Andrew Leonard: I remember the day I fell in love with the Internet as well as I remember the birth of my children. The summer of 1993; I was a reporter at the alt-weekly San Francisco Bay Guardian and my editor assigned me a story about an anime convention in Oakland, California. I asked the organizer of the conference where I could find some otaku (fanboys) to interview. “They all hang out on the Internet,” he said.

I didn’t have Internet access, but I had a modem and a CompuServe account that I used to exchange emails with my uncle. An hour spent lurking in a CompuServe anime forum sparked a life-changing epiphany. The online world, I realized instantly, was a fantastic reporting tool. I learned more about anime in that hour than I could have in a week spent tracking down interview subjects via landlines. I knew right away that I had to break out of the CompuServe walled garden and start homesteading the wild Internet.

From that day forward, my Rolodex might as well have been carved on cuneiform tablets. Within a week, I had figured out how to use my wife’s University of California, Berkeley student account to telnet and gopher and FTP my way around the pre-web “Net.” Within the year, I had quit the Guardian (although not before dropping a cover story — “How to Connect to the Internet”) and started writing for a brand new magazine called Wired.

I loved the Internet. But 25 years later, I see the words “the blockchain is the new Internet” scrolling down Twitter andI want to shake my news feed by the scruff of the neck and growl: Have you people learned nothing?!

As is so often the case with new converts, I was an instant over-the-top evangelist. And why not? Dreams formerly relegated to pulp science fiction novels had become reality: the library of all knowledge was just a few 14.4 baud beeps and gurgles away. I was far from a libertarian but I do confess to resonating to John “cypherpunk” Gilmore’s declaration that “the Net interprets censorship as damage and routes around it.” Totalitarians, corporate overlords, and media monopolies: beware! Your gatekeeping days were over! The Internet had set us free.

Gosh, I loved the Internet. But 25 years later, I see the words “the blockchain is the new Internet” scrolling down Twitter and it’s all I can do to keep from screaming: Oh man, I fucking hate the blockchain. I want to shake my news feed by the scruff of the neck and growl: Have you people learned nothing?!Call me apostate, or maybe just an aging grouch, but if the blockchain really is the new Internet, we’re all screwed.

Let’s get a few things out of the way. I do not hate the blockchain because I fundamentally question the technical merits of cryptographically-secured, distributed-database technology. Nor do I hate the blockchain because of how quickly Initial Coin Offerings turned from “innovative way to raise startup capital without selling your soul to venture capitalists” to “how fast can we scam a whole generation of crypto-suckers out of their cash before security regulators slam the door on our collective ass?” I don’t even hate the blockchain because bitcoin seems, at this point, primarily a way to transmute massive amounts of electricity into a speculative, climate-change acceleratinginvestment commodity. There are a great many smart people working on blockchain implementations and a ton of money pouring into the space. I am prepared to concede that some useful applications will emerge that make my life more convenient and don’t break the planet. A few years had to pass between Mosaic 1.0 and the debut of Spotify and streaming Netflix and the iPhone. There’s still plenty of time before we call this round of innovation a wrap.

No, my problem has little to do with the actual technology. My gripe is with human faith in technology. The same kind of utopian promises that bloomed during the Internet’s early heyday — “freedom, fairness, and equality for the society of tomorrow” — are on the tip of every bitcoin miner’s tongue. The passion of the true zealot is everywhere: “The blockchain will set us free.”

But if there is one thing that we should have learned from the history of the last 25 years, it is that digital networks and computers and code are no solution to human brokenness. With each passing day, the opposite seems more likely to be true. Pressure exerted by the Internet cracked some long-existing social fissures wide open.

Instead of gaining access to the library of all human knowledge, we ended up card-carrying members of Jorge Luis Borges’ “Library of Babel” — that infinite biblio-nightmare that stockpiled every possible iteration of gibberish along with the real books written in real languages.

