<nettime> Review: Michel Bauwens and The Promise Of The Blockchain

[nettime's value chain <nettime@kein.org>]

By maxdovey, March 21, 2016 at 4:17 pm.
http://networkcultures.org/moneylab/2016/03/21/promise-of-the-blockchain/

Michel Bauwens and The Promise Of The Blockchain
Thursday 25 February 2016

This event was organised by FIBER and De Brakke Grond and was part
of FIBER’s Coded Matter(s) series and the year programme of the De
Brakke Grond ‘All Future Memories’ De Brakke Grond, Amsterdam

‘Michel Bauwens and The Promise Of The Blockchain’ was attended by
both artists and entrepreneurs eager to be at the cutting edge of the
latest speculative boom in disruptive technology – the Blockchain.
The evening program consisted of four presentations that demonstrated
the promising potential of Blockchain technology in different areas of
society.

It began with a basic overview from Michelle Kasprzak who acted as
moderator, explaining in layman’s terms the fundamental principles
of Blockchain and providing clear examples of it’s use in social
contexts. One of those examples is Mazacoin a crypto-currency that
is used to trade between different native American tribes in Dakota,
USA. The crypto-currency aims to create a sovereign state for the
indigenous people, helping to protect them from global market
forces by facilitating their own trade and local economy. Localized
movements, informal economies and community currencies were also part
of the picture painted by Micheal Bauwens who delivered the opening
keynote. Bauwens described the social context for the rise of the
commons and explained how Blockchain and crypto-currencies can assist
in this change of what he called ‘global value regimes’. Bauwens
anticipates a dramatic change in dominant value systems and supports
this claim with the view that dominant value regimes change roughly
every 500 years. He shows a linearity of trade from early civilization
to the fall of the Roman Empire, and from the industrial revolution to
the extractive economy we have today.


Bauwens wants to show how the economy is moving from an extractive
model to a generative model – one of value production – and
insists that there is a real bottom up transition movement towards
new systems of value that are not based on market costs but on social
benefit. P-2-P values and initiatives towards a new commons have
gained a lot of traction in different communities around the world and
can be followed on the website http://commonstransition.org/. Bauwens
uses the term ‘net-archical’ to describe the extractive mechanisms
of major online platforms such as Facebook & Twitter and articulates
the extractive & plundering nature of share economy services such
as Uber and Airb’n’b. Bauwens makes clear distinctions between
what he calls ‘Net-archical capitalism’ (Facebook, Uber) that are
centralized companies interested in profit and ‘Global Commons’
initiatives such as Wikipedia & Couchsurfing, which are not for profit
and geared towards collective social benefit.

Bitcoin as a currency has turned into a de-centralized, distributed
form of free market capitalism that should not be viewed as a new form
of value exchange, but as another currency that is traded on the stock
market.

After clarifying the blurred lines between share economy principles
and digital monopolies Bauwens goes on to address some common
misconceptions about the crypto-currency Bitcoin. Bauwens highlights
how Bitcoin, in attempting to be completely de-regulated from the
central banks, has become completely dependent on free-market
capitalism. For him, Bitcoin as a currency has turned into a
de-centralized, distributed form of free market capitalism that
should not be viewed as a new form of value exchange, but as another
currency that is traded on the stock market. It is Bauwens’
reservations about Bitcoin that frame his vision for a post-capitalist
society and new value regime(s) that can be created by Blockchain,
not Bitcoin. In light of this, Bauwens is confident that Blockchain
technology (the technology that powers Bitcoin) can transform how
value is produced and exchanged in the way we exchange physical and
material goods similar to how networked technologies enabled the
knowledge commons in the rise of the information age. For Bauwens,
the application of Blockchain is an opportunity for de-centralized
peer produced initiatives to take hold in the physical material world
through logistics, transport and smart technology. Initiatives such as
sustainable energy that can be collectively managed and distributed
via a Blockchain ledger, or car-pooling where the profits are
automatically distributed within social groups. He argues that we can
create a new value system by taking the generative, open, p2p models
of the Internet and integrating them into physical and material goods
with Blockchain applications. D-CENT_main The next speaker was Jaromil
from D-cent – a EU funded organization that has been exploring and
developing tools for new forms of democratic social governance.

