Blockchain: Blueprint for a New Economy

states and nations at present. 111 One

indication that the “blockchain as public

documents registry” has truly arrived

would be, for example, if there were to

be corresponding Bitcoin prediction

markets contracts for events in the

couple’s life, such as having children,

purchasing real estate, and even

potentially filing for divorce (which

would also be logged on the

blockchain), and the inevitable social

science research to follow showing that

blockchain marriages last longer (or not)

than their religious or civil

counterparts.

Figure 3-2. World’s first Bitcoin wedding,

David Mondrus and Joyce Bayo,

Disneyworld, Florida, October 5, 2014

(image credit: Bitcoin Magazine, Ruben

Alexander)

Blockchain-based governance systems

could offer a range of services

traditionally provided by governments,

all of which could be completely

voluntary, with user-citizens opting in

and out at will. Just as Bitcoin is

emerging as a better alternative to fiat

currency in some situations (cheaper,

more efficient, easier to transmit,

immediately received, and a superior

payments mechanism), the same could be

true for blockchain-based governance

services. The same services a traditional

“fiat” government carries out could be

delivered in a cheaper, distributed,

voluntary way by using blockchain

technology. The blockchain lends itself

well to being a universal, permanent,

searchable, irrevocable public records

repository. All government legal

documents such as deeds, contracts, and

identification cards can be stored on the

blockchain. Identity systems such

as blockchain-based passports would

need to achieve critical mass adoption in

order to be recognized, just as Bitcoin

does in the case of being recognized and

being widely usable as money. One

project that provides the code for a

blockchain-based passport system is the

World Citizen project. 112 The project aims to create world citizenship through

affordable decentralized passport

services by using available

cryptographic tools (Figure 3-3).

Figure 3-3. The World Citizen Project’s

Blockchain-based passport (image credit:

Chris Ellis)

A key point is that anyone worldwide

can use decentralized government

services; just because you live in a

particular geography should not restrict

you to certain government services and

mean that you have only one government

provider. Governments have been a

monopoly, but with blockchain

government services in the global

Internet-connected world, this need not

be the case any longer. The possibility of

global currencies like Bitcoin and global

government services bring up important

questions about the shifting nature of

nation-states and what their role should

be in the future. A country might be

something like a hometown, where you

are from, but not in sharp relief in day-

to-day activities in a world where

currency, finance, professional

activities, collaboration, government

services, and record keeping are on the

blockchain. Further, Bitcoin provides a

transition to a world in which

individuals are increasingly mobile

between nation-states and could benefit

from one overall governance system

rather than the host of inefficiencies in

complying with multiple nation-states.

As is standard with cryptocurrency

code, decentralized governance

software, too, would be open source and

forkable, so that anyone can create his

own blockchain nation and government

services in this collaborative platform

for DIYgovernance.

In the area of titling and deeds, as

Bitcoin is to remittances, decentralized

blockchain government services is to the

implementation of a property ownership

registry, and could be the execution of

the detailed plans set forth by

development economists such as

Hernando de Soto. 113 Decentralized

blockchain-based government services

such as public documents registries and

titling could be a useful tool for scaling

the efforts already in place by

organizations such as de Sotos’s Institute

for Liberty and Democracy, or ILD,

which has programs to document,

evaluate, and diagnose the extralegal

sector and bring it into alignment with

the legal system. A universal

blockchain-based property registry

could bring much-needed ownership

documentation, transferability,

transactability, value capture, and

opportunity and mobilization to

emerging markets where these structures

do not exist or are nascent (and

simultaneously, potential business for its

blockchain service cousin, dispute

resolution). As some countries in Africa

were able to leapfrog directly to cellular

telephone networks without installing

copper wire infrastructure (and some

countries might be able to leapfrog

directly to preventive medicine with

personalized genomics114), so too could

emerging-market countries leapfrog

directly to the implementation of

blockchain property registries. Other

blockchain government services could

facilitate similar leapfrogging—for

example, speeding Aadhar’s (the

world’s largest biometric database115)

efforts in issuing national ID cards to the

25 percent of Indians who did not have

them, and helping to eliminate

inefficiencies in national ID card

programs due to issues like ghost IDs

and duplicate IDs.

