Blockchain gives power back to the individual … provided one knows how to use it!
The Blockchain paradigm is not easily understood and many qualifiers are evoked in attempting to define it: disintermediation, traceability, transparency, tamper-proof, immutability, and so on…
But that which in our view best synthesizes Blockchain’s fundamental contribution is certainly its ability to empower individuals. It is this empowerment that is at the heart of the Blockchain revolution.
Blockchain is a harbinger of major societal changes and brings the promise of enormous opportunity in all domains. The (re)taking of power by the individual, however, demands that certain precautions be taken.
Blockchain is decrypted in 7 points through the prism of reappropriation of power to the individual. How does this translate concretely? What are the consequences?
- By encouraging individual initiatives Blockchain stimulates creativity and innovation
All collective innovation projects present the major risk of ending up demotivating contributors for lack of recognition of their personal contributions. By identifying the identity and input of actual contributors and tracing and capitalizing on their contributions, the Blockchain can have a real incentivizing effect. By making sure that we can “render to Caesar what is Caesar’s this technology introduces a powerful motivation lever. But beyond a simple recognition of individuals, Blockchain can value their contributions and pay them their dues. By introducing this nudge effect into communities of innovators, we now have a powerful tool of collective emulation where the singularity of each individual can flourish.
For example, the Steemit platform aims to become the Twitter and Reddit of the Blockchain: the users behind the most shared content are given back a portion of advertising revenue. The Hedge Fund Numer.ai, meanwhile, puts thousands of data scientists in competition in order to develop the model of Machine Learning that will best address the market failures. To date more than 30 000 data scientists have registered (100 times more quants than the largest hedge fund in the world. Far from being a mere platform, it is the very first one that “ uberizes” high-education jobs. The objective is ultimately to decentralize the platform itself in order as not to fall into a model of capturing the added value by centralized entities.
So even the platforms end up “uberized” themselves. Because they become redundant, transactions take place directly in peer-to-peer mode. And to do that, the Blockchain has an essential mechanism, the Smart Contract: a program that runs automatically according to a specified source code. For some of these smart contracts, it is a question of evaluating the contributions of each one and to remunerate them at their fair value.
For example, universities could run on a new model more open and more incentives linked to performance: the researchers would be paid according to an algorithm evaluating the impact of their contributions, and corporates/philanthropists/government enjoy different benefits and disclosure of information according to the funding level. If researchers are assured of receiving the benefit of their work, and that it is recognized in a fair way by eliminating the risks of plagiarism and theft, collaborations between research centers would blossom.
The same applies to university / business partnerships and business / consumer partnerships. The start-up Sense is establishing a platform for creating smart contracts and “Proof-of-Intelligence” algorithms that quantifies “conversational contributions”, each participant thus sees a return according to the added value they bring to the discussion.
- The Blockchain makes data and the reputation of individuals a major intangible asset
The empowerment of individuals includes the mastery of their personal data. The crucial economic resource of our time is data, and it is clear that today, individual data is captured in silos owned by private corporations. This data is used and resold without the consumer being aware of the use made of it, either for commercial purposes or even in recent in ever increasing number of cases the manipulation of public opinion.
Thanks to Blockchain, some platforms such as Facebook or Twitter can be decentralized, the global data would be anonymized and resold but each user could decrypt his personal data thanks to his private key. Some could posit a world where the end user will have access to a “control dashboard”. Where he can visualize all his data and give his consent to each use case or at least clearly know for what purpose it will be used. The co-founder of Firefox and JavaScript Brendan Eich is at the helm of a new web browser named Brave . This browser blocks by default trackers and ads on sites with an opt-in system that only shows targeted ads and redistributes part of the advertising manna, at the instigation of the user, with the added bonus of more than doubled loading speeds. The user has the freedom to choose what level of data sharing he accepts for a known use, while being compensated fairly.
The management of one’s own reputation is for everyone a corollary of the control of one’s personal data. From the moment when in a network individuals are in the front line, they are naturally encouraged to defend and promote their own reputation, which becomes an essential asset. The Blockchain can allow this through the notarization of facts or achievements. Just a few days ago, MIT announced it was certifying its degrees throught a Blockchain; at the same time, the French start-up BCDiploma proposes to authenticate diplomas by storing them directly on the Blockchain. These solutions will allow the individual to insert a true and indisputable version of his qualifications on his resume and on LinkedIn. At the humanitarian level the NGO Bitnation has also established a service that enables refugees to prove their identity to authorities even if they are undocumented.