Instead of leading us to truth, the Internet gave everyone the unparalleled opportunity to build their own personal knowledge universe, catalyzing a comprehensive unmooring of society from actual fact that has surely been a factor in the rise of Trump and a global turn towards propaganda-fed authoritarianism.

I respect the idealism of blockchain developers… But I am confounded by their inability to see that they are falling victim to exactly the same fallacies their hacker forebears embraced.

Instead of freeing ourselves from the manipulation of corporations and governments, we have bequeathed them the most powerful tools of panopticonic surveillance and control ever invented.

The smartest blockchain developers that I have talked to do not deny these truths of what the Internet has wrought. On the contrary, what gets them most excited about the future is their confidence that blockchain technology is the antidote for all the toxic ills unleashed by Internet anarchy. Once their dream of perfectly decentralized, unhackable, smart-contract-executing “trustless” tech is perfected, they believe, central banks and government tyranny will be rendered impotent, nation-state borders transcended, voting fraud and fake news made impossible. The blockchain, in their view, is a teleological apotheosis, the perfection of progressive human civilization through technology.

At the heart of this vision is the idea that human messiness can be abstracted away by clever code. In a “trustless” system, public key cryptography and the “consensus” generated by distributing a database across multiple nodes eliminates the potential for fraud or corruption or exploitation committed by any intermediary. Smart contracts will automatically execute the terms of any deal, without getting bogged down by human fickleness or well-capitalized litigation. Tyrants will be powerless against cryptocurrency-funded freedom fighters organized in decentralized networks.

That’s the theory, anyway. But it misses the most important point about human messiness. The indisputable fact — obvious to anyone who has studied the history of technology or simply been alive for the last 25 years — is that living, breathing humans will deploy any conceivable technology for both good and evil, for the realization of both freedom and tyranny, for greed and power, and just plain mayhem. The Internet gave white supremacists a voice denied to them for decades; nothing is going to stop them from figuring out how to use blockchain technology for bigotry. Smart contracts will be tested in human courts. Regulators will regulate.

Decentralization is the first commandment of the blockchain faith. But what did William Butler Yeats tell us happens when “the center cannot hold”? Things fall apart!

I respect the idealism of blockchain developers who, I believe, are sincere in their faith that they are building a better world. But I am confounded by their inability to see that they are falling victim to exactly the same fallacies their hacker forebears embraced: this notion that we can code ourselves out of the deep holes we’ve dug; that we are building utopias in our virtualities that will finesse away the imperfections of human character.

It seems to me increasingly clear that we need to spend less time abstracting away our humanity and more time pressing the flesh. Instead of seeking out the anomie of decentralization, we need to figure out how to come together. To successfully deal with the failings of humanity, we have to spend more time with humans and less time thumbing our smartphones.

It’s not hard to understand the urge to declare that “the blockchain is the new Internet.” The mid-90s were a giddy time; the astonishingly fast transformation that swept through the culture was unlike anything in recent memory, and if you were riding the shockwave of that blast, it was exhilarating. Linked together in a global network, the computers that Steve Jobs called “bicycles of the mind” promised to take us anywhere we wanted to go. And, of course, a whole lot of people ended up making quite a bit of money off the new digital infrastructure. So who wouldn’t want to return to optimism of those days? Peace, love, and the Internet, man. It was so groovy.

That’s why I loved the Internet so much. Because of that sense of possibility and hope and progress. But that’s also exactly why I hate the blockchain. Because it reminds me of just how illusory those promises turned out to be.

The post The Blockchain Is a Reminder of the Internet’s Failure appeared first on P2P Foundation.

Governments and civil society have now also joined the quest and are actively exploring the potential of DLTs to create transformative social change. Experiments are underway to leverage blockchain technologies to address major societal challenges – from homelessness in New York City to the Rohyingya crisis in Myanmar to government corruption around the world. At the same time, a growing backlash to the newest ‘shiny object’ in the technology for good space is gaining ground.   