PrecedentCoin: Blockchain

Dispute Resolution

Another Blockchain 3.0 project focuses

exclusively on using the blockchain for

more effective dispute resolution.

Precedent is conceptually like “The

People’s Court or Judge Judy on the

blockchain.” So far there has been no

way to take advantage of a centralized

repository of precedents used to resolve

disputes, so Precedent is developing a

concept, framework, altcoin, and

community to implement a decentralized

autonomous legal procedure

organization (as described in further

detail in “The Precedent Protocol

Whitepaper.” Precedent’s “polycentric

decentralized legal system” makes it

possible for individual users to pick the

legal system and features they like,

emphasizing the ongoing theme of

blockchain-enabled personalization of

governance and legal systems. The

Precedent legal/dispute-resolution

community is incentivized to develop

with the community coin, PrecedentCoin

or nomos.

In the same way that a decentralized

community of miners maintains the

Bitcoin blockchain by checking,

confirming, and recording new

transactions, so too functionally do

“dispute precedent miners” in the

Precedent community by entering new

disputes, resolved disputes, and

precedents on the dispute resolution

blockchain (the blockchain entries are

links to securely stored off-chain content

with the dispute/precedent details).

Precedent runs as a blockchain

metaprotocol overlay (structurally like

Counterparty). Proof of precedent is

envisioned as part of the system’s

consensus mechanism (analogous to

proof of work or proof of stake in

Bitcoin mining). The Precedent system is

radically peer-to-peer; users dictate

what it means for a dispute to be

justiciable (appropriate or suitable for

adjudication), and they can fork the

protocol if new standards are deemed

preferable. The tokenized altcoin,

Precedentcoin or nomos, is used for

community economic functions like

paying to submit a dispute to the network

and remunerating “miners” for

community dispute resolution tasks

(conceptually like community “jurors”

or “citizen dispute resolvers”).

It should be noted that, as the project

points out in a white paper, “The

Precedent Protocol is strictly concerned

with the justiciability of the dispute in

question and is wholly agnostic to the

justness or fairness of the outcome.”

Thus, there is potential risk for abuse, in

the form of buying or collectively

achieving a strange or unfair decision by

consensus. The project aims to decide

only the justiciability of a dispute—the

point of law, not the point of fact.

Liquid Democracy and Random-

Sample Elections

Other blockchain governance efforts

focus more directly on developing

systems to make democracy more

effective. In the model of a DAS

(distributed autonomous society), there

could be a need to set forth standardized

principles for consensus-based

decentralized governance systems, and

decentralized voting systems such as that

offererd by BitCongress. 116 Other projects focus on other ideas such as

delegative democracy, a form of

democratic control where voting power

is vested in delegates, as opposed to

representatives (as many congressional

and parliamentary models today). One

such project is Liquid Democracy,

which provides open source software to

facilitate proposition development and

decision making.

In the Liquid Democracy system, a party

member can assign a proxy vote to any

other member, thereby assigning a

personal delegate instead of voting for a

representative. A member can give her

vote to another member for all issues,

for a particular policy area, or for only a

particular decision for any length of

time. That vote can be rescinded at any

time. Under this system, a person can

become a delegate for multiple members

within a polity very quickly, wielding

the political power normally reserved

for elected representatives as a result.

But, a person can lose this power just as

quickly. This is the “liquid” in Liquid

Democracy, a process that can also be

referred to as “transitive delegation.” If

someone is respected as a trusted expert

in a particular area, he can gain

members’ votes. As a result, every

person within a Liquid Democracy

platform is a potential politician. 117

There are clearly many potential issues

with the Liquid Democracy platform as

currently set forth. One concern is

stability and continuity over time, which

could be resolved with agent reputation

mechanisms, broadly confirmable and

transferrable if stored in an accessible

blockchain.

The idea of delegated decision making,

supported and executed in blockchain-

based frameworks might have wide

applicability beyond the political voting

and policy making context. For example,

health is another area for which

advocacy, advice, and decision making

are often delegated and poorly tracked

with almost no accountability.

