Blockchain: The Next Everything

Stephen P. Williams

• Editorial: Scribner
• Año: 2019
• ISBN:
  9781982116842
• Categoría: Betriebswirtschaft
• Categoría: E-Commerce

An experienced tech writer fully explains blockchain technology and how it will radically transform the world as we know it in this accessible, reader-friendly, illuminating guide. What is blockchain? Why does everyone from tech experts to business moguls to philanthropists believe it is a paradigm-shifting technology, bound to revolutionize society as significantly as the internet? Indeed, why is blockchain touted as The Next Everything? In this deft, fascinating, and easy-to-digest introduction to one of the most important innovations of recent times, Stephen P. Williams answers these questions, revealing how cryptocurrencies like bitcoin are just one example among dozens of transformative applications that this relatively new technology makes possible. He interprets the complexity into digestible anecdotes, metaphors, and straightforward descriptions for readers who don't know tech, and explains all of blockchain's most important aspects: why this so-called digital ledger is unhackable and unchangeable; how its distributed nature may transfer power from central entities like banks, government, and corporations to ordinary citizens around the world; and what its widespread use will mean for society as a whole. Taking us on a dazzlingly vivid tour through the systems predicted to soon underpin economics, politics, global trade, science, art, and numerous other aspects of our everyday lives, Blockchain: The Next Everything is a truly extraordinary journey into our future.

IV

THE THRILL OF THE NEW

Stacks of Apps Called Dapps

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Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

—Vitalik Buterin, cofounder of the Ethereum blockchain

Dapps, or distributed applications, open the blockchain to all kinds of purposes. They are essentially software that’s built on top of the chain in another, more easily accessed layer. Dapps can be customized to accomplish many tasks, from paying someone for generating solar electricity, and charging their electric car for consuming it, to tracking the path your blackberries took from the farm in Mexico to the processor in California to the artisanal ice cream factory in Brooklyn. You would know if the berries were organic, as advertised, and whether they’d been washed. There are now dapps that let Estonians vote, that track the journey of alpaca wool from farm to sweater, and that let citizens make micropayments to journalists whose work they read (cutting out the influence of advertisers, owners, and editors). AID:Tech, a blockchain-centered women’s health project in Tanzania, uses a dapp to follow the medical progress and care of pregnant women; in July 2018 the very first babies were born on the blockchain.The business of health care is sorely in need of technological improvement. Blockchain is rapidly proving itself useful in this field, with a host of startups, including Gem, MedRec, and BitMED. There are three main areas where blockchain can help: medical records, consent to share those records, and micropayments to patients as a reward for healthy behavior that reduces overall medical costs. For instance, medical records can be written into blockchains, so that they can never be changed. The patient could control who has access, and to what, at any time. When used with clinical trials, blockchain would remove any temptation to manipulate the data. And patients might be rewarded for letting researchers use their data, as well as for sticking to their treatment protocol. BitMED is taking this a step further, by offering people free medical care in exchange for the right to sell their data to drug and medical device companies, and to researchers. According to BitMED, the global health data market is worth $230 billion. They say the data that is now taken for free would subsidize or pay for a person’s health care.

Of course, no one debates the necessity of digital cats. They’re meow as hell, cute as a scratch on the neck, and they don’t carry toxoplasmosis: Clearly, CryptoKitties are the new cats. You can buy these little digital cat images that live in your phone with ether coins, using Ethereum blockchain technology. Like so many other figments of our digital imagination, CryptoKitties are DTF: You can breed them to create other, possibly more valuable kitties. The CryptoKitties company, in Vancouver, says these cats are collectibles, like baseball cards and art. Seems to me that, however you want to look at it, in the end the kitties are money.

You can’t pet them, other than by stroking them on your screen. You can’t take them to the vet, or wear them around your neck like a stole. They are graphic, hypoallergenic, and pretty obedient. Their value is determined by scarcity and desire, just like most things in our world. Apparently, desire is pretty high, because when the kitties first came out so many people bought the cats that the transactions slowed the massive Ethereum blockchain to a crawl. CryptoKitties has generated over $20 million in sales, with some cats going for over $100,000, according to the New York Times.

The population began with the release of “hundreds” of kitties. For the next eleven months, a new Generation 0 kitty was released every fifteen minutes or so. These first kitties don’t have parents. But as they are bred, their offspring take on the previous generation’s genetic qualities. You can pay other “owners” tens of thousands of dollars to breed their cats with yours, if you think their DNA is worth the cost. The holy grail is to breed a “Fancy Cat,” by creating a special “ascension” kitty. Just keep trying until you get the right one.

