Decommodification, Decentralization and Direct Democracy

And now programmers of a libertarian bent are starting to ask what else we don’t need.

Imagine driverless taxis roaming from city to city in search of the most lucrative fares; a sky dark with hovering drones delivering your shopping or illicit drugs. Digital anarchy could fill your lives and your nightmares with machines that answer to you, your employers, crime syndicates… or no one at all. Nearly every aspect of our lives will be uprooted.

To understand how, we need to grasp the power of the “blockchain” – a peer-to-peer ledger which creates and records agreement on contentious issues with the aid of cryptography.

A blockchain forms the beating heart of Bitcoin. In time, blockchains will power many radical, disruptive technologies that smart people are working on right now.

Until recently, we’ve needed central bodies – banks, stock markets, governments, police forces – to settle vital questions. Who owns this money? Who controls this company? Who has the right to vote in this election?

Now we have a small piece of pure, incorruptible mathematics enshrined in computer code that will allow people to solve the thorniest problems without reference to “the authorities”.

The benefits of decentralised systems will be huge: slashed overheads, improved security and (in many circumstances) the removal of the weakest link of all – greedy, corruptible, fallible humans.

But how far will disruptive effects reach? Are we rapidly approaching a singularity where, thanks to Bitcoin-like tools, centralised power of any kind will seem as archaic as the feudal system?

If the internet revolution has taught us anything, it’s that when change comes, it comes fast.

…Here’s an illustration. The University of Abertay in Dundee now offers a four-year BSc in “Ethical Hacking”. Abertay is a minor university and some of its other courses – eg, a BSc in “Performance Golf” – invite ridicule. So, on the face of it, does “Ethical Hacking”, which could mean anything.

Click through to details of the course, however, and you realise that it’s cleverly designed to address the growing anxieties of large organisations that live in fear of digital sabotage.

According to the prospectus, “the business world is seeing a rapid increase in the demand for ethical or white hat, hackers, employed by companies to find security holes before criminal, black hat, hackers do … Hackers are innately curious and want to pull things apart. They experiment and research. A hacker wants to learn and investigate. The aim is for you to arrive on this programme as a student and leave as an ethical hacker.”…

Whether these ethical hackers will stay ethical is another question, however.

Social networks, search engines and online retailers have grown rich by soaking up our personal data and distilling it into valuable databases used to surgically target advertising.

As the adage goes: “If you’re not paying, then you’re the product”. You don’t pay a penny for Google’s search engine, email or calendar products. What you do provide, though, is data on every aspect of your life: who you know; where you go; what you enjoy eating, wearing, watching…

Behind the laid-back, let’s-play-table-football facade of Silicon Valley firms lies a sneakiness and paranoia that, critics say, verges on the sociopathic. This is hardly surprising. The giant dotcoms stand to lose billions of dollars and even kick-start a US recession if the internet becomes too unstable for them to manage. But, in addition, they need to take advantage of digital instability in order to shaft their rivals.

“These guys are control freaks who see themselves as ‘disruptive’, to quote one of their favourite words,” says a California-based analyst. “It’s a very combustible mixture particularly when you consider the endless, endless uncertainty they face every day.”…

Now we need to put our finger on a really important paradox that lies at the heart of the coming digital anarchy.

The hidden power of the Facebooks, Twitters and Googles of this world is inspiring digital anarchists to destroy the smug, jargon-infested giants of Silicon Valley. But who are these hackers? They’re unlikely to be career criminals who identify themselves by their black hats. On the contrary, they may well have picked up their techniques while working in Palo Alto.

In some cases, the very same people who helped create these mega-corporations are now working on “disruptive technologies” to replace them.

We think of Silicon Valley as peopled by “liberals”. But that’s misleading. They may be socially liberal, but their “libertarianism” is often predicated on very low taxes funding a very small government. They have a soft spot for the anti-tax Republican Rand Paul and the kill-or-be-killed ethos of the paranoid libertarian capitalist Ayn Rand (whom Mr Paul was not named after, though he’s had to spend his whole life denying it).

The digital utopias at the back of these people’s minds are often startlingly weird.