Blockchain technology creates an

opportunity for the greater accountability

and tracking of such delegation. For

example, the bioethical nuances of

delegated medical decision making

articulated in the book Deciding for

Others, by Allen Buchanan, could be

implemented in Liquid Democracy

structure. 118 This could improve health

care–related decision making, and

enable a system of decentralized

advocacy, as many individuals do not

have adequate informed advisors on

hand to act on their behalf. In the farther

future, cultural technologies such as the

blockchain could become a mechanism

for applied ethics.

Liquid Democracy is also a proposition

development platform. Any member can

propose a new idea. If enough other

members support the proposition, it

moves on to a discussion phase, at

which point it can be modified and

alternatives put forward. Of the

proposals that are offered, those with

enough support are put up for a vote. A

vote is made using the Schultz method of

preferential voting, which ensures that

votes are not split by almost identical

“cloned” proposals (like double-spend

problem for votes). All of this is

coordinated in the online platform. The

voting system can run at different levels

of transparency: disclosed identity,

anonymity, or a hybrid system of

authenticated pseudonymity. An

unresolved issue is how binding

decisions made by the Liquid

Democracy system might be and what

enforcement or follow-up mechanisms

can be included in the software. Perhaps

initially Liquid Democracy could serve

as an intermediary tool for coordinating

votes and indicating directional

outcomes.

Ideas for a more granular application of

democracy have been proposed for

years, but it is only now with the Internet

and the advent of systems like

blockchain technology that these kinds of

complex and dynamic decision-making

mechanisms become feasible to

implement in real-world contexts. For

example, the idea for delegative

democracy in the form of transitive

voting was initially proposed by Lewis

Carroll (the author of Alice in

Wonderland) in his book The Principles

of Parliamentary Representation.119

Random-Sample Elections

In addition to delegative democracy,

another idea that could be implemented

with blockchain governance is random-

sample elections. In random-sample

elections, randomly selected voters

receive a ballot in the mail and are

directed to an election website that

features candidate debates and activist

statements. As articulated by

cryptographer David Chaum, 120 the idea

is that (like the ideal of a poll) randomly

sampled voters would be more

representative (or could at least include

underrepresented voters) and give voters

more time to deliberate on issues

privately at home, seeking their own

decision-making resources rather than

being swayed by advertising.121

Blockchain technology could be a means

of implementing random-sample

elections in a large-scale, trustable,

pseudonymous way.

Futarchy: Two-Step Democracy

with Voting + Prediction

Markets

Another concept is futarchy, a two-level

process by which individuals first vote

on generally specified outcomes (like

“increase GDP”), and second, vote on

specific proposals for achieving these

outcomes. The first step would be

carried out by regular voting processes,

the second step via prediction markets.

Prediction market voting could be by

different cryptocurrencies (the

EconomicVotingCoin or

EnvironmentalPolicyVotingCoin) or

other economically significant tokens.

Prediction market voting is

investing/speculating, taking a bet on one

or the other side of a proposal, betting

on the proposal that you want to win.

For example, you might buy the “invest

in new biotechnologies contract” as

what you think is the best means of

achieving the “increase in GDP”

objective, as opposed to other contracts

like the “invest in automated agriculture

contract”). As with random-sampling

elections, blockchain technology could

more efficiently implement the futarchy

concept in an extremely large-scale

manner (decentralized, trusted,

recorded, pseudonymous). The futarchy

concept is described in shorthand as

“vote for values, bet on beliefs,” an idea

initially proposed by economist Robin

Hanson, 122 and expounded in the

blockchain context by Ethereum project

founder Vitalik Buterin.123 This is a

quintessential example of the potential

transformative power of blockchain

technology. There is the possibility that

voting and preference-specification

models (like futarchy’s two-tiered voting

structure using blockchain technology)

could became a common, widespread

norm and feature or mechanism for all

complex multiparty human decision

making. One effect of this could be a

completely new level of coordinated

human activity that is orders of

magnitude more complex than at present.

Of course, any new governance structure

including futarchy has ample room for

abuse, and mechanisms for restricting

coercion and outright results hacking are

incorporated to some degree but would

need to be improved upon in more

robust models.

