I believe we have already passed the point of no return; while the powers that be can throw hissy fits and slow the decentralization trend down, it is too late to completely eliminate it (unless a nuclear war destroys us all…). And luckily, while there has been some resistance to this trend, it has come far short of the complete war against decentralization that would be necessary to cause a substantial delay in its unfolding.
Technology and business innovations, foremost among them being the internet, bitcoin (and other cryptocurrencies), and peer-to-peer (P2P) everything, are helping to usher in a new world where power has been radically distributed. This is in stark contrast to most of the history of human existence, where political and capital structures have been controlled by an elite oligarchy – a “1%”, if you will (though it is really more like .01% to .001%).
This post is intended to just be an introduction to some of these developments, and it will not be the last time that I discuss them. But for now, my goal is just to show you how modern technology is allowing us to relate and connect to each other without relying on existing power structures.
The Internet and Communication
I’m hardly the first person to point out the way that the internet has revolutionized communicating and sharing information. But things like blogging and social media are only just the beginning.
In the past, it was very easy for governments and large corporations to control the information that the public had access to. This is largely still true – consider how in America, only six giant corporations control over 90% of what you watch, read, and listen to. Because of this concentration of power (among other reasons), it is very easy for governments to distribute propaganda and misinformation in order to manipulate public opinion.
Luckily, the rise of the internet, and with it, the alternative media, this control of information is beginning to slip. Yes, government propaganda is still very effective on the majority of the population (there are people who still believe there were WMDs in Iraq…), but now people have access to different and conflicting sources of information at the click of a button.
The significance of this cannot be overstated. More people than ever are recognizing that they’ve been lied to, bamboozled, and used. Discontent with the status quo is spreading like wildfire. Now, when the police slaughter an innocent 12 year old boy and then manhandle, handcuff, and shove in their patrol car his 14 year old sister, the whole world can see it and be enraged. But like I said, this is only the beginning.
The next Big Thing in this area is the imminent adoption of micropayments. Before the advent of technologies like bitcoin, the cost of transferring money to someone was fairly high – it generally costs at least a dollar in fees to move money around from one person to another. But bitcoin and other cryptocurrencies have negligible transaction fees, which means that “tipping” someone, or sending them a few cents at a time, is possible.
What does this mean for media and the spread of information?
A whole lot. Currently, most alternative news sources are dependent on some combination of donations and advertising deals. As such, there are still barriers to entry in this space, because sites require a lot of traffic before they can get any kind of significant advertising. But with micropayments, this can all change.
Soon, we will be seeing websites with bitcoin paywalls. Publishers will be able to charge miniscule amounts for people to consume their content – perhaps just a couple cents per article. This will make content creation far more economical for anyone. By starting even a small blog such as this one, a writer could make some side cash immediately, and perhaps even a decent living fairly quickly (assuming people like their content, of course). This will greatly reduce the influence that advertisers have, so they will be less able to exert pressure on the types of content that are available.
The blockchain, which is the underlying technology behind bitcoin, will also contribute to information liberation. It is a decentralized public ledger – in laymen’s terms, a way of keeping track of information that does not require trusting any particular party. This means that the historical record will soon be free from the Orwellian notion of being rewritten. As Julian Assange, founder of Wikileaks, describes it:
“You can prove a particular statement, particular consensus and particular contract that happened at a particular time globally and it requires the subversion of every single jurisdiction where people are running bitcoin to overturn that.”
In other words, it will become practically impossible to censor information, as there will be no central point of control over it.
Technology is making freedom of speech a physical reality, rather than just an ideal that people hope governments will abide by.
Bitcoin and Finance
Another major power center today is with the control of the money supply. Central banks around the world control the supply of money, which allows governments to monetize their debt (spend beyond their means but just “print” more money to cover the costs) and distribute largesse and favors to politically connected individuals and businesses.
The victims? You and me, and everyone else who are stuck holding on to the less valuable dollars, euros, yen, rubles, etc.
But bitcoin and other cryptocurrencies are free from central control. They operate based on mathematical principles and code, rather than special interests. Not only that, they are global technologies that allow fast transactions to happen from anywhere in the world for negligible fees, all while avoiding capital controls.
This means that you and I could do business together, even if our governments may not want us to. Government “sanctions” (aka economic warfare) will become irrelevant, and capital controls intended to prevent people from taking their wealth outside the country will be easily circumvented. We saw this happen in Cyprus during their banking collapse.
The blockchain will make possible all sorts of secure financial instruments as well. “Smart contracts”, or self-executing contracts, are becoming a reality. What does this mean? For one thing, it drastically reduces or even eliminates the need for trust in business dealings. This will take lawyers and banks out of the picture for many types of financial or business transactions.
You can think of smart contracts as a computer program’s “if-then” statements, except that they interact with real world assets. Let the power of that sink in for a moment, and you’ll see that huge changes are coming.
And with the proliferation of cryptocurrencies and “crypto 2.0” projects out there, much more is on the horizon. For instance, Darkcoin is becoming closer and closer to digital cash, allowing anonymous, instantaneous, and secure payments. And other projects, such as NXT, are building entire infrastructures that can have all kinds of applications. Consider the NXT FreeMarket, which is like a decentralized eBay. Think Silk Road, but impossible to shut down.
Cryptocurrencies such as bitcoin are destroying barriers and giving people an unprecedented amount of freedom from the decisions of their governments.
