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<nettime> The Revolution will (not) be decentralised: Blockchains
agent humble on Thu, 11 Jun 2015 23:55:57 +0200 (CEST)

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<nettime> The Revolution will (not) be decentralised: Blockchains

by Rachel O'Dwyer

The data centre rules.

Decentralised topologies and non-discriminatory protocols have been all
but replaced by a recentralisation of infrastructure, as powerful
corporations now gatekeep our networks. Everything might be accessible,
but this access is mediated by a centralised entity. Whoever controls
the data centre exercises political and economic control over
communications. It???s difficult to see how we can counteract these
recentralising tendencies in order to build a common core
infrastructure. There are significant barriers in place. This includes
the age-old problem of scaling distributed forms of organisation beyond
the local. But it also includes barriers in terms of access and control
of network resources. There are political and economic constraints
governing the ownership and distribution of computational power,
servers, bandwidth and energy. While we can access any range of software
applications for free, the core network is always substantiated in
property and provisioned on a scale that blocks access to all but the
most powerful actors.

These centralising tendencies have also reared their head in
cryptocurrencies. If Bitcoin was hailed as financially disruptive in
much the way that VoIP and mesh networks were thought to be disruptive
to cellular, powerful mining pools now control much of the
infrastructure and rent-seeking individuals control a lion???s share of
Bitcoin???s value. But we don???t need to throw the baby out with the
bathwater. While Bitcoin in and of itself may be problematic as an
alterative currency, the underlying architecture has potentials not only
for the future of money, but also for the future of networked cooperation.

Equality as a standard

Blockchain-based technologies may still have a role to play. They look
set to have significant implications for money, for property and for
cooperative organisation going forward. For example, there???s been some
discussion about how the blockchain could support new forms of
peer-production, and fully decentralised infrastructures for
applications as varied as finance, mesh networks, cloud databases and
share economies. The broader implication is that the blockchain could
support the activities and resources necessary to the commons, as
suggested in this recent article by David Bollier. At the same time,
there are a number of other important considerations going forward.
These include how key criteria like trust, property and governmentality
are architected within a blockchain and what centralising tendencies or
emerging possibilities for control might accompany this protocol. A lot
of what follows is pretty speculative, but worth discussing in the
context of peer-production.

But first of all, what is the blockchain? The blockchain is the
distributed ledger that keeps track of all transactions made using the
Bitcoin cryptocurrency. Arguably this is Bitcoin???s key innovation,
allowing users to transact without the intervention of a trusted third
party such as a Central Bank or Federal Reserve. In what is sometimes
called the second wave of blockchain innovation, people are now looking
at the underlying database as an infrastructure for more than monetary
transactions. Just as Bitcoin makes certain financial intermediaries
unnecessary, new innovations on the blockchain remove the need for
gatekeepers from other processes. The key takeaway is that the
blockchain could support not only cryptocurrencies but also other
financial instruments like equity, securities and derivatives; smart
contracts and smart property; new voting systems; identity and
reputation systems; distributed databases; and even the management of
assets and resources like energy and water. Because of the way it
distributes consensus, it routes around many of the challenges that
typically arise with distributed forms of organisation??? issues such as
how to cooperate, scale and collectively invest in shared resources and
infrastructures. There are a number of start-ups and groups currently
innovating in this space such as Ethereum, Ripple and Mastercoin.

The Ethereum project really illustrates this possibility to abstract the
blockchain from a specifically monetary context to one in which we???re
thinking about decentralised economies and services more generally. In
short, it extends the decentralised capabilities of Bitcoin beyond
financial transactions. Bitcoin involves two parameters: a trustless
database (more on this later) and a transactions system capable of
sending value from place to place. In order to do this, Bitcoin
implements a simple scripting language. But this scripting language is
limited in terms of what it can do.[1] Bitcoin???s scripting language
lacks certain fine-grained controls and nuances that might be necessary
to provision other services. To do more complicated things, the
expectation was that you needed to create an entire meta-protocol layer
or even a new blockchain. Ethereum developers recognised that these
functions could be implemented and scaled if there was a stronger
foundational layer with a powerful scripting language for these
protocols to be built on. Ethereum builds a generalised framework that
extends the capabilities of the blockchain to allow developers to write
new consensus applications. This is a blockchain with a built in
Turing-complete programming language, allowing anyone to create
applications and rules to support them. In this way, we move beyond
monetary transactions towards any number of foreseeable applications.[2]

How the blockchain might support a commons

Some of these applications are still speculative; some of them are
already implemented. Potential applications of Ethereum include
peer-to-peer forms of cloud computing or Dropbox; incentivised Wi-Fi
mesh networking or big data and machine learning; games and gambling;
reputation systems; and of course financial applications. Already
existing applications include Airlock.me a keyless access protocol;
La???Zooz, an alternative ride-sharing application; the Eris stack, a
distributed application server; Bitvote a distributed voting system; and
Traity and Cryptoswartz, both online reputation systems.

Distributed Organisations & the Trust Web: One significant claim is that
blockchain-based technologies such as Ethereum can support and scale
distributed forms of cooperation on a global scale. This has been
referred to under a few different names: the recent Coin Center report
refers to Distributed Collaborative Organisations, while Ethereum???s
founding developer Vitalik Buterin speaks elsewhere about Decentralised
Autonomous Organisations. As David Bollier recently pointed out, this
model resonates with organisations that are interested in fostering
commons-based peer-production. Where questions about how to reach
consensus, negotiate trust and especially scale interactions beyond the
local are pervasive in the commons, the blockchain looks set to be a
game changer.