For the agreed-upon consensus

necessary to register blockchain

transactions, there could be at least two

models, and potentially many more in the

future. The first consensus mechanism is

the mining operation: with the aid of

software, miners review, confirm, and

register transactions. The second

consensus mechanism is prediction

markets. An event might be assumed to

be true if enough independent

unaffiliated persons have voted their

opinion that it is true in a prediction

market. Truthcoin is such a blockchain-

based, trustless, peer-to-peer prediction

marketplace that hopes to resolve some

problems with traditional prediction

markets, such as bias in voters, and

integrate the prediction market concept

with the remunerative coin and public

records structure of Bitcoin.124 Even

farther, Truthcoin aims to provide a

trustless oracle service, registering what

might be relevant events of record in the

blockchain. Some examples of

“information items” of interest would be

the current interest rate, the daily high

temperature, and cryptocurrency daily

high and low prices and trading volume.

For blockchain-based smart contract

operations, independent oracles

providing information are a key

component in the value chain. For

example, blockchain-based mortgage

might have certain interest rate reset

dates in the future that could be

automatically implemented upon having

a trustable source of future information,

such as that registered in a blockchain by

a reputable independent oracle, like

Truthcoin.

Societal Maturity Impact of

Blockchain Governance

A side benefit of blockchain governance

is that it might force individuals and

societies to grow into a new level of

maturity in how topics like governance,

authority, independence, and

participation are conceptualized and

executed. We are not used to governance

being a personal responsibility and a

peer-to-peer system as opposed to

something externally imposed by a

distant centralized institution. We are not

used to many aspects of blockchain

technology, like having to back up our

money, but we learn appropriate

savviness and new behaviors and

conceptualizations when adopting new

technologies. We are not used to

decentralized political authority and

autonomy.

However, we have matured into the

reception of decentralized authority in

other contexts. Authority floating freely

has already happened in other industries

such as information, wherein the news

and publishing industry became

decentralized with blogging and the

restructuring of the media industry.

Entertainment is similar, with corporate

media properties existing alongside

YouTube channels, and individuals

uploading their own content to the Web.

The value chain has exploded into the

long-tail format, and individuals became

their own taste makers and quality

arbiters. A crucial twenty-first-century

skill is that individuals must examine

content and think for themselves about

its quality and validity. The Bitcoin

revolution is the same thing happening

now with currency, economics, finance,

and monetary policy. It might seem

harder to let go of centralized authority

in matters of government and economics

as opposed to culture and information,

but there is no reason that social maturity

could not develop similarly in this

context.

Chapter 4. Blockchain 3.0:

Efficiency and Coordination

Applications Beyond Currency,

Economics, and Markets

Blockchain Science: Gridcoin,

Foldingcoin

As blockchain technology could

revolutionize the operation of other

fields, innovators are starting to envision

how the concepts might apply to science.

So far, the main thread is related to peer-

to-peer distributed computing projects

for which individual volunteers provide

unused computing cycles to Internet-

based distributed computing projects.

Two notable projects are SETI@home

(the Search for Extraterrestrial

Intelligence, which uses contributed

computing cycles to help analyze radio

signals from space, searching for signs

of extraterrestrial intelligence), and

Folding@home (a Stanford University

project for which computing cycles are

used to simulate protein folding, for

computational drug design and other

molecular dynamics problems). Per

blockchain technology, remunerative

coin has been set up to reward

participants in both the SETI@home and

Folding@home projects. For

SETI@home, there is Gridcoin, which is

the remunerative coin available to all

BOINC (Berkeley Open Infrastructure

for Network Computing) projects, the

infrastructure upon which SETI@home

runs. For Folding@home, there is

FoldingCoin, a Counterparty token that

runs and is exchangeable to the more

liquid XCP cryptocurrency (and

therefore out to Bitcoin and fiat

currency) via the Counterparty wallet

(Counterwallet).

