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

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СКАЧАТЬ the world of finance, an idea so powerful every government on the planet is trying to figure out whether to co-opt it or outlaw it, the dream of the most fervent libertarian, dark-Web denizens, is a ledger.

      Like, an accounting book.

      The genesis of that subversive idea was, of course, Bitcoin, which, when boiled down to its most basic concept, is founded on the upkeep of a digitized ledger, a record of exchanges and transactions. What makes this ledger so radical, so controversial, is the way in which this record of transactions, known as a blockchain, is created and maintained. Bitcoin, released in 2009 by a person or persons using the pseudonym Satoshi Nakamoto, was designed to be an end-around to the banks and governments that have for centuries been the guardians of our financial systems. Its blockchain promised a new way around processes that had become at best controlled by middlemen who insisted on taking their cut of every transaction, and at worst the cause of some man-made economic disasters.

      You probably bought this book expecting to read crazy, wild ideas about our digitized future … and here we are, giving you ledgers. But ledgers have been integral in underpinning the development of civilization for millennia. The trinity of writing, money, and ledgers made it possible for human beings to do business beyond kinship groups and thus form larger settlements. And while the contributions of money and writing are well appreciated, ledgers tend to be known only by those who studied the dry science of accounting.

      The advent of the first ledger technology can be traced back to roughly 3000 BCE, in ancient Mesopotamia (modern-day Iraq). Of the tens of thousands of clay tablets the Mesopotamians left behind, most are, well, ledgers: records of taxes, payments, private wealth, worker pay. The famous Code of Hammurabi—the Babylonians’ system of law—was written on one of these ledgers, but most of the kings had their own rules set out as well. The rise of these ledgers matched the rise of the first large-scale civilizations.

      Why have ledgers been so important throughout history? Exchanges of goods and services have defined the expansion of societies, but this was possible only if people could keep track of the exchanges. It wasn’t so difficult for everyone in a small village to remember that someone had killed a pig and to trust—a word we’ll encounter throughout this book—that all who ate of it would find some way to later repay the hunter, perhaps with a new arrowhead or some other thing of value. It was another to manage these cross-societal obligations across a larger group of strangers—especially when moving outside of kinship boundaries made it harder to trust each other. Ledgers are record-keeping devices that help deal with those problems of complexity and trust. They help us keep track of all the multiple exchanges upon which society is built. Without them, the giant, teeming cities of twenty-first-century society would not exist. That said, ledgers are not truth itself—not in an absolute sense—for when it comes to matters of value, an element of judgment and estimation is always present in the recording process. Rather, they are tools for getting closer to the truth, to an approximation of it that’s acceptable to all. Problems arise when communities view them with absolute faith, especially when the ledger is under control of self-interested actors who can manipulate them. This is what happened in 2008 when insufficient scrutiny of Lehman Brothers’ and others’ actions left society exposed and contributed to the financial crisis.

      Money itself is intrinsically linked to the idea of a ledger. Physical currency like gold coins and paper money are, similarly, record-keeping devices; they too aid with societal memory. It’s just that rather than existing within a written account of transactions, a currency’s record-keeping function is abstracted into the token—the gold coin, the dollar bill. That token is communally recognized as conveying some right to goods or services that the bearer has earned from tasks performed in the past.

      Once human beings started to engage in exchanges of money across distances, tokens’ capacity to play this record-keeping function broke down. There was no way for the payer to physically deliver the tokens to the payee without having to trust a courier who might well steal it. The solution came with the advent of a new form of ledger-keeping known as double-entry bookkeeping, an approach that was pioneered, as we’ll discuss lower down, by a clique of Renaissance bankers. In adopting this bookkeeping, they thrust banking into the payments business and, for centuries, helped to greatly expand the capacity for human exchange. It’s not an overstatement to say that this idea of banking built the modern world. But it also amplified a problem that had always dogged ledgers: can society trust the record-keeper?

      Bitcoin tackled this problem by reimagining the ledger itself. It confronted the problem that bankers themselves are not necessarily to be trusted and might rip you off with hidden fees and opaque charges. Bitcoin did this by, for the first time, entrusting responsibility for confirming and maintaining the ledger of transactions to a community of users who checked each other’s work and agreed on a common record to represent their shared approximation of the truth. A decentralized network of computers, one that no single entity controlled, would thus supplant the banks and other centralized ledger-keepers that Nakamoto identified as “trusted third parties.” The ledger they collectively produced would become known as the blockchain.

      With Bitcoin’s network of independent computers verifying everything collectively, transactions could now be instituted peer to peer, that is, from person to person. That’s a big change from our convoluted credit and debit card payments system, for example, which routes transactions through a long sequence of intermediaries—at least two banks, one or two payment processors, a card network manager (such as Visa or Mastercard), and a variety of other institutions, depending on where the transaction takes place. Each entity in that system maintains its own separate ledger, which it later must reconcile with every other entity’s independent records, a process that takes time, incurs costs, and carries risks. Whereas you might think that money is being instantly transferred when you swipe your card at a clothing store, in reality the whole process takes several days for the funds to make all those hops and finally settle in the storeowner’s account, a delay that creates risks and costs. With Bitcoin, the idea is that your transaction should take only ten to sixty minutes to fully clear (notwithstanding some current capacity bottlenecks that Bitcoin developers are working to resolve). You don’t have to rely on all those separate, trusted third parties to process it on your behalf.

      The key architectural feature of Bitcoin and other cryptocurrency systems that lets these peer-to-peer transactions happen is the distributed nature of the blockchain ledger. That decentralized structure is made possible because of a unique software program that uses strong cryptography and a groundbreaking incentive system to guide the ledger-keepers’ computers to reach consensus. It does so in a way that makes it virtually impossible for anyone to change the historical record once it has been accepted.

      The result is something remarkable: a record-keeping method that brings us to a commonly accepted version of the truth that’s more reliable than any truth we’ve ever seen. We’re calling the blockchain a Truth Machine, and its applications go far beyond just money.

      To see how the blockchain’s “God’s-eye” view could be valuable, let’s turn the lens away from Bitcoin for now and onto the traditional banking system. It’s there that we can see the problems blockchains are supposed to solve.

       The Trust Bubble

      On January 29, 2008, the Wall Street firm Lehman Brothers reported its financial statement for the fiscal year of 2007. It had been a good year for Lehman, despite some rumblings in the stock market and a downturn in the housing market, which had been red-hot for years and a major source of revenue for investment and commercial banks. The firm, founded 167 years earlier in Alabama and one of the bedrock institutions of Wall Street, posted record revenue for 2007, $59 billion, and record earnings, $4.2 billion. The amount was more than twice what the company had brought in and earned just four years earlier. Lehman’s “books” had never looked better.

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