The CryptoKitties company pockets the price of each Generation 0 cat that is released. Plus a 3.75 percent fee on each transaction within their marketplace. Meow! This blockchain thing might just have (four) legs.

Like hip-hop, ultimate Frisbee, and LSD before it, blockchain is clearly a culture as much as a thing.

I walked down New York’s Canal Street late one afternoon looking for the cryptocurrency bohemians. Horns blared and the sidewalk was packed with grandmothers pushing carts full of Chinatown groceries home through the crowd. I was surprised at how little had changed in the thirty years since I’d first wandered this street. More tourists, maybe, shopping for off-market luxury goods sold by the African traders, oblivious to the fact that they could get hauled off to the slammer if the fashion task force were to take exception to their Louis Vuitton bag. I found my way to the entrance of a nineteenth-century warehouse and climbed an old-school flight of steep wooden stairs, opened a door, and was greeted by a young intern/receptionist. The loft was about eighty feet long and twenty-five feet wide, with worn plank floors and a few nonsensical glass “rooms.” The ceiling fixtures were copper-colored Tom Dixon lamps that were popular in their day, though they looked like sad plastic now. It felt like a rich person’s loft circa 2005.

“I didn’t get a ticket in advance, so I’d like to pay here,” I told the receptionist, who stood sentinel with a large iPhone. She typed and typed and typed into the screen and finally said, “Fifty dollars.”

“Fifty? The website says thirty-five.”

“Now it’s fifty because of the crowd,” she said. “Demand.”

Congestion pricing, surge pricing, rip-off pricing, I thought. But I paid and took a seat. A screen near a makeshift bar up front displayed van Gogh’s Starry Night.

Two thirtysomething women sat next to me. They were art curators for an all-female nonprofit gallery in Dumbo called A.I.R. They knew a bit about blockchain, but didn’t seem obsessed. They were there to learn, but, looking around at the pretty dull crowd, and the cheesy van Gogh screen on the wall, they didn’t get their hopes up.

Finally, the leader of this high-priced “meetup” took the floor and introduced the first speaker. This was the guy with the van Gogh. He had absolutely nothing to do with blockchain, but he did have this art biz called Meural, which manufactured and sold framed screens designed to hold digital art collections. You’d buy one and then subscribe to his service for forty bucks a year, which would give you access to an imaginary space where “the iconic meets the unexpected.” You could download whichever paintings you wanted from their licensed collection of digital images. They claimed the collection represented $3 billion worth of art. But not really, since all the art was in pixels and you could not smell the paint. The speaker hoped someday to use cryptocurrency to reward artists each time their work was viewed or resold, but he didn’t seem to have any specific plans. Applause. Behind me a young guy said to his curly-headed nerdy neighbor, “Why are you here?”

“I just bought my first crypto two months ago. I’m very interested in art on the blockchain.”

Two months ago, I thought, laughing to myself at the absurdity of the speed at which this technology had rolled through culture. Jeez. I bought my first crytpo seventeen months ago. I was an old-timer.

One of my curator neighbors suggested I look at Rhizome, an online publication with archives of digital art. She said that’s where digital art was happening.

Then things got really interesting. A lanky, clean-cut guy named Tommy Nicholas, founder of Alloy and special adviser to Rare Art Labs, spoke about using tokens, rather than coins, as a way of valuing art. His main point, and it’s an important one, was that tokens only work if you create a community that values them. When they are valued, they become a sort of currency for rare digital art. My head almost popped off when I heard that term. What the hell did it mean?

Tommy explained: The first copy of a digital image, when it’s registered on a blockchain, becomes an immutable work of art. There can only be one. All the screen grabs and other copies that are made and passed around will never have the provenance, guaranteed on the chain, of being the first. Thus, a rare digital image. Once this was an oxymoron. Now it isn’t.

Next up was Matt Hall, one of the creators of cryptopunks, collectible digital rare art of cheesy-looking pixelated punk rockers. They released 10,000 of these characters into the marketplace, with tokenized values, and watched them trade. People have made hundreds of thousands of dollars off these babies, all tracked and traded via blockchain. Now that’s rare digital art!

As the evening moved slowly along into a snooze, my new curator friends ordered takeout on their phones (using old-fashioned credit cards), and my mind kept going back to cryptopunks. They seemed so of the moment, and also so nostalgic (punk rockers?), so innovative as an art product and yet so dull.

