A Trust Building Ghost in a Trust-less Machine.
by Hassan Mirakhor
Life is never without it’s ironies and perhaps one of the greater historical ironies of our time is the emergence of Bitcoin’s blockchain Technology. Bitcoin’s proof of work consensus algorithm is designed to be inherently trust-less, i.e. it removes the need for trusted third parties, like banks and lawyers, in order to transact, contract, or otherwise do business on both a large and small scale. It’s borderless nature ignores limits set by the various nation states, which is again a kind of exemption from trusted parties. Yet, with all the trust-less-ness emerging in blockchain technology, we are fast discovering that bitcoin’s blockchain tech is building trust between people on a global scale.
Bitcoin provides an open source, secure protocol for people to transact across the globe. One transaction can lead to another and another, until a foundation of trust can exist between two or more parties. Social media is an example of the kind of trust I am speaking of. In the ordinary world, it would be quite difficult for thousands of individuals to trust each other enough to meet face to face and talk about how to make a better cherry pie, but with social media, one can discuss a better recipe in a matter of minutes. It is also certainly easier to have 25K followers on Twitter than it would be to have them in the ordinary world. If you don’t believe me, just ask a celebrity.
The point is the internet has an uncanny way of connecting people, regardless of race, religion, country of origin, or sex, or any of the other vast differences that we allow to separate ourselves from everyone else. Imagine what this power to connect will do to finance?
Bitcoiners will tell you that bitcoin is the ‘internet of money’, the ‘http of finance’ etc… Certainly that is a better definition than most regulators have come up with. Still, it lacks poetry and does not grasp the full potential. I see Bitcoin as a monolith, like from the movie, “2001 Space Odyssey”. Bitcoin is a huge indefinable something that no-one understands, but promises to transform everything.
While the ordinary world is fast rushing toward an inevitable global decoupling and a brutal regression into petty tribalism, the internet is forcing connection and the inevitable synergy that results. Yes, I am a globalist, but the globalism I am looking for is one regulated by mathematical certainties generated by protocol. Not the failed meanderings of a coercive state. Blockchain is the beginning of all that and more. It may be what separates us from a Mad Max future.
When I began trading in the legacy markets, the barriers to entry were and remain enormous. There were high deposit limits set by brokers, who were often more exploitative than helpful. Also, offshore opportunities remained elusive, due to government restrictions. Today’s cryptocurrency markets, in contrast, have low barriers to entry and function globally without the need for brokers. This is just a small example of the sort of potential that we can see from blockchain technology.
While history will accord progress to the evolution of government, I often feel that progress comes more from the elimination of barriers to investment. If common people can share in the risks of an opportunity, enormous growth will inevitably occur in the real sector of our global economy. This will restore the true purpose of finance, which was to spur real sector growth, rather than maintain a concentration of wealth in the hands of the 1% of the 1%.
Truly, we are in French Revolution territory when it comes to the concentration of wealth. Government has not done much to help redistribute the wealth that is so heavily concentrated in the hands of a few. I am not anti-government, but I do think it is time to put more faith in code and return trust to our world through trust-less protocol. As with similar events in our history, innovation will guide the state and the state will find its place in the new world.
Until then, there remains the ghost in the machine, working to build trust on a divided planet.
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Disclaimer: The author owns Bitcoin in his portfolio. Nothing he writes should be considered financial advise.