A more fundamental use of the

blockchain for science could be

addressing the wastefulness of the

mining network, which consumes

massive amounts of electricity. Instead

of being used to crunch arbitrary

numbers, perhaps the extensive

processing power could be applied to

the more practical task of solving

existing science problems. However, a

mining algorithm must meet very

specific conditions, like generating code

strings or hashes that are easily

verifiable in one direction but not in

reverse, which is not the structure of

traditional scientific computing

problems.125 There are some

cryptocurrency projects trying to make

blockchain mining scientifically useful

—for example, Primecoin, for which

miners are required to find long chains

of prime numbers (Cunningham chains

and bi-twin chains) instead of SHA256

hashes (the random guesses of a specific

number issued by mining software

programs based on given general

parameters). 126 There is an opportunity

for greater progress in this area to

reformulate supercomputing and desktop

grid computing problems, which have

been organized mainly in a massively

parallel fashion, into a mining-

compatible format to take advantage of

otherwise wasted computing cycles. 127

Gridcoin, if not solving the problem of

using otherwise wasted mining cycles, at

least tries to align incentives by

encouraging miners to also contribute

computing cycles: miners are

compensated at a much higher rate (5

GRC versus a maximum of 150 GRC)

for mining a currency block when also

contributing computing cycles. A typical

complaint about blockchain technology

is the wastefulness of mining, both in

terms of unused computing cycles and

electricity consumption. The media

presents estimates of power

consumption such as “the Eiffel Tower

could stay lit for 260 years with the

energy used to mine Bitcoins since

2009, ”128 and that in 2013 Bitcoin

mining was consuming about 982

megawatt hours a day (enough to power

31,000 homes in the United States, or

half a Large Hadron Collider),129 at a

cost of $15 million a day. 130 However,

the comparison metric is unclear; should

these figures be regarded as a little or a

lot (and what are the direct economic

benefits of the Eiffel Tower and the

LHC, for that matter)? Bitcoin

proponents counter that the blockchain

model is vastly cheaper when you

consider the fully loaded cost of the

current financial system, which includes

the entire infrastructure of physical plant

bank branch offices and personnel. They

point out that the cost to deliver $100

via the blockchain is much cheaper than

traditional methods. Still, there is

concern over how Bitcoin could

eliminate its wasteful consumption of

electricity for mining while continuing to

maintain the blockchain, and 3.0

innovations could be expected. One

response is cryptocurrencies that are

apparently more energy efficient, such as

Mintcoin.

Community Supercomputing

SETI@home and Folding@home are

community supercomputing projects in

the sense that a community of individual

volunteers contributes the raw resource

of computing cycles; they are not

involved in setting the research agenda.

A more empowered model of community

supercomputing would be using the

resource-allocation mechanism of the

blockchain to allow noninstitutional

researchers access to supercomputing

time for their own projects of interest. In

a model like Kickstarter, individuals

could list projects requiring

supercomputing time and find other

project collaborators and funders,

soliciting and rewarding activities with

appcoin or sitecoin. An early project in

this area, Zennet, has been announced

which may allow community users to

specify their own supercomputing

projects and access shared desktop grid

resources via a blockchain structure.

Citizen science data analysis projects

are under way and were perhaps

initially demonstrated in the example of

mass collaboration on open data sets in

the book Wikinomics (2008). 131 The

difference is in liberty extending: now

using the blockchain means that these

kinds of citizen science projects can be

deployed at much larger scale—in fact,

the largest scale—at a tier at which (per

resource constraints) citizen scientists

do not currently have access.

Wikinomics and other examples have

documented the scientifically valid

contributions of citizen science as a

channel. 132 Projects such

as DIYweathermodeling, for example,

could have the benefit of getting citizen

scientists involved in contributing

evidence to large-scale issues like the

climate change debate.

Global Public Health: Bitcoin

for Contagious Disease Relief

Another application of blockchain health

is in global public health, for the

efficient, immediate, targeted delivery of

aid funds for supplies in the case of

crises like Ebola and other contagious

disease breakouts. 133 Traditional banking

flows hamper the immediacy of aid

delivery in crisis situations, as opposed

to Bitcoin, which can be delivered

immediately to specific publicly

auditable trackable addresses.

