The Truth Machine: The Blockchain and the Future of Everything. Paul Vigna

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СКАЧАТЬ arises. The authenticity of a land title document that’s represented in a blockchain will, for example, depend on the attestation of some authority figure such as a government registrar. This dependence on a trusted middleman, some cryptocurrency purists would argue, overly compromises a blockchain’s security function, rendering it unreliable. For that reason, some of them say, a blockchain is inappropriate for many non-currency applications. We, however, view it as a trade-off and believe there’s still plenty of value in recording ownership rights and transfers to digitally represented real-world assets in blockchains. We must, however, be aware of that trust component and establish acceptable standards for how data from such sources is gathered and entered into a blockchain-based system.

      Blockchain technology doesn’t remove the need for trust. In fact, if anything it’s an enabler of more trustful relations. What it does do is widen the perimeter of trust. While the software removes centralized trust from the internal ledger-keeping process inside the blockchain, we must trust other people in the “off-chain” environment. We have to trust that a merchant will fulfill a promise to deliver goods on time, that a provider of some source of key information like a stock market price-feed is accurate, or that the smartphones or computers we use to input information haven’t been compromised at the manufacturing stage. As we go about designing new governance systems based on this technology, we need to think hard about best practices as they exist at that outer rim—the “last mile” of verification, as some call it. Blockchain technology should be an impetus to develop standards and rules about how the fulfillment of contractual obligations is to be judged in ways that can be read and understood in this new digital context.

      Finally, there’s a potentially contentious issue around the market framework—the questions of which computers control the blockchain and how much power to dictate prices, access, and market dominance that allows. Permissioned blockchains—those which require some authorizing entity to approve the computers that validate the blockchain—are by definition more prone to gatekeeping controls, and therefore to the emergence of monopoly or oligopoly powers, than the permissionless ideal that Bitcoin represents. (We say “ideal” because, as we’ll discuss in the next chapter, there are also concerns that aspects of Bitcoin’s software program have encouraged an unwelcome concentration of ownership—flaws that developers are working to overcome.)

      Permissioned systems integrate a trusted third party—the very kind of intermediary that Satoshi Nakamoto aimed to avoid—to authorize which computers can participate in the validation process. This option makes sense for various industries that are looking to adopt blockchain technology but whose current industry structures just don’t allow a permissionless system. Until the law changes, banks would face insurmountable legal and regulatory opposition, for example, to using a system like Bitcoin that relies on an algorithm randomly assigning responsibility at different stages of the bookkeeping process to different, unidentifiable computers around the world. But that doesn’t mean that other companies don’t have a clear interest in reviewing how these permissioned networks are set up. Would a distributed ledger system that’s controlled by a consortium of the world’s biggest banking institutions be incentivized to act in the interests of the general public it serves? One can imagine the dangers of a “too-big-to-fail blockchain”: massive institutions could once again hold us hostage to bailouts because of failures in the combined accounting system. Perhaps that could be prevented with strict regulation; perhaps there needs to be public oversight of such systems. Either way, it’s incumbent upon us to ensure that the control over the blockchains of the future is sufficiently representative of broad-based interests and needs so that they don’t just become vehicles for collusion and oligopolistic power by the old guard of finance.

      The open-source development of permissioned ledger models that’s being done by R3 CEV, a consortium dominated by major banks, and by the Hyperledger group, in which tech firms like IBM, Intel, and Cisco play hefty roles, is important. It’s forcing the incumbents within them to see the spotlight that this new technology shines on the inefficiencies of their old, centralized work processes. And some of the ideas being developed there will no doubt be of great value to the wider ecosystem of blockchain development. But we believe the “permissionless” ideal first laid down by Bitcoin and since followed by countless alternative “altcoins” and blockchains is a vital one for the world to focus on.

      As we stated in The Age of Cryptocurrency, Bitcoin was merely the first crack at using a distributed computing and decentralized ledger-keeping system to resolve the age-old problem of trust and achieve this open, low-cost architecture for intermediary-free global transactions. It may or may not be the platform that wins out. Perhaps something else will come along and fulfill for the age of cryptocurrency what the Transmission Control Protocol/Internet Protocol, or TCP/IP, pair of protocols did for the age of the Internet. Something will emerge as a standard, base-layer protocol that dictates how all computers everywhere exchange value with each other. Will it be Bitcoin, Ethereum, or something else entirely, perhaps a protocol that allows computers with digital assets on any one of these competing blockchains to trade directly with each other without going through a third party? Such is the threat and opportunity that open-source development offers: anyone can copy and then improve upon your idea. The good news is that boundless energy and innovation will go into figuring out how to iterate upon the ideas that currently exist and will build a potentially better system. That innovation might find its way back into Bitcoin, helping to cement its first-mover advantage. Or it might diffuse the value creation power across a wider array of platforms until something more popular comes along. In the next chapter we will ask such questions as we survey the frenetic pace of invention in the blockchain space.

Three

       THE PLUMBING AND THE POLITICS

      Building a decentralized economic system for a network of independent, anonymous computer owners in which everyone will work in the interests of the group poses a daunting technical challenge. It’s also a major political challenge. Herding cats comes to mind. It turns out that building a network outside the traditional political system requires a lot of political decisions.

      Success for a decentralized cryptocurrency or blockchain network comes down to designing the right rule set—the software protocol—by which participants interact with each other. Satoshi Nakamoto’s Bitcoin breakthrough gave us the first working example of how to achieve this even when large amounts of money, business secrets, and other matters of value are at stake. But as the community of Bitcoin’s users and computer owners has grown and changed, and as newcomers have demanded new functions and more powerful applications, there’s been constant pressure to upgrade and change the protocol to facilitate those needs. The problem is that in a truly decentralized, open-source system where no one is in charge, it’s extremely difficult to get all those people with their far-flung disparate interests to agree on what changes to make.

      There are probably several thousand extremely bright programmers and entrepreneurs trying to make this software take off. In some ways, they’re like the Founding Fathers in the United States: they’ve come across something new and intriguing that could change the world, if they could only configure it properly. “All men are created equal” did not just explode, sui generis, on the colonial landscape in July 1776. It was the synthesis of a classical-liberal school of thought that had been developing for decades—and still is, for that matter. The techno-philosophers of the blockchain movement are grappling with myriad iterations of an idea. They just have to find the best ones.

       The Cypherpunks’ Holy Grail

      The starting point for understanding how blockchains work, as well as the technical and political debates they engender, is the first working blockchain: the Bitcoin blockchain. Bitcoin put the objective of pure, permissionless decentralization front and center. In guiding a community of autonomous users to reach agreement on transaction histories, it showed that software controlled by no СКАЧАТЬ