Consider, for example, Peter Thiel, the founder of PayPal – ironically, one of the companies Bitcoin aims to blow out of the water. He has donated $1.25m to the SeaSteading Institute, a group which aims to create an autonomous nation in the ocean, away from existing sovereign laws and free of regulation.

At a conference in 2009 he said: “There are quite a lot of people who think it’s not possible. That’s a good thing. We don’t need to really worry about those people very much, because since they don’t think it’s possible they won’t take us very seriously. And they will not actually try to stop us until it’s too late.”

It’s difficult to generalise about motives when the membranes separating control and anarchy, creativity and disruption, greed and philanthropy have become so alarmingly thin. Remember that the entrepreneurs of Silicon Valley and its many global franchises are usually young enough to be impressionable and excitable. Yes, some of them they may qualify as utopians – but, like utopians throughout history, they are ready to use destructive tactics to reach their goal…

The new digital anarchists – who are as likely to wear Gant chinos as hoodies, and wouldn’t be seen dead in an Anonymous mask – are in the mood to punish Facebook, Google, Twitter, PayPal, eBay, you name it, for their arrogance. Indeed, they may have encountered this arrogance close up by working for them. That’s enough of a motive for the great digital unravelling.

As for means and opportunity – well, they now have their weapon of choice: the blockchain.

…Bitcoin is a decentralised network designed to replace the financial system. Ethereum is a decentralised network designed to replace absolutely anything that can be described in code: business contracts, the legal system or, as some of Ethereum’s more evangelical backers believe, entire states.

Primavera De Filippi, a postdoctoral resreacher at CERSA/CNRS/Université Paris II, is one of Europe’s most intellectually dazzling experts on digital and civil rights in cyberspace. She’s currently at Harvard, exploring the legal challenges of decentralised digital architectures.

Ethereum, she says, is “really sophisticated, and if any of these platforms are going to take off, I believe it’s the one.

“It becomes a completely self-sufficient system, impossible to corrupt. It’s a disruptive technology, and society will adapt to it, but it will be a slow process.”

Liquid democracy

If you are looking to undermine centralised power, the biggest, most tempting target is government itself…

Denmark has decided to take a very liberal policy with crypto-currencies, declaring that all trades will be tax-free; profits will be untouched, but losses will be non-deductible. It’s no surprise, then, that this is one of the places it is being experimented with as an election tool.

The Liberal Alliance party, just seven years old, was founded on an ethos of economic liberalism – it supports a flat rate income tax of 40 per cent, for example – and has begun to use technology built on Ethereum for internal votes.

Party spokesman Mikkel Freltoft Krogsholm argued that it was an obvious choice for e-elections because it allows transparency and security and gives people the chance to “look under the hood” of the voting process. “From a liberal ideological point of view, it was an opportunity we just had to take,” he said.

The blockchain makes perfect sense for this application because all transactions (they can be thought of as votes in this scenario) are recorded in perpetuity for reference. It also provides transparency so that a person can check that his or her vote was actually counted. Otherwise, how can you ever really be sure that your paper ballot made it to the final count?

Eduardo Robles Elvira is working on a similar but larger-scale system which he calls Agora Voting. It was developed as a tool for the Internet Party in Spain, which has a policy that all citizens should be able to vote on all matters in constant referenda. Rather than keep the code private he works with any party that wants to apply it to e-elections.

It has already been successfully used in election primaries, with over 33,000 votes being cast.

The ultimate aim is “liquid democracy”: not to just elect representatives and let them get on with it, and not necessarily to have direct referenda on each tiny issue, but to offer a system so flexible that a happy medium can be struck for every citizen.

It can be best thought of as a social network designed not to help you share photographs, play games or communicate with your friends, but to run and manage your country.

If you want to cast your vote on every issue, fine, that’s possible. Or you can place your voting power in the hands of a career politician, as in the current system, or a knowledgeable friend or colleague.

And control could be infinitely fine: say you’re a cyclist, you could hand over voting power on all road safety matters to a cycling charity that pushes for better infrastructure, but retain votes on economic matters and leave everything else in the hands of your local Liberal Democrat office.

“The idea behind liquid democracy is not to remove representative democracy with direct democracy, but to let you choose your means of democracy. You don’t use an airplane to get to the street corner, and you don’t walk from London to Tokyo: depending on what you want to do, you choose the means of transport,” Robles told me.