Individual peer-to-peer aid as well as

institutional aid could be contributed via

Bitcoin. In emerging markets (often with

cellphone penetration or 70 percent or

higher) there are a number of SMS

Bitcoin wallets and delivery

mechanisms, such as 37Coins134 and

Coinapult, and projects such as

Kipochi135 that are integrated with commonly used mobile finance

platforms like M-Pesa (in Kenya, for

example, 31 percent of the GDP is spent

through mobile phones136). Apps could

be built on infectious disease tracking

sites like Healthmap and FluTrackers to include Bitcoin donation functionality or

remunerative appcoin more generally.

Charity Donations and the

Blockchain—Sean’s Outpost

Perhaps the world’s best-known

Bitcoin-accepting charity is Sean’s

Outpost, a homeless outreach nonprofit

organization based in Pensacola,

Florida. Capitalizing on the trend of

individuals receiving Bitcoin and not

having any local venues to spend it in or

otherwise not knowing what to do with

it, and Bitcoin startups needing to demo

how Bitcoin is sent on the Web, Sean’s

Outpost has been able to raise

significant donor contributions and

undertake projects like a nine-acre

“Satoshi Forest” sanctuary for the

homeless.137

Blockchain Genomics

The democratization and freedom-

enhancing characteristics of the

blockchain seen in many projects also

apply in the case of consumer genomics,

which is the concept of uplifting

organizations to the blockchain (to the

cloud in a decentralized, secure way) to

escape the limitations of local

jurisdictional laws and regulation. That

there is a need for this does not

necessarily signal illegal “bad players”

with malicious intent; rather, it indicates

a lack of trust, support, relevance, and

espousal of shared values in local

jurisdictional governments. Traditional

government 1.0 is becoming outdated as

a governance model in the blockchain

era, especially as we begin to see the

possibility to move from paternalistic,

one-size-fits-all structures to a more

granular personalized form of

government. Genomics can be added to

the list of examples of uplifting

transnational organizations to the

decentralized blockchain cloud like

ICANN, WikiLeaks, Twitter, Wikipedia,

GitHub, and new business registrations

as DACs. Transnational blockchain

genomics makes sense in the context of

the right to personal information (the

right to one’s own genetic information)

being seen as a basic human right,

especially given the increasing cost

feasibility per plummeting genomic

sequencing costs.

In one view, consumer genomics can be

seen as a classic case of personal

freedom infringement. In many European

countries and the United States,

paternalistic government policy

(influenced by the centralized strength of

the medical-industry lobby) prevents

individuals from having access to their

own genetic data. Even in countries

where personal genomic information is

used in health care, there is most often

no mechanism for individuals to get

access to their own underlying data. In

the United States, prominent genomic

researchers have tried to make a public

case that the “FDA [Food and Drug

Administration] is overcautious on

consumer genomics,” 138 and established

in studies that there is no detrimental

effect to individuals having access to

their own genomic data. 139 In fact, the

opposite might be true: in the humans-as-

rational-agents model, 80 percent of

individuals learning of a potential

genetic predisposition for Alzheimer’s

disease modified their life-style

behaviors (e.g., exercise and vitamin

consumption) as a result. 140 Other news

accounts continue to chronicle how

individuals are seeking their own

genomic data and finding it useful—for

example, to learn about Alzheimer’s and

heart disease risk.141

As a result of paternalistic purview, and

no clear government policies for the

preventive medicine era, US-based

consumer genomics services have

closed (deCODEme142), directed their

services exclusively toward a physician-

permissioning model (Pathway

Genomics, Navigenics), or been forced

to greatly curtail their consumer-targeted

services (23andMe143). In response,

blockchain-based genomic services

could be an idea for providing low-cost

genomic sequencing to individuals,

making the data available via private

key.

One of the largest current

transformational challenges in public

health and medicine is moving from the

current narrowband model of “having

only been able to treat diagnosed

pathologies” to a completely new data-

rich era of preventive medicine for

which the goal is maintaining,

prolonging, and enhancing baseline

health. 144 Such a wellness era is now

beginning to be possible through the use

of personalized big data as predictive

information about potential future

conditions. Personalized genomics is a

core health data stream for preventive

medicine as well as individuals as

knowledgeable, self-interested, action-

taking agents.145

In fact, as of November 2014, a

blockchain genomics project, Genecoin,

has launched an exploratory website to

assess potential consumer interest,

positioning the service as a means of

backing up your DNA. 146

Blockchain Genomics 2.0:

Industrialized All-Human-

Scale Sequencing Solution

At one level, there could be blockchain-

enabled services where genomic data is

sequenced and made available to

individuals by private key outside the

jurisdiction of local governments.

