new tech. Thanks to blockchain, Bitcoin strips one of the greatest sources of power of from governments and the financial world, as no taxes can be levied on Bitcoin transactions, nor any fees or interest charges applied as well. It is purely peer-to-peer, and its success makes you think about what other core government/institutional functions could be placed in the hands of the people? If we had the right tech tools and knew how to use them, could we perhaps police ourselves? Could we draft and enter into international treaties? While it may seem these are far too complex and difficult issues to handle without a powerful central government, the success of Bitcoin and other crypto-currencies should allow us to at least ask, “Are you sure about that?”
After all, Bitcoin’s enabler, blockchain, is at its core a radical asymmetric force, as it decentralizes power, taking influence away from major institutions – banks, governments, corporate conglomerates – and distributes control of crucial networks directly into the hands of everyone in the blockchain network. This may seem a bit terrifying at first but keep in mind, researchers have consistently found that it’s not human being’s intelligence alone that sets us apart from our primate brethren, but our insanely high levels of cooperation (you rarely, if ever, see two chimps in the wild carrying a log together to help cross a stream). In fact, radical experiments in mass cooperation are occurring all over the internet these days, whether it’s Twitch Plays Pokemon – where hundreds of thousands of people from across the globe controlled a single Pokemon player and were able to advance the main character through the game – or Reddit’s recent Place experiment, that allowed for over a million Redditors to collaborate on a single work of art. Instead of a misshapen lump of random colors and lines, the community created a recognizable and in some sense quite beautiful masterpiece. While these may seem fairly trivial, keep in mind that the internet itself is a globally distributed network that operates oftentimes on trust. In fact, there is a “thin geeky line” (rather than a ‘thin blue line’) of netizens all over the planet who enforce best practices and responsible behavior on the internet. Recently, when Pakistan attempted to block its citizens from seeing Youtube videos critical of authorities, Google did not step in, but rather geeks from all over the planet who were able to slam Pakistan’s internet until the government relented and pulled the YouTube block. This kind of asymmetric power is structured into the internet itself, and blockchain takes it to another level.
Perhaps a bit more esoterically, but still worth thinking about, blockchain itself has a very different kind of symmetry to it than what we’re used to, something called “expanding symmetry.” We get that term from fractal geometry, which describes shapes – such as a shoreline – that exhibit similar patterns at increasingly small scales. So if you think of thousands of miles shorelines and then think of just a few hundred yards of shoreline, you’ll see that the jagged, moving lines repeat at scale. Blockchain has this feature as well, as each node in the network contains the information of the state of the entire network as a whole and thus has the same “expanding symmetry” as fractals found in nature.
Indeed, if we were to search the world’s literature for a viable metaphor for blockchain, we’d find a beautiful representation in the ancient Buddhist metaphor of Indra’s Net. In this metaphor, a person is asked to imagine a great net of baubles, each so bright and clear that you can see the reflection of all the net’s baubles in each bauble, so that nothing is ever hidden and each part depends on the whole and vice versa. This gorgeous vision was used by the Buddha to explain how the entirety of the world was localized in some sense in every grain of sand, in even the smallest specks of dirt. We can use it in this modern world to ask about our desire to create “expanding symmetry,” ie, how to create systems that value its most modest components as much as the system in its entirety. The current trendlines point to the future becoming all the more deeply networked and interconnected no matter what we do; thus, the systems that will emerge as the most successful will likely be those like blockchain that value each individual member and provide a transparent, clear benefit in the outcome, so that the whole may always be greater for everyone than simply the sum of the individual parts.
Given the immense power of the technologies now at hand, what other choice do we have?