“We might see in the future a shift from trusting a single entity to trusting a computerised democratic and verifiable system, the same way that we saw a shift from trusting our healers and priests in the Middle Ages to trusting the scientific method.

“It’s just a glimpse into the future. It’s like the first website: it doesn’t have animations, it’s not responsive, it may look now really basic, but still, it’s the base of what we use now everyday, twenty years later. Maybe we will have a system more similar to ancient Athens, but scalable, where elected leaders are not so important.”…

Andreas Antonopoulos is chief security officer at UK-based Blockchain.info, the world’s largest Bitcoin wallet provider with over 1.1m registered users…People think Bitcoin is just a better way to do PayPal, and it’s not. Just like the internet, it’s a platform, and on that platform you can now build an incredible variety of things.

“We can’t even imagine what things people are going to build. But just in the last year, from watching the startups in the space, I’ve been amazed at the range of innovation that occurs when you combine internet, the sharing economy and crypto-currencies.

“This allows forms of self-organisation that don’t depend on parties or representative government at all. Representative democracy was a solution to a scaling problem. The fact that you couldn’t get a message across Europe in anything less than a couple of weeks.

“Well, that issue of scale has now been solved. So the question is, why do you need representatives? If you ask people who were born with the internet they can’t understand why we need them. To a whole generation of people [the phasing out of represnetative democracy] this is already a normal and natural progression. And now we have the tools to do that.

“In my view, and this is probably why I call myself a ‘disruptarian’, centralised systems have one inevitable trajectory that has been validated throughout history, which is that as the people in the centre accumulate power and control they eventually corrupt the system entirely to serve their own needs, whether that’s a currency, a corporation, a nation.

“Decentralised institutions are far more resilient to that: there is no centre, they do not afford opportunities for corruption. I think that’s a natural progression of humanity.

“It’s an idea that has existed for centuries and has progressively become more and more prevalent. The essential basics of going from monarchies to democracies, from distributing information, knowledge, education and wealth to the middle class, and power to simple people, has been a trend that has lasted now for millennia.

“This is not some kind of libertarian manifesto, or anarchist manifesto, saying that we don’t need mechanisms for achieving social cohesion. It’s simply recognising that we can create better mechanisms as we solve problems of scale. That’s all. It’s not some kind of crazy ‘we don’t need governments’ manifesto. It’s simply that we can make better governments when we don’t concentrate power as much in the hands of a few people.

“As my ancestors in Greece figured out more than three thousand years ago, power corrupts. You can read about that in the writings of the ancient greek philosophers, and nothing really has changed – only that scale of power, and the scale of misery that can be created when that power is wielded to do bad things.”

Daniel Larimer, who is working on a tool called Bitshares to apply blockchain technology to banking, insurance and company shareholding, believes that this new breed of technologies will ultimately render government entirely obsolete.

“I envisage a situation where governments aren’t necessary. That the free market will be able to provide all the goods and services to secure your life, liberty and property without having to rely on coercion. That’s where this all ultimately leads,” he told me.

“The end result is that governments will have less power than free markets. Essentially, the free market will be able to provide justice more effectively and more efficiently than the government can. So, I see governments shrinking.

“If you think about it, what is the reason for government? It’s a way of reaching global consensus over the theory of right and wrong, global consensus over who’s guilty and who’s innocent, over who owns what.

“They’re going to be losing legitimacy as more open, transparent systems are able to provide that function without having to rely on force. That’s my mission in life.”

In his version of the future, identity and reputation will be the new currency. Laws and contracts will be laid down in code and, if broken, reparations will be sought mathematically rather than through law enforcement agencies, courts and prisons.

Those who cannot make good will be victim to “coordinated shunning” by the rest of the network – the whole of society. They will not be able to interact financially or in any other system running on the blockchain. They will be in an “economic prison”. This will extend beyond being unable to make money transfers, because the blockchain will be in control of voting, commerce and communications. Being banished from this system would make life all but impossible.

“There are ways that you can structure society to achieve justice and encourage people to settle their debts,” says Larimer. “There’s a way to give small-town reputation on a global scale. It is ultimate libertarianism.”

Or anarchy, depending on your point of view.