D-cent produces digital programs, code and software that aim to change
societal structures to more open, democratic forms of organization.
Perhaps this is why Jaromil was not immediately interested in Bitcoin
until it was used to defend and support Wikileaks against the
financial blockade inflicted by Visa, Mastercard & Paypal in response
to the leak of US diplomat cables in September 2011. This collective
action and mobilized resistance sparked Jaromil’s interest in
Bitcoin as a de-centralized tool for collective social organization.
However, as Jaromil points out, the software behind Bitcoin is what
you call a ‘trustless system’: it assumes every single user is
corrupt and fraudulent in order to protect and secure itself from
being hacked. This model, he argues, suits one type of transaction
but there are plenty of other reciprocal forms of exchange that occur
within informal economies that could become recorded transactions.
For example, what about lending someone you know some money, with no
agreed set time or date to pay it back? This type of unconditional
gifting is difficult to program into digital lending systems. The
after-effects of social media platforms have perpetuated an insatiable
desire to measure and quantify every social relationship into a
numerical value.

This is why Jaromil helped produce FreeCoin, an e-wallet created
for exchange and trading between friends; he calls it a ‘social
wallet’. FreeCoin is a social currency that adapts the ‘proof
of work’ concept used in Bitcoin to validate social gifting and
exchange within communities. In experimenting with the proof of work
concept Jaromil is re-defining how value is expressed and exchanged by
people and how technology can measure and distribute that value. By
putting people at the center of the design of FreeCoin, Jaromil wants
to re-instate trust into a trustless system.


Although it is an admirable concept I am concerned there is a
disheartening ramification in turning the quality of a person’s
social relations into a cypto-currency. In order to account for the
value shared between friends and social groups, FreeCoin software
would need to measure and quantify those friendships to validate it
as ‘social currency’. I can understand the need to design an
electronic currency that reflects and incorporates relationships and
trust between social networks, however using social relations as units
of economic value descends from the commoditization of friendships
used within social media businesses. Social media platforms such
as Facebook use friendships and social groups to create targeted
advertising campaigns that turn every encounter, every click and every
like, into quantifiable economic figures. The business social media
platform LinkedIn explicitly quantifies friends and relationships
with ratings and scores to aid the unemployed find work in the labor
market. The after-effects of these platforms have perpetuated an
insatiable desire to measure and quantify every social relationship
into a numerical value. Although FreeCoin is not directly calculating
market value based on your social relationships, it is adapting a
numerical scoring model for validating social relations to produce a
unique ‘social’ cypto-currency. The prospect of scoring friends
with a numerical value between 1 and 10 and using this number to
facilitate and record informal exchanges seems anything but social. I
hope I am not alone in feeling that a meritocratic scoring model for
validating social relations with tokens would be an implementation of
the worst aspects of social media business models and I fail to see
how digitizing the emotional value between friends into a quantified
currency could be empowering for communities.


As an associate at Berkman Center for Internet & Society at Harvard
Law School Primavera De Filippi is concerned with how Blockchain can
transform law and create new forms of social governance. Although
Filippi acknowledges that smart contracts cannot and should not
replace all legal governance, she does believe there are many outdated
legal procedures that could be converted into smart contracts. When
you combine smart contracts and networked technology such as the
Internet of Things you are able to enforce contracts without human
mediation. The libertarian attitude towards distributed de-centralized
governance contradicts and demolishes core socialist values.

For example, I might one day buy a car but then be unable to keep
up with my credit repayments; with a smart contract the car could
be automatically locked down until I could fulfill my payment
responsibilities. A crucial issue regarding this is that law is
intentionally ambiguous, this allows for a certain degree of human
agency for individuals to create their own moral and ethical choices
within a legal framework. That is why lawyers often describe legal
procedures with the cliché ‘every case is unique’. This is why
the prospect of autonomous automated legal governance is something
to be concerned about and not something that should be easily gift
wrapped into the de-centralized libertarian package; that is the idea
that ‘distributed technology will be empowering for everyone’.
As David Golumbia outlined at Moneylab#2 in December last year
(video), the libertarian attitude towards distributed de-centralized
governance contradicts and demolishes core socialist values – such
as state regulation and institutions such as the welfare state. The
potential for automated agents to enforce law and social governance
should be examined with great caution, because in distributing power
this way you simultaneously reduce autonomy of individual citizens
and the power of the state. Distributing the power for anyone to
create their own law enforcing applications (with software such as
Ethereum) is socially democratic in production (everybody gets to make
their own digital contract) but could lead to a regime of networked
governmentality in reality. Although this sounds like a libertarian
dream for a few it could be a de-centralized panopticon for the many.


