“On 20 July 2016, something happened that was arguably the most philosophically interesting event to take place in your lifetime or mine.”

The above quote is undoudbtedly hyperbole if you’re not a geek, but nevertheless, last year’s conflict around Ethereum and The DAO, which punctured the anarcho-capitalist utopia of a trustless society, was a milestone for the understanding of technological systems and their embeddedness in human value systems. Rather than aiming for trustlessness and the atomization of individuals in automated market systems, we should focus our efforts on building systems based on trust between humans, on community building, and on the centrality of the commons.

This article gives details around last year’s DAO crisis around a central theme: Blockchains don’t offer us a trustless system, but rather a reassignment of trust!

Excerpted from E J Spode:

“Such are the perils of supposedly trust-free technology. It might make for good marketing copy, but the fact of the matter is that blockchain technology is larded through with trust. First, you need to trust the protocol of the cryptocurrency and/or DAO. This isn’t as simple as saying ‘I trust the maths’, for some actual human (or humans) wrote the code and hopefully debugged it, and we are at least trusting them to get it right, no? Well, in the case of The DAO, no, maybe they didn’t get it right.

Second, you have to trust the ‘stakeholders’ (including miners) not to pull the rug out from under you with a hard fork. One of the objections to the hard fork was that it would create a precedent that the code would be changeable. But this objection exposes an unmentioned universal truth: the immutability of the blockchain is entirely a matter of trusting other humans not to fork it. Ethereum Classic Classic would be no more immutable than Etherum Classic, which was no more immutable than Ethereum. At best, the stakeholders – humans all – were showing that they were more trustworthy qua humans about not forking around with the blockchain. But at the same time, they obviously could change their minds about forking at any time. In other words, if Ethereum Classic is more trustworthy, it’s only because the humans behind it are.

Third, if you are buying into Ethereum or The DAO or any other DAO, you are being asked to trust the people who review the algorithm and tell you what it does and whether it’s secure. But those people – computer scientists, say – are hardly incorruptible. Just as you can bribe an accountant to say that the books are clean, so too can you bribe a computer scientist. Moreover, you’re putting your trust in whatever filters you applied to select that computer scientist. (University or professional qualifications? A network of friends? The testimonials of satisfied customers – which is to say, the same method by which people selected Bernie Madoff as their financial advisor.)

Finally, even if you had it on divine authority that the code of a DAO was bug-free and immutable, there are necessary gateways of trust at the boundaries of the system. For example, suppose you wrote a smart contract to place bets on sporting events. You still have to trust the news feed that tells you who won the match to determine the winner of the bet. Or suppose you wrote a smart contract under which you were to be delivered a truck full of orange juice concentrate. The smart contract can’t control whether or not the product is polluted by lemons or some other substance. You have to trust the humans in the logistics chain, and the humans at the manufacturing end, to ensure your juice arrives unadulterated.

Can’t these gateways to the system be trustless as well? Can’t smart contracts some day have code to call for robotic orange-pickers and robotic juice concentrate-makers who would summon their robotically driven trucks to deliver the orange juice concentrate straight to our door? Yes – in theory. But imagine the task of reviewing the code to ensure that every step in the process hadn’t been corrupted by a bug that uses security failures to highjack trucks, or that gives false approvals to adulterated orange juice. Perhaps we could write second-order programs to automate the testing of the first-order programs – but why do we trust those? Do we ultimately need automated automated-program-tester testers? Where does it end?

By now, the answer should be obvious: it ends with other humans. Blockchains don’t offer us a trustless system, but rather a reassignment of trust. Instead of trusting our laws and institutions, we are being asked to trust stakeholders and miners, and programmers, and those who know enough coding to be able to verify the code. We aren’t actually trusting the blockchain technology; we are trusting the people that support the blockchain. The blockchain community is certainly new and different, and it talks a good game of algorithms and hashing power, which at least sounds better than tired slogans such as Prudential is rock solid and You are in good hands with Allstate. But miners aren’t necessarily any more reliable than the corporations they replace.

The sorry case of The DAO raises another question: Why are people so eager to put their faith in blockchain technology and its human supporters, instead of in other social and economic organisations? The upheavals of 2016, from Brexit to Trump, suggest that there is widespread fatigue with traditional institutions. Governments can be bought. Banks are designed to service the wealthy, and to hell with the little guy. ‘The system is rigged’ is a common refrain.