- The Blockchain Makes Intellectual Property Law Obsolete
With the digitization of knowledge swathes of industries disappear; it is with this in mind that Blockchain solutions not only make it possible to recognize rights and equitably reward creators, but also to dispense with predatory intermediaries (such as major record companies) and to leverage collaborative initiatives. Universal Music alumni who helped Radiohead publish the first download album via free-price Torrent are back with the platform Blokur.
This system consists of an artificial intelligence that will scan all copyrights and reach a consensus that will be reflected on the Blockchain, thus automatically reducing copyright conflicts. The current regulation in terms of copyright is totally outdated and is not adapted to the digital age. At this very moment, the European Parliament is examining a piece of legislation that would require websites to implement tools for active filtering of content shared by users. This is a blow to the open-source movement and a financial burden of at least 20,000 euros per year, curbing the appearance of new innovative websites. A system such as Blokur but generalized to all industries would be much less expensive and fair.
The French Startup Wespr wants to become a decentralized publishing platform, not only in terms of content sales but also in the business model of publishing. Very schematically, the advances, profits and royalties would be distributed between the author and the investors which would constitute in common a “publishing house” where decisions would be made by consensus and payments are made according to the attention a reader gives to the book (in terms of read content).
From the moment when individuals are encouraged to become more innovative and creative, it is obvious that regulation as we know it today in terms of intellectual property no longer has a raison d’être will be brought to deeply evolve. The current patent system, that was a driver for innovation and growth in the postwar period now reached its limits. Costs and deadlines for approval, the “tragedy of anti-commons” which prevent the use of basic research when it comes from a holding entity, patent trolls and rent seeking make it unbearable for small businesses.
If it is now difficult to imagine an immediate full use of Blockchain in this area (as it relates to a very slowly moving legal framework) but its progressive adoption will lay the groundwork for a less expensive, faster automated patenting process (proof-of-invention with a hash value) and whose arbitration will depend on an algorithm and not a judge.
- The absence of hierarchical power requires new exchange tools
Blockchain generates disintermediation. Thanks to this technology we can do without trusted intermediaries or third parties (lawyers, courts, guarantor banks, insurers, etc.) to execute transactions. This causes a Copernican revolution in the way we interact with others. We have seen that smart contracts are an essential mechanism for smoothing and speeding up exchanges.
Among the tools invented by the Blockchain there are also new fiduciary devices as the return of power to individuals presupposes their financial autonomy in terms of payments, borrowing and investment, all in order to create a virtuous framework that will accompany exponential P2P exchanges. Despite modern technology, the economic structure is still stuck in its old habits. Unless you spend cash face to face must necessarily go through a centralized player to trade (bank via payment processor, bank investment fund or government).
Some of the Blockchain applications consist of new, faster, safer and cheaper ways of payment such as the now famous Bitcoin You can send money around the world almost instantly and cheaply, without going through a third-party layer (private or central bank). For others, such Monero it’s about guaranteeing absolute anonymity, creating for each exchange hundreds of mini-transactions to multiple accounts in order to make the transaction untraceable. This is a development that is a major challenge for governments in the fight against tax fraud and money laundering. Smart contracts will also facilitate online commerce through a safe and sure escrow system . In the journey of an online purchase the user can send a deposit in cryptocurrency, the follow the product in real-time thanks to an IOT module connected to the blockchain and will be debited at the time of delivery, the whole time managed through a contract written in just a few lines of code!
- Blockchain generates new funding models
Behind the mysterious ICO (Initial Coin Offering) acronym lies the concept of universal fundraising (geographically and demographically) through the issuance of a project-specific currency with a special appreciation mechanism. A company issues and exchanges its currency that is equivalent to a toll for accessing and using the network and which will most often be used for the proposed service for money that gives the start-up means to develop. If the service becomes popular the value of the issued tokens will increase and the return on investment can become very substantial. This is the culmination of the trend of crowdfunding: it may emerge late private placements and the beginning of an era of transparency and increased accountability. In the first half of 2017, the amounts raised by ICO outperformed Seed and Round A investment by Venture Capital funds (venture capital).