At this year’s The Impacts of Civic Technology Conference (TICTeC), organized by mySociety in Lisbon, the GovLab’s Stefaan Verhulst and Andrew Young joined the Engine Room’s Nicole Anand, the Natural Resource Governance Institute’s Anders Pedersen, and ITS-Rio’s Marco Konopacki to consider whether or not Blockchain can truly deliver on its promise for creating civic change.

For the GovLab’s contribution to the panel, we shared early findings from our Blockchange: Blockchain for Social Change initiative. Blockchange, funded by the Rockefeller Foundation, seeks to develop a deeper understanding of the promise and practice of DLTs in addressing public problems – with a particular focus on the lack, the role and the establishment of trusted identities – through a set of detailed case-studies. Such insights may help us develop operational guidelines on when blockchain technology may be appropriate and what design principles should guide the future use of DLTs for good.

Our presentation covered four key areas (Full presentation here):

1. The evolving package of attributes present in Blockchain technologies: on-going experimentation, development and investment has lead to the realization that there is no one blockchain technology. Rather there are several variations of attributes that provide for different technological scenarios. Some of these attributes remain foundational -– such as immutability, (guaranteed) integrity, and distributed resilience – while others have evolved as optional including disintermediation, transparency, and accessibility. By focusing on the attributes we can transcend the noise that is emerging from having too many well funded start-ups that seek to pitch their package of attributes as the solution;
2. The three varieties of Blockchain for social change use cases: Most of the pilots and use cases where DLTs are being used to improve society and people’s lives can be categorized along three varieties of applications:

1. Track and Trace applications. For instance: 
   1. Versiart creates verifiable, digital certificates for art and collectibles which helps buyers ensure each piece’s provenance.
   2. Grassroots Cooperative along with Heifer USA created a blockchain-powered app that allows every package of chicken marketed and sold by Grassroots to be traced on the Ethereum blockchain.
   3. Everledger works with stakeholders across the diamond supply chain to track diamonds from mine to store.
   4. Ripe is working with Sweetgreen to use blockchain and IoT sensors to track crop growth, yielding higher-quality produce and providing better information for farmers, food distributors, restaurants, and consumers.    
2. Smart Contracting applications. For instance:
   1. In Indonesia, Carbon Conservation and Dappbase have created smart contracts that will distribute rewards to villages that can prove the successful reduction of incidences of forest fires.
   2. Alice has built Ethereum-based smart contracts for a donation project that supports 15 homeless people in London. The smart contracts ensure donations are released only when pre-determined project goals are met.
   3. Bext360 utilizes smart contracts to pay coffee farmers fairly and immediately based on a price determined through weighing and analyzing beans by the Bext360 machine at the source.  
3. Identity applications. For instance:
   1. The State of Illinois is working with Evernym to digitize birth certificates, thus giving individuals a digital identity from birth.
   2. BanQu creates an economic passport for previously unbanked populations by using blockchain to record economic and financial transactions, purchase goods, and prove their existence in global supply chains.
   3. In 2015, AID:Tech piloted a project working with Syrian refugees in Lebanon to distribute over 500 donor aid cards that were tied to non-forgeable identities.
   4. uPort provides digital identities for residents of Zug, Switzerland to use for governmental services.

1. The promise of trusted Identity: the potential to establish a trusted identity turns out to be foundational for using blockchain technologies for social change. At the same time identity emerges from a process (involving, for instance, provisioning, authentication, administration, authorization and auditing) and it is key to assess at what stage of the ID lifecycle DLTs provide an advantage vis-a-vis other ID technologies; and how the maturity of the blockchain technology toward addressing the ID challenge. 

1. Finally, we seek to translate current findings into

• Operational conditions that can enable the public and civic sector at-large to determine when “to blockchain” including:
  • The need for a clear problem definition (as opposed to certain situations where DLT solutions are in search of a problem);
  • The presence of information asymmetries and high transaction costs incentivize change. (“The Market of Lemons” problem);
  • The availability of (high quality) digital records;
  • The lack of availability of credible and alternative disclosure technologies;
  • Deficiency (or efficiency) of (trusted) intermediaries in the space.
• Design principles that can increase the likelihood of societal benefit when using Blockchain for identity projects (see picture) .