In this context, the blockchain is presented as an algorithmic tool to
foster trust in the absence of things like social capital, physical
colocation or trusted third-party management. These are actually
referred to as ???consensus??? algorithms, and they are the staple of
projects such as Ethereum and Ripple. As David Cohen has described it
???Trust, rules, identity, reputation and payment choices are embedded at
the peer level. Participants arrive already trusted and decentrally
acknowledged???. Cohen and Mougayar have dubbed this innovation the ???trust
web??? to describe the new suite of applications that weave network value
and consensus into the protocol itself, forgoing the social institutions
and relations that were previously mandatory.

Node Incentivisation: Another innovation is that Ethereum incentivises
participation, encouraging actors to contribute without introducing
centralisation. Ethereum also puts features in place to discourage
centralisation in the future. In order to use an Ethereum application,
users make micropayments to the developers in ether, Ethereum???s coin, or
???cryptofuel??? as they term it. This might be making a micropayment in
turn for storage space on a server or for acting as a relay in a mesh
networking protocol. For example, in a hypothetical Ethereum mesh
network, anybody could act as a node, charging small amounts for
relaying people???s messages (in the region of a few microcents per kb)
and alternatively paying to have their own messages relayed. We can take
this further and reward people for other kinds of contributions, such as
writing source code or producing creative content on a website. Monetary
transactions aside, this encourages people to contribute to the commons
and puts systems in place to try and protect its resources from
commercial expropriation.

Decentralised Infrastructures: A third significant innovation is a
change to infrastructure. Ethereum describes itself as ???an
infrastructure for next generation social and economic systems???.
Blockchain innovations that manage networks, servers or natural
resources really do radicalise infrastructure. We???re no longer speaking
about monolithic resources with prohibitive barriers to entry, the
quintessential server farm housed in some distant industrial estate.
Instead, we can imagine infrastructure as something immaterial and
dispersed, or managed through flexible and transient forms of ownership.
Where powerful servers, channels and processing capacities seem like the
primary chokepoint of open networks, the blockchain is a powerful
antidote. As Buterin argues in a recent interview:

 "We would build a decentralised Internet network where all of us would
access documents and content without going through a server. It means
that you will need zero infrastructure to develop and distribute

The payoff seems to be that new blockchain-based technologies have the
potential to support new forms of commons-based peer production,
supplying necessary tools for cooperation and decision making,
supporting complementary currencies and even provisioning infrastructures.

Trust in the code

At this early stage of development, it???s also crucial to think about how
criteria like governance, property relations and modes of production
are engineered into the blockchain, and what centralising tendencies or
emerging possibilities for control might accompany this protocol. The
issue most frequently cited has to do with the difficulty of regulating
rogue companies in a distributed system. Primavera de Filippi, a
researcher at the forefront of legal challenges in distributed
organisation, points to the difficulty regulating companies and
identifying who or what is in charge when things go wrong. The
blockchain is still anybody???s baby and not the exclusive bequest of
groups working towards a decentralised Internet or a ???Post-Snowden???
Internet economy. Companies from share economy start-ups to major
players in IT are looking to the blockchain for their next meal ticket.
IBM, for example, is currently in talks about a blockchain-tied cash
system with a number of central banks.

Other issues concern the design of trustless architectures and smart

Trustless Architectures: First of all, what kind of subjectivity does
the blockchain support? In the development of consensus algorithms and
monetary incentives, there???s an assumption that we can delegate much of
the messiness of human relations to algorithmic governance, anticipate
the motivations of individual actors and foreclose destructive
behaviours. This comes back to this question of trust, something I???ve
already written about in relation to Bitcoin. The claim being made is
not that we can engineer trust in friends, institutions or governments,
but that we might dispense with them altogether in favour of what Bill
Maurer, Taylor C. Nelms and Lana Swartz refer to as ???trust in the code.???
As outlined in the Bitcoin whitepaper, proof-of-work is not a new form
of trust, but the abdication of trust altogether as social confidence in
favour of an algorithmic regulation. In other words, it doesn???t matter
whether I believe in my fellow peers just so long as I believe in the
technical efficiency of the blockchain protocol.

What kinds of subjectivity do we want to algorithmically inscribe into
our systems? Blockchain start-ups begin from the assumption that there
is no trust and no community, only individual economic agents acting in
self-interest. Fair enough, you might think, it???s precisely the fact
that projects like Ethereum engineer confidence and provide economic
incentives for contribution that may distinguish it from other services
like Freenet. But it also proceeds from a perspective that already
presumes a neoliberal subject and an economic mode of governance in the
face of social and/or political problems. ???How do we manage and
incentivise individual competitive economic agents???? In doing so, it not
only codes for that subject, we might argue that it also reproduces that

Smart Property: Innovations in property and infrastructure also seem to
go both ways. While greater flexibility around ownership of core
infrastructure is arguably a good thing, the introduction of artificial
scarcity and the new controls implied by smart property also have
worrying implications for Internet copyright and Digital Rights
Management. Property doesn???t disappear, but instead it is enforced and
exercised in different ways. If rights were previously exercised through
norms, laws, markets and architectures, today they are algorithmically
inscribed in the object.

Going forward, it???s clear that there are a number of considerations to
take into account, foremost not only how we provision the necessarily
technical tools or resources for building a commons, but how we work to
cultivate the necessarily kinds of social relations and subjectivity
that might accompany this shift. There is real potential in the
blockchain if we appreciate it not as some ultimate techno-fix but as a
platform that, when combined with social and political institutions, has
real possibilities for the future of organisation.


[1] It can???t support some of the more complicated forms of joint
accounts, stateful contracts or hedging contracts for example.
[2] For more on this see the Ethereum Whitepaper.
[3] This is similar to criticisms that are sometimes made of Elinor
Ostrum???s approach to governing the commons.

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