The final speaker to take to the stage was Vinay Gupta who gave an
energetic presentation on the history of databases and the cultural
and social origins of Blockchain. Gupta historizes the evolution of
the database from the perspective of an I.T. engineer, summarizing
the complexities of older systems and the beautiful simplicity of a
single universal networked database – the Blockchain. He exclaims
that the Blockchain ‘fuses together network and data in a away that
was never possible’. Gupta continues to identify the social and
cultural origins of Blockchain as a consequence of cryptography and
cypherpunk hacker culture. The cypherpunks were digital activists
who used cryptography and other (open source) computer programming
tools to ensure privacy in electronic communication to hack and
oppose state governance. Gupta, as a self-confessed cypherpunk, sees
Bitcoin and Blockchain as a linear outcome of the anti-authoritarian
digital movements of the 90s and like many Bitcoin-enthusiasts, he is
radically anti-authoritarian and takes any opportunity to criticize
current state or democratic organizations as centralized hives of
power and control. Gupta dramatically over-simplifies this dichotomy
by calling it “The Lawyers vs the Technicians”, a social struggle
between working classes (computer programmers) and the privileged
elite (technocrats). By contextualizing the Bitcoin phenomenon within
the cypherpunk movement and presenting the history of databases the
audience at Fiber may have been left still wondering about the social
relevance of Blockchain, but are at least assured of its technical
significance.


All the speakers presented their individual versions of bright
promising futures that use Blockchain technology. It is very appealing
to believe in all the promises Blockchain technology poses to solve
because of the libertarian political rhetoric that surrounds it. We
are repeatedly led to believe that it will create a more democratic
and equal society however I am not convinced that any of the uses of
Blockchain presented at this event will fulfill that promise. The
anticipation surrounding Blockchain is magnified by anti-authoritarian
rhetoric and juvenile ‘taking back the power’ attitude with
de-centralized software and open source applications. Examples of
Blockchain technology liberating communities to collectively manage
their resources in a de-centralized or autonomous manner are still
abstract thought experiments or draft prototypes at best.

This promise relies on citizens using the available software to
liberate themselves from the current tyranny of power by designing
‘world-changing’ applications. The examples of Blockchain
technology liberating communities to collectively manage their
resources in a de-centralized or autonomous manner are still
abstract thought experiments and draft prototypes at best. Without
any large-scale examples of Blockchain applications successfully
supporting communities and the commons, the remaining attraction is
the renegade; anti-authoritarian attitude that distributed p-2-p
technologies will somehow overthrow governments and central banks.
What is scarcely mentioned within the Blockchain bubble is the
banks appropriation of Blockchain as the newest electronic payment
system. The major banks and financial companies were quick to start
investigating and incorporating Blockchain early on and formed the R3
consortium in 2014. The R3 consortium is an unorthodox collaborative
organization consisting of 43 of the world’s largest banks to work
together to investigate how Blockchain technology could improve the
world of finance. Just last week the Bank of England announced its
very own bitoin crypt-currency replica called RSCoin, built on a
private and centralized Blockchain. This is another massive blow
for Bitcoin advocates as it appears that the technology will become
the basis for global finance and the de-centralized, open source,
p-2-p public ledger will be replicated into a private, centralized
and controlled system to serve the banks. The desire to uproot the
dichotomies of power with a distributed public ledger should be met
with greater consideration and questioning of what would actually
benefit from becoming de-centralized, distributed and autonomous.

Consequently, the political rhetoric surrounding Blockchain as a
tool for anti-authoritarian, de-centralized freedom is shadowed by
its imminent widespread dominance in the financial sector. Unless
you are working in the financial sector, there is currently very
little impetus for individuals to begin implementing Blockchain into
their day-to-day lives. The desire to uproot the dichotomies of
power with a distributed public ledger should be met with greater
consideration and questioning of what would actually benefit from
becoming de-centralized, distributed and autonomous. At the end of
his presentation Gupta emphasized the emergence of Blockchain as
a class war by commenting “until now it has been historically
impossible to re-write the political system from the bottom up”.
If you want to frame the expansion of Blockchain as a political
revolution than I would go one step further to ask what are you
fighting for? Social justice and inequality won’t be solved by
any technical application so if your building applications from the
frequently termed ‘bottom-up’, take greater consideration to ask
who it is for and who would it benefit? This way the democratic social
values that Blockchain technology consistently promotes might begin
to permeate to the rest of society rather than remain entrenched in a
power struggle between what Gupta describes as “The battle between
the lawyers vs. the technicians”.



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