In the coming months, we will continue to share our findings from the Blockchange project in a number of forms – including a series of case studies, additional presentations and infographics, and an operational field guide for designing and implementing Blockchain projects to address challenges across the identity lifecycle.

The GovLab, in collaboration with the , is also delighted to announce a new initiative aimed at taking stock of the promise, practice and challenge of the use of Blockchain in the extractives sector. The project is focused in particular on DLTs as they relate to beneficial ownership, licensing and contracting transparency, and commodity trading transparency. This fall, we will share a collection of Blockchain for extractives case studies, as well as a report summarizing if, when, and how Blockchain can provide value across the extractives decision chain.

If you are interested in collaborating on our work to increase our understanding of Blockchain’s real potential for social change, or if you have any feedback on this presentation of early findings, please contact [email protected].

The post If, When and How Blockchain Technologies Can Provide Civic Change appeared first on P2P Foundation.

What is Ethereum? Can this technology actually support the establishment of a utopian, free, and decentralized society? Or could it instead promote a more dystopian vision of society – or even a Skynet? Before we can understand anything about Ethereum, we must first understand Bitcoin: what it is, and how it works.

The Bitcoin story begins in 2009, when Satoshi Nakamoto (whose identity is still unknown, in spite of recent rumors published in Newsweek) released the first implementation of Bitcoin, which he described as a “a decentralized currency based on a cryptographic ledger” – but what does that mean, exactly?

• First, there is the notion of a decentralized database, known as the blockchain. To understand the concept of the blockchain, imagine a public ledger that records every transaction made on the Bitcoin network, and that a copy of this ledger is distributed to every user connected to the network. These users all agree that once a transaction has been recorded, it can never be deleted.
• Second, there is the concept of digital tokens, which are the basic unit of transaction. Combining this with a transaction system on the decentralized database creates a decentralized currency or payment system.
• Finally, there is encryption, which serves to ensure the integrity and security of the overall system by preventing anyone from performing a transaction unless they have the proper authority to do so.

And so, we have Bitcoin: a decentralized cryptocurrency that operates on a peer-to-peer network, which is not regulated by any central bank or other governmental institution but only – and exclusively – by code.

I will not go into the technical (and actually quite complex) details of the Bitcoin protocol, but it is important to know that its code is entirely open source, so anyone may examine it and try to find flaws in the implementation.

After a few years of struggle, testing, and experimentation, Bitcoin’s value rose from less than a dollar in 2009 to over $1,000  in recent months. Nowadays, it is accepted by many commercial actors, such as Foodler or Eurostock, and a growing number of ATMs are being deployed all over the world. Bitcoin has proven that it is possible to have a working decentralized currency system. However, the really interesting point about Bitcoin is not the currency itself, but rather the fact that its protocol – the blockchain – can be used to implement many other applications which have nothing to do with money.

Now let us consider Ethereum, which builds upon the technology of Bitcoin in order to create a next generation “Smart Contract and Decentralized Application” platform. What does that mean, exactly? Well, if Bitcoin is a decentralized cryptocurrency, Ethereum is the platform upon which a decentralized cryptocurrency can be built. Some have defined it as “cryptocurrency 2.0”,  but actually, it is much more than that.

Just like Bitcoin, Ethereum implements a decentralized database, a system of digital tokens, and an encryption scheme. But it also implements a Turing-complete scripting language, which makes it possible for anyone to deploy an application directly on the blockchain. So, instead of adding new features to the Bitcoin protocol, Ethereum took a step back and actually removed all features from the blockchain, in order to make it easier for users to build their own applications by implementing only the features they need as an extra layer on top of the blockchain.

Therefore, just as Bitcoin marked the establishment of a decentralized cryptocurrency that subsists independently of any government or financial institution, Ethereum could potentially lead to the deployment of decentralized applications that operate autonomously on the blockchain.