However, at another higher level, as a

practical matter, to achieve the high-

throughput sequencing needed for all

seven billion humans, larger-scale

models are required, and blockchain

technology could be a helpful

mechanism for the realization of this

project. Individuals ordering their

genomes piecemeal through consumer

genomic services is an initial proof of

concept in some ways (and a health

literacy tool as well as a possible

delivery mechanism for personal results

and recommendations), but not an “all-

human-scale” solution for sequencing.

Blockchain technology, in the form of a

universal model for record keeping and

data storage and access (a secure,

decentralized, pseudonymous file

structure for data stored and accessed in

the cloud) could be the technology that is

needed to move into the next phase of

industrialized genomic sequencing. This

applies to genomic sequencing generally

as an endeavor, irrespective of the

personal data rights access issue.

Sequencing all humans is just one

dimension of sequencing demand; there

is also the sequencing of all plants,

animals, crops, viruses, bacteria,

disease-strain pathogens, microbiomes,

cancer genomes, proteomes, and so on,

to name a few use cases.

There is a scale production and

efficiency argument for blockchain-

based transnational genomic services.

To move to large-scale sequencing as a

“universal human society,” the scope and

scale of sequencing and corresponding

information processing workloads

suggests not just transnationality, but

more important, heavy integration with

the cloud (genomic data is too big for

current forms of local storage and

manipulation), and the blockchain

delivers both transnationality and the

cloud. Transnational regional centers for

genomic sequencing and processing and

information management of the

sequenced files could be the best way to

structure the industry given the cost,

expertise, equipment, and scale

required. This could be a more efficient

solution rather than each country

developing its own capabilities.

Blockchain technology might be used to

achieve a high-throughput level of

industrialized genomic sequencing—on

the order of millions and billions of

genomes, well beyond today’s hundreds.

In reality, blockchain technology might

supply just one aspect of what might be

needed; other issues are more critical in

achieving industrialized genomic

sequencing operations (information

processing and data storage is seen as

the real bottleneck). However, the

blockchain ecosystem is inventing many

new methods for other operational areas

along the way and might be able to

innovate in a complementary manner for

a full solution to industrial-scale

genomic sequencing, including recasting

the problem in different ways as with

decentralization concepts.

Blockchain Technology as a

Universal Order-of-Magnitude

Progress Model

Blockchain technology might be

indicative of the kinds of mechanisms

and models needed to achieve the next

orders-of-magnitude progress in areas

like big data, moving to what would

currently be conceived as “truly-big-

data,” and well beyond. Genomic

sequencing could be one of the first

demonstration contexts of these higher-

orders-of-magnitude models for

progress.

Genomecoin,

GenomicResearchcoin

Even without considering the longer-

term speculative possibilities of the

complete invention of an industrial-scale

all-human genome sequencing project

with the blockchain, just adding

blockchain technology as a feature to

existing sequencing activities could be

enabling. Conceptually, this would be

like adding coin functionality or

blockchain functionality to services like

DNAnexus, a whole-human genome

cloud-based storage service. Operating

in collaboration with university

collaborators (Baylor College of

Medicine’s Human Genome Sequencing

Center) and Amazon Web Services, the

DNAnexus solution is perhaps the

largest current data store of genomes,

having 3,751 whole human genomes and

10,771 exomes (440 terabytes) as of

2013. 147 The progress to date is

producing a repository of 4,000 human

genomes, out of the possible field of 7

billion humans, which highlights the

need for large-scale models in these

kinds of big data projects (human whole-

genome sequencing). The DNAnexus

database is not a public good with open

access; only 300 worldwide

preapproved genomic researchers have

permission to use it. The Genomic Data

Commons148 is a US-government-funded

large-scale data warehouse and

computational computing project being

assembled to focus on genomic research

and personalized medicine. In this case,

the resource is said to be available to

any US-based researcher. This is a good

step forward in organizing data into

standard unified repositories and

allowing access to a certain population.