However, this practice is still very lightly regulated and could lead to bubble phenomenon such as what occurred during the multiplication of Internet IPOs during the 90s. It is now common that a financing campaign of the order of a quarter of a billion of dollar closes within hours, and it is possible to perform an ICO without being constrained by the mandatory rules of transparency and disclosure that surround the issuing of shares! As a result, regulators around the world are adopting more or less restrictive postures regarding this practice.
But these types of financing are not solely a bottom-up process where money goes from the pockets of the individual to decentralized organizations. It is just as much an empowerment of the individual: the startup Ethlend is setting up a Blockchain to offer credit and to contract debt through the intermediary of a smart contract. The interest rate is determined by a truly transparent market price, all the opposite of the LIBOR, based on the daily surveying of the largest banks in London, and for which we discovered that it was manipulated for years affecting more than 350 trillion (!!!) dollars of debts and derivatives.
- Individual empowerment requires regulation and security of the Blockchain
The increased freedom generated by the Blockchain is an opportunity for the individual to emancipate himself from obsolete and oftentimes corrupt central structures. And this opportunity gives cold sweats to the powers that be, for reasons sometimes justified (black markets impossible to regulate, money laundering, freedom of expression, horizontal political organization). However, these two worlds must be reconciled in order to propel the Blockchain towards a legitimacy that would make its adoption universal.
The world is now at a turning point: if Blockchain allows the user to regain control of their data and reputation it is nonetheless a big problem: a system controlling all aspects of our life.
Facebook knows our conversations and preferences, Google Maps where we went, Spotify our musical tastes and so on … In China the government has established “Social Credit Score “ optional for now but that will become mandatory from 2020. Each citizen will have a score that will fluctuate depending on the payment of taxes and bills, criminal history, positive or negative message spread on social networks (and on chatting apps) and even mundane facts such as playing video games (irresponsible) or to buy diapers (good parent). And the consequences would not be thin: the score of each citizen will influence the cost of insurance or interest rate loans, the opportunity to send children to a good or bad school, even the possibility of leaving the country.
Blockchain, which could be an alternative if individuals turn to digital identities disconnected from their geographical roots, could also be set up (centrally and controlled by a government) to justify such a system, by lowering the costs of transactions and unifying several disparate private databases.
The individual will be safe from abuse only if the appropriate Blockchain type is established and accepted. Even on the Bitcoin we run the risk of excessive centralization (Chinese miners who hold the vast majority of computing power) would be contrary to the fundamental principles of the technology! History would then tragically repeat itself just as with the advent of Internet supposed to free us but that gradually led to a concentration of power on an unprecedented scale.
It’s the same story regarding peer to peer relationships: for the relations and interactions between individuals can flourish without problems democratic functioning must be guaranteed. It shouldn’t be the case that in a P2P community, under the pretext of liberating individuals’ capacity for initiative, power is monopolized by a few to the detriment of the entire group.
- The resumption of power by individuals can reinvent socio-economic models
If Blockchain’s main asset is to solve the problem of trust between individuals without going through a third party guarantor, it also allows to create new types of governance and relationships based on the transparency of interactions. As with any societal change, care must be taken to protect against the emergence of structures leading to abuse while giving leeway for experimentation that could have major benefits for humanity.
We can imagine a voting system by Blockchain: all the votes would be public and linked to a random identifier that only the citizen knows. He can then verify that his vote has not been altered by consulting the list of all votes. It would then be easy to push the imagination further and establish a direct or liquid democracy where each decision would be based on a vote expressed or delegated in a transparent and instantaneous manner through biometric authentication on his phone. Some of the largest contributors to the field are fervent believers in a new system of government called Futarchy. Decisions would be made with a token that would financially reward good decisions, by connecting real world outcomes to predictions of policies effects.
In the economic sphere, imagine what could be brought to the table by the increase in individual initiatives by allowing individuals to create shared communities of interest (i.e: Open Value Networks), Blockchain in this sense renews an economic democracy. It allows for example to transform the top down model from a single producer to consumers to a network of small producers / consumers, especially in energy; help product traceability and strengthen producer and consumer responsibility.
In the societal realm, the re-appropriation of power by individuals must induce an increase in the level of consciousness and collective intelligence.
Whatever the future system of government is we must rethink the role of individuals, invent new social relations, new values, a new culture. The Blockchain will be the ferment to rethink one, and even new social contracts. But the corollary of the empowerment of individuals is to surround themselves with precautions so that this resumption of power is reflected in collective benefits and not in selfish appropriation.