By far, the most famous P2P businesses to take hold recently have been Uber and Airbnb, which have shaken up the taxi and hotel industries, respectively. Uber is basically just a mobile interface that allows drivers to connect with people who need rides without going through a cab company as an intermediary. Airbnb does the same thing, but connects property owners with people who are looking to stay somewhere.
These services have already gone mainstream and hardly seem exciting, but there’s so much more than this. As Jeffrey Tucker said:
“If your sink is leaking, you can click TaskRabbit. If you need a place to stay, you can count on Airbnb. In Manhattan, you can depend on WunWun to deliver just about anything to your door, from toothpaste to a new desktop computer. If you have a skill and need a job, or need to hire someone, you can go to oDesk or eLance and post a job you can do or a job you need done. If you grow food or make great local dishes, you can post at a place like credibles.co and find a prepaid customer base.”
People can connect with each other and take advantage of their skills in ways we could never before. P2P technology is taking the division of labor as far as it will go, and this is incredibly disruptive to more centralized business models.
Consider the taxi industry. In most cities, the taxi industry is highly regulated, and the supply of drivers is strictly limited. This helps them secure undeserved profits by allowing them to charge higher prices. You and I, of course, are the victims. But with Uber and Lyft available, anyone with a car can have an income, and anyone who needs a ride can get it more affordably.
Imagine this happening in every industry. What might this look like in health care? Only the free market will decide, but here’s a thought: perhaps people with some medical knowledge will offer their services and start doing home visits again. If you get sick, you can go online and order a nurse or physician (based on the feedback that other users have submitted) to drop by your house and help you. This can get around strict medical licensing requirements and expensive medical care, and allow people to have a more personal experience for a fraction of the cost.
Let’s take this another step further. What about the provision of security? Most people believe that a 3rd party, the state, is necessary to provide this good. There are some very obvious problems with the socialized policing model we are forced to live under today, including rampant police brutality and the lack of protection offered. Enter the PeaceKeeper app.
Peacekeeper connects members of a community together so they can help protect each other. If your home is being robbed, you can press a button on your phone, alerting your neighbors to the break in. By the time the robber goes outside with your TV, there could be three people you trust with shotguns ready to go. Compare this with local police, who are often slow to respond, never get your property back, and more likely than not will murder your dog.
The P2P revolution is already happening, and over time, will completely change the way we interact with each other.
3D printing has the potential to get around excise taxes, regulations, and intellectual property laws by allowing anyone to simply “print” any product that they can get their hands on a design for.
Even I struggle to comprehend the implications of this. But without a doubt, 3D printing will help consumers become producers of the things that they want, without being dependent on inefficient or monopolized companies. If a new product is invented, the patent holder will no longer be able to extort extra monopoly profits from this – once their design is known, anyone will be able to create it from their own home.
Most significant for our discussion is the effect this could have on the manufacture of guns. Cody Wilson, founder of Defense Distributed, has already created a 3D printed gun called the “Liberator”, and its design had been downloaded over 100,000 times before being taken offline. It’s far from perfect, but just imagine the benefit for human liberty that something like this could have! If 3D printing had existed during the 1930s and 40s, the disarmed Jewish population of Germany could have fought back far more effectively. And this will be the case for future despots – they will have far more difficulty controlling and “pacifying” their population.
Are These Changes Really Inevitable?
This rapid advance in technology is a crypto-hippie or techno-libertarian dream come true. But is it a guarantee that things will play out this way?
Of course, anything can happen, and nothing is inevitable about this. But the technology is here, and we aren’t going to un-learn how to take advantage of it, especially when it has so much potential to improve our lives. And unless there is a worldwide effort to eradicate these technologies, governments will just be playing an elaborate game of whack-a-mole with them. Even if, say, bitcoin were made illegal in the US, it would continue to be used and have its infrastructure developed throughout the world (and let’s be honest, it would continue to be used in the US).
I often hear skepticism about things like bitcoin. “But doesn’t it get hacked all the time?” seems to be a common refrain. The answer is no, it doesn’t. While it is technically feasible that there is some major flaw in the bitcoin protocol, it is entirely open source and has the attention of many developers focused on making it even better. It’s highly unlikely that there is a “fatal flaw”, and it is even more unlikely that there is an NSA backdoor.
The bitcoin ecosystem is showing signs of being “anti-fragile”, which means that it may be getting even stronger when faced with difficulties and instabilities. Consider the bubble in bitcoin price at the end of 2013 and beginning of 2014. While the price was certainly volatile, this has merely attracted more and more interest in the currency, strengthening its network effects.
And while many bitcoin companies (note: not bitcoin itself) have had issues, including the cataclysmic Mt. Gox meltdown in February 2014 and the recent BitStamp hack, the security of the bitcoin ecosystem is continuing to improve.
In fact, BitStamp is back up and running, now with multi-sig security, which is an incredible step up. It has turned a weakness into a strength, and now other cryptocurrency exchanges will need to adopt multi-sig in order to keep up. And this is nothing, because we will soon have decentralized exchanges, which will reduce counterparty risk while trading digital currencies.
So, while the techno-libertarian dream may not be a 100% certain future, we are rapidly progressing in that direction. The next few years will be fascinating, and if governments haven’t somehow blown up the world, it seems about as sure as one can get when trying to predict the future.
Disclaimer: The author currently holds investments in bitcoin, darkcoin, litecoin, and NXT.