A further step could be using an appcoin

like Genomecoin to expand access on a

grander scale as a public good fully

accessible by any individual worldwide.

Further, the appcoin could be the

tracking, coordination, crediting, and

renumerative mechanism sponsoring

collaboration in the Genome Data

Commons community. Like the

aforementioned Wikinomics example,

the highest potential possibility for

discovery could be in making datasets

truly open for diverse sets of individuals

and teams from a variety of fields and

backgrounds to apply any kind of model

they might have developed.

One benefit of “Bitcoin/blockchain-as-

economics” is that the technology

automatically enables embedded

economics as a feature in any system. In

the genomic sequencing and storage

context, the economics feature could be

used in numerous ways, such as

obtaining more accurate costs of

research (blockchain economics as

tracking and accounting) and to

remunerate data contributors (whether

institutional or individual) with

Genomecoin or GenomicResearchcoin

(blockchain economics as micropayment

remuneration). The economic/accounting

tracking features of the blockchain

further allows now other foreseen

capabilities of the blockchain, such as

attribution as an enabler for large-scale

human projects (like attribution at the

GitHub line item of committed code or

digital asset IP-protected ideas).

Attribution is a crucial feature for

encouraging individual participation in

large-scale projects.

Blockchain Health

In the future, there might be different

kinds of blockchains (ledgers) for

recording and tracking different kinds of

processes, and exchanging and providing

access to different kinds of assets,

including digital health assets.

Blockchain health is the idea of using

blockchain technology for health-related

applications.149 The key benefit behind

blockchain health is that the blockchain

provides a structure for storing health

data on the blockchain such that it can be

analyzed but remain private, with an

embedded economic layer to

compensate data contribution and use. 150

Healthcoin

Healthcoin could more broadly be the

coin or token for health spending,

forcing price discovery and

rationalization across health services.

Services in national health plans could

be denominated and paid in Healthcoin.

This could help to improve economic

inefficiencies rife within the health-

services industry. Price transparency—

and a universal price list—could result,

such that every time a certain health

service is performed, it costs 5

Healthcoin, for example, instead of the

current system (in the United States)

where each consumer might pay a

different amount that is a complex

calculation of the multipayor system

connecting different insurers and plans.

EMRs on the Blockchain:

Personal Health Record

Storage

Personal health records could be stored

and administered via blockchain like a

vast electronic electronic medical

record (EMR) system. Taking advantage

of the pseudonymous (i.e., coded to a

digital address, not a name) nature of

blockchain technology and its privacy

(private key access only), personal

health records could be encoded as

digital assets and put on the blockchain

just like digital currency. Individuals

could grant doctors, pharmacies,

insurance companies, and other parties

access to their health records as needed

via their private key. In addition,

services for putting EMRs onto the

blockchain could promote a universal

format, helping to resolve the issue that

even though most large health services

providers have moved to an EMR

system, they are widely divergent and

not sharable or interoperable. The

blockchain could provide a universal

exchangeable format and storage

repository for EMRs at a population-

wide scale.

Blockchain Health Research

Commons

One benefit of creating standardized

EMR repositories is exactly that they are

repositories: vast standardized

databases of health information in a

standardized format accessible to

researchers. Thus far, nearly all health

data stores have been in inaccessible

private silos—for example, data from

one of the world’s largest longitudinal

health studies, the Framingham Heart

Study. The blockchain could provide a

standardized secure mechanism for

digitizing health data into health data

commons, which could be made

privately available to researchers. One

example of this is DNA.bits, a startup

that encodes patient DNA records to the

blockchain, and makes them available to

researchers by private key. 151

However, it is not just that private health

data research commons could be

established with the blockchain, but also

public health data commons. Blockchain

technology could provide a model for

establishing a cost-effective public-

health data commons. Many individuals

would like to contribute personal health

data—like personal genomic data from

23andMe, quantified-self tracking

device data (FitBit), and health and

fitness app data (MapMyRun)—to data

research commons, in varying levels of

openness/privacy, but there has not been

a venue for this. This data could be

aggregated in a public-health commons

(like Wikipedia for health