In fact, Ethereum not only makes it very easy to deploy alternative cryptocurrencies, but also to set up decentralized communications systems (like BitMessage),  alternative social media (like Twister), or online storage (like Dropbox) in a completely decentralized way, therefore not controlled by any third party. Given that there is no centralized third party to interact with, the interactions between applications and users are regulated by the code of these applications. In Ethereum lingo, this code is actually a “smart contract”, which establishes the rules and procedures that everyone must abide by.

So, what’s a smart contract? Well, a contract is an agreement between two or more individuals who agree to do something, in exchange for receiving something else. The problem is that each party has to trust that the other party will, in fact, fulfill its side of the contract. Smart contracts eliminate the need for trust between parties to the extent that they are self-enforceable. In fact, the code and the contract have been merged into one, given that the contract is both defined and enforced in the same way –  by the code.

In the analog world, the most common example we could use is that of a vending machine.

You put money into the machine, and – assuming you inserted the correct amount of money – the machine will deliver the product you ordered. You don’t need to trust the machine, and the machine doesn’t need to trust you, either. But what’s even more interesting is that in Ethereum, you can also have decentralized applications interacting directly with other decentralized applications, essentially eliminating the need for any human interaction.

This leads to the most interesting aspect of Ethereum, which is the concept of Decentralized Autonomous Organizations. Basically, these are a more sophisticated kind of smart contract, with a constitution that stipulates the rules of governance for the organization, and with a system of equity allowing users to invest in the organization by purchasing shares.

Take ICANN, for example. Instead of trusting an organization to operate according to a certain set of principles, we can encode these principles into the protocol of a decentralized application (like Namecoin), or even incorporate them into the constitution of a decentralized autonomous organisation.

But, to come back to the legal issues: what’s so special about Distributed Autonomous Organisations? And why do they raise so many interesting legal challenges?

• First of all, they are autonomous in the sense that once they’ve been created on the blockchain, they no longer need their creators, nor are they under any obligation to respond to, or be responsible of any requests made by them.
• Secondly, they are self-sufficient in that they charge users for the services they provide in order to pay others for the resources they need (such as bandwidth and processing power).
• Finally, they are decentralized, since they do not subsist on a specific server, but instead are encoded into the blockchain (which is distributed to the entire network), and their code is executed in a decentralized manner by every node of the network.

These characteristics make them extremely difficult to regulate because there is no single entity which has control over them. In addition, given the self-enforcing properties of their code, they might actually challenge some of the most basic principles of our legal system. In fact, there are many legal challenges raised by Ethereum, but I will focus here only on the three that seem most interesting to me.

Let’s begin with Contract Law. As previously stated, the particularities of smart contracts are that they are transparent (their code is open source; anyone can examine them) and self-enforcing (trust between parties is unnecessary; contracts are executed automatically, independent of their will).

In traditional contracts, each party is free to decide whether to fulfill the contract, whether to only partially implement the contract (by leaving out some obligations), or whether to breach the contract (and pay instead for damages or compensation). By contrast, in the case of smart contracts, parties have no choice but to implement the contract, because the contract has been encoded, written into the code. It cannot be breached unless one actually manages to break into the code.

This raises the question of what is legally binding vs. what is technically binding.

For instance, there are many situations in contract law that might either invalidate the contract (if it was agreed to under undue influence, for example) or limit its enforceability (to the extent that it goes against the interests of consumers). But smart contracts are not affected by these provisions as they operate within their own closed technological framework, which does not necessarily implement any of these legal safeguards. In this sense, smart contracts could effectively bypass the legal framework of contract law.

When it comes property law, the situation is quite similar, in that Ethereum implements its own technical framework which operates outside of the legal framework of property law. In particular, Ethereum introduces two important features that significantly differ from traditional property rights.

The first is the concept of smart property, which relies on smart contracts and digital tokens to establish a decentralised and trust-free asset management system. The idea is that ownership of something can be transferred directly via the blockchain, through the transfer of specifically designed coins which are linked to a particular item. This allows for the creation of “cryptographically-activated” assets, such as a smartphone that can only be used by spending a particular token, or a car that can only be driven by the person who owns that token. Instead of transferring the ownership of the car, transferring the token associated with that car is sufficient to achieve the same result.