But instead of targeting the moral failures of the system and trying to reform it, the very concept of ‘trust’ has become suspect. Blockchain enthusiasts tend to cast trust as little more than a bug in our network of human interactions. To be sure, one of the weird features of trusting relationships is that, in order to trust someone, there has to be some chance that they will fail you. Trust involves risk – but that’s not necessarily a bad thing.

Which brings us back to Buterin and the hard fork of The DAO. What made this event significant was not just what it demonstrated about the foibles of technology or the hubris of 20-something computer scientists. What it really exposed was the extent to which trust defines what it is to be human. Trust is about more than making sure I get my orange juice on time. Trust is what makes all relationships meaningful. Yes, we get burned by people we rely on, and this makes us disinclined to trust others. But when our faith is rewarded, it helps us forge closer relationships with others, be they our business partners or BFFs. Risk is a critical component to this bonding process. In a risk-free world, we wouldn’t find anything resembling intimacy, friendship, solidarity or alliance, because nothing would be at stake.

Perhaps we ought to reconsider the desire to expunge trust, and instead focus on what should be done to strengthen it. One way to support trust is to hold institutions accountable when they betray it. When the US Department of Justice, for example, elected not to prosecute any of the bankers responsible for the 2008 financial collapse, the net effect was to undermine confidence in the system. They debased the principle of trust by showing that violating the public’s faith could be cost-free.

Much of our system of trust is invisible to us – but it would be helpful if we could be more aware and appreciative all the same

Second, trusting relationships should be celebrated, not scorned. When we believe in someone and they betray us, our friends might call us a sucker, an easy mark, a loser. But shouldn’t we celebrate these efforts to trust others – just as entrepreneurs talk up the value of failure on the road to innovation? Isn’t the correct response along the lines of: ‘I see why you trusted them, but isn’t it is terrible that they let you down?’

Third, we should appreciate the trusting relations we engage in, and are rewarded by, every day. We’re constantly relying on others to help us with something or look after our financial affairs, and much of the time we simply take it for granted. In part, that’s because much of our system of trust is invisible to us – but it would be helpful if we could be more aware and appreciative all the same.

Finally, we shouldn’t deceive ourselves with the idea that a technological fix can replace the human dimension of trust. Automation of trust is illusory. Rather than disparaging and cloaking human trust, we should face the brutal truth: we can’t escape the need to rely on other people, as fallible and imperfect as they might be. We need to nurture and nourish trust – not throw it away, like so much debased and worthless currency.”

2 Comments On the perils of trustless systems

  1. AvatarPaul Harrison

    I very much appreciated this screed as a reframing of the conversation about trust, and particularly the brutal truth: “we can’t escape the need to rely on other people.” I hope that the broader conversation can continue in a more nuanced direction than in the past. What are the strengths and weaknesses of older trust models vs new proposals? E.g., the financial system today is built on national legal systems and nation state threats of violence. Blockchain trust is built on computer science and engineering. Each, as described, dependent on people with access to and knowledge of the levers. The internet system today uses trust systems such as DNS, ICANN and CA’s that largely fall back on the national trust model, much as global trade works through national customs, trade agreements and financial links. Most obviously, the blockchain runs orthogonal to these mature and sophisticated existing trust systems. It is appealing to educated engineers who are close to the levers of power in this new distributed model. It is appealing to grey and black market participants who have been excluded from the regularized economy. It is appealing to citizens of failed states for whom the standard trust model is failing. But, it is indubitably immature and unsophisticated. One way it can grow is through the engineering of trust building blocks. Millions of people execute credit card transactions each day, depending on written agreements which they do not understand or read, but which represent the accumulated wisdom of centuries of financial/legal experience. The work being done now in areas such as deterministic builds, zero knowledge proofs, source code verification may one day lead to trust edifices built in the cybersphere which no longer require users to be PhDs or helpless plebes; just as today one need not be a JD in order to engage in commerce.

  2. Avatarmargie bryant

    EJ Spode has offered something really exciting regarding trust, who we trust and why? I cant find EJ Spode and would love to be able to if anyone can help!

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