Leaving, I felt full of blockchain thoughts, and happy once again. The steep wooden stairway to the street gave me nostalgic thoughts of NYC in the late seventies, when these lofts went begging for tenants, and you never knew what you’d find at the top of the stairs: a magical flaxen-haired woman wearing twinkling lights and singing along to a synthesizer, perhaps. That happened to me once.

On the street, a Senegalese man wearing a Fila tracksuit wanted me to buy some fake transparent Balenciaga sneakers for eighty dollars. I wondered how blockchain would affect this counterfeit market that never seemed to leave Canal Street. I didn’t think it actually would. Since everyone who shopped the sidewalks of Canal Street knew that the luxury goods they were getting for such a good price were fake, why would any of them need to check provenance on the blockchain? Unless, I thought, the salespeople were able to make rare digital images of the counterfeit goods. That would legitimize them, as subjects of rare digital art, and give them true value.

In early 2018, Steve Bannon, former chief strategist for President Donald Trump, announced that he had invested heavily in bitcoin and other cryptocurrencies. Liberal utopians everywhere shuddered.

In other right-wing political news, after the violent white nationalist march in Charlottesville, some mainstream institutions, including PayPal and some banks and social media companies, quit working with avowed racists. Many of those racists then turned to cryptocurrency as a means of exchange—neo-Nazi leader Richard Spencer had already declared bitcoin the currency of the alt-right. Soon, a Twitter account called @neonaziwallets began posting the bitcoin activity of thirteen different bitcoin accounts it had deduced were linked to pro-Nazi, white nationalist groups, exposing their financial activities to the world. This curious mix of a free-flowing, no-intermediary economy and perhaps unwanted transparency is bitcoin in a nutshell.

Curiously, it seems that blockchain and bitcoin might also have the effect of encouraging more equality, by offering access to financial markets to people of color, and those with lower incomes who have traditionally faced more barriers to entry to the investing class. Blockchain technology can help level the playing field so that people with limited resources from all social groups are able to invest and participate in the marketplace in ways they’ve long been denied. Fractionalization of ownership can make even the smallest investment valid, especially if government regulations keep pace with the evolution of blockchain.

Another equalizing idea that is getting a great blockchain boost is the movement for universal basic income. An innovative and sometimes puzzling Berlin startup called Circles lets people create their own individual cryptocurrency to use in what they call a postcapitalist economic system based on collaborative interaction.

When someone joins Circles, a smart contract mints him or her a certain amount of crypto out of thin air. This is hard for most people, including, at first, myself, to grasp. An algorithmic proof of work protocol regularly adds more of their personal coins to their digital wallet. The value for this crypto arises from the fact that all the users of Circles see each other’s currencies as equally valid. They can accept currency for a service they provide, and they can spend it in stores that participate. Circles now operates at a local scale, with shops and restaurants in Berlin accepting the currencies. It’s expected that as more people join, all of the individual Circles currencies will meld into one giant shared currency, perhaps even a global currency. In this economy, everyone would have a basic income as new crypto would be regularly created for each person. Of course, there are many potential pitfalls, including the real specter of inflation. As with so much involving blockchain, the proof will be in the intangibles.

In Atlanta, and elsewhere, a growing black-tech movement is using blockchain to address issues that affect the African-American community. Atlantian Ed Dunn has a fascinating project to use blockchain to establish a free market exchange program that’s intended to provide all kinds of services for black Americans, although it seems that anyone would be able to access the products, from repurposed clothing to investments.

Blockchain is uniquely designed to level playing fields, because it does not have to be controlled by the institutions that often create the problems that lead to inequality. As an unemotional ledger technology, the blockchain underlying all dapps is blind to ethnicity, color, and class. All over the world, it’s giving power to those who need it the most.

Forests are vast, complex distributed systems, where individual trunks are joined into a community by roots, pheromones and other chemicals, sounds, and perhaps other communication tools as yet undiscovered by humans. Trees use these systems to warn each other of dangerous chemicals in the environment, and to share nourishment when needed. However, given their stationary, nonviolent nature, trees can’t harness their distributed systems to protect themselves from loggers intent on clear-cutting forests.

The terra0 framework, on the Ethereum network, is meant to help them out. It’s hard to say whether it is an art project or a forestry innovation, but terra0 is designed to turn forests into DAOs, meaning they manage themselves by selling timber and acquiring more land. In effect, the forest owns itself.

Here’s how that happens:

You decide you want to help a forest take care of itself and expand in a sustainable way. You b...