And the other is the concept of crypto-property. This is extremely interesting in that it allows for algorithmical entities, which are neither moral persons nor legal persons, to own currency or particular assets as if they were their own property. So, as opposed to standard property rights – which have been defined by the law and can therefore, in certain situations, also be taken away by the law – crypto-property rights are both defined and automatically enforced by code! This means that they cannot be seized, but that also, once they have been stolen, there is no possibility of recourse.

Returning to Ethereum, this essentially means that Distributed Autonomous Organizations have absolute sovereignty over their own resources, which cannot be seized by anyone unless this is specifically provided for by the code of these organizations. That brings us back to what Lawrence Lessig had already identified over 10 years ago: basically, that in cyberspace, code is law. I think we all understand that by now.

So the question is: if code is law, how can the law regulate the code so that it actually regulates our behaviors in a way that remains compliant with the law? This brings up some more fundamental questions: how do we want to regulate Distributed Autonomous Organizations? Should they be regulated in the same way as standard corporations or organizations, or do we need a distinct body of law that would better account for their specificities?

As I was researching these questions, most of the material I found was related to the question of the regulation of intelligent robots. This was surprising at first, but in fact it makes complete sense since they both share this commonality of being autonomous and self-sufficient.

This bring us to the third point, which is the issue of liability and responsibility. Let’s take the example of a Distributed Autonomous Organisation designed to send a copyrighted song to everyone who transfers the equivalent of $1.00. Here, the main challenge is to determine who is in charge of, and responsible for, this kind of activity?

It could be the creator of the Distributed Organization, but then we run into two problems. First, the creator might be difficult to identify if the distributed organization was created anonymously. Second, even if the creator could be identified, it would be possible that the creator would no longer have the power to control the organisation – which will continue to operate as long as there are sufficient funds for it to operate on its own.

Or, should the users be held vicariously liable for the services for which they’ve paid? This would only apply to the extent that they knew or had good reason to believe that the Decentralized Organization was doing something wrong (but, in this case, users might actually not be unaware that they are purchasing an infringing song).

Perhaps the Distributed Autonomous Organization itself should be held liable for its own actions. But then we encounter an ever bigger problem in terms of law enforcement. It is virtually impossible to recover damages or to obtain an injunction unless these measures have been specifically encoded into the contract/constitution of the organization.

So, we find ourselves in a state of legal limbo, as we cannot rely on traditional legal means to regulate the code of this technology. The question is: do we actually need to?

The supporters of Ethereum would argue that we don’t. In fact, if Bitcoin was designed as a decentralized alternative to counteract the corruption and inefficiency of the financial system, then Ethereum constitutes a decentralized alternative to the legal system as a whole! This refers to the somewhat anarchic idea of decentralized law, where everyone is free to implement their own rules within their own contracts, creating an interconnected system of rules interacting with each other in a reliably predictable way and not dependent on trust between parties.

Of course, the flipside is that Ethereum could potentially be taken over by big corporations, financial institutions, or even by the State, in an attempt to recreate the same economic system and political order that we have today – except that this time, it would be much more difficult to escape from that system.  This could lead to the establishment of a totalitarian society that is (almost exclusively) regulated by self-enforcing contracts, which establish the rules that everyone must abide by, without any constitutional constraints.

I would like to conclude with a quote from Yochai Benkler, which says that there are, in fact, no perfect freedoms, just different sets of constraints. What we have to ask ourselves is whether we would rather live in a world where we are constrained by the rules of law – which are universal, but also more democratic, more flexible and not perfectly enforceable – or the rules dictated by code – which, once they have been agreed upon, will be automatically enforced without any possibility of recourse.

Transcribed from a conference held at the Berkman Center for Internet & Society on April 15, 2014. You can find the video of the conference here.

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