Blockchain The Institutional Technology

Blockchain technology has the capacity to enable the emergence of totally new forms of social and economic organization; new forms of distributed networked organizations as central institutions within society

The prominent blockchain thinker Primavera De Filippi summarizes clearly much of the significance of the blockchain as an institutional technology when she notes “today the blockchain is marking the beginning of a new digital revolution whose focus is not just human communication but rather human interaction and cooperation. What the internet has done to achieve global interpersonal communication the blockchain could do today to achieve global and systematic collaboration. The blockchain is a new coordination technology that relies on a decentralized network of computers in order to coordinate individual actions in a completely distributed and decentralized manner… by analogy with nature you can think of the blockchain as a way for people to mimic the social dynamics found in certain species of animals like ants and termites as a way to promote and ideally achieve collective intelligence, by recording individual actions on a distributed database the blockchain makes it possible for people to coordinate themselves directly and collaborate on a global scale, without any centralized authority or hierarchical structure….across all domains of society cooperation can lead to much better results if only it can be properly orchestrated, and this is exactly what the blockchain provides.”

Complexity

Ours is a hugely complex and ambitious global society and economy of upwards of seven billion people. The world has got a lot more complex in just the past few decades. Since the fall of the Berlin Wall the rise of globalization and information technology the connectivity and complexity has been rapidly escalating and with the internet of things, it will only continue. There is increasingly a strong mismatch between the design of our institutions and the complexity of the environment they operate in. Centralized organizations that were designed within the context of the industrial age that was stable, predictable and limited in connectivity and complexity are stalling and becoming fragile along many dimensions.

It is no accident that our primary social institutions are not delivering the desired functional outcomes when they are most needed. Political systems are no longer a forum where people can express their opinions and make collective decisions about the things that affect their society. The educational system of the industrial age is organized in such a way that it seems incapable of delivering the education that people need for today’s world. It is becoming apparent that our health care systems aren’t designed to really deliver health. Only a small fraction of the resources in our financial systems actually goes into productively funding economic activity in the real economy while most of it disappears into the world of high finance. As cybernetics taught us for any organization to be functional the internal complexity of the system’s structure and functions has to be sufficed to match the complexity of its environment. Our world just got a lot more complex and the centralized architecture to these systems limits their capacity to deal with that and deliver the required outcomes.

In responding to the complexity of this new world these systems need a more network model that removes the bottlenecks created by the centralized component and pushes capabilities out to the edges where they can be recombined via automated networks on demand. This is exactly what online platforms do but as the underlying infrastructure of the networked society these platforms cannot be owned and operated by private enterprises towards their own benefit. The current platform society is unsustainable, it takes societies most needed resource, data, and connectivity, and puts it in the hands of large enterprises to create huge profits and creates dangerous concentrations of power in the boardrooms of technology companies. For the move into the information age to be viable and sustainable the internet needs to become a global, public, secure, trusted, distributed cloud computing infrastructure, and that is the potential of the blockchain and indeed what makes it of critical importance to where we are as a burgeoning global civilization. With this IT infrastructure, we are able to revisit all these systems of organization and question what is the underlying value or service they deliver and then rebuilt token economies to reflect that value and function as a distributed management system replacing the centralized management structures of the past.

Distributed Systems

Without centralized control, distributed organizations have self-organizing emergent dynamics

We will conclude with one final point here with respect to decentralization, whether or not the blockchain enables this more decentralized and more equitable world that many hope does not turn on the technology itself, technology is never anything more than a tool, whether this tool really helps us build a decentralized world on all levels depends more on the values that we embed in it. As Harvard professor Yochai Benkler noted, “It is not enough to build a decentralized technology if you do not make it resilient to reconcentration at the institutional, organizational or cultural level, you have to integrate for all of those.”

Blockchain will decentralize the underlying technology and enable us to build a more distributed world but whether that turns out to simply be re-centralized on another level turns on the question of the values incorporated into the token economies that we are currently building. Do we embed a single set of values into the token economy as we did in the past or do we use this to quantify and manage for all forms of value, social, cultural, environmental etc. thus enable this more equitable and distributed world. This won’t be determined by a technology innovation and won’t be defined by some powerful organization it will emerge out of each of us expressing our values through token systems.

2018-02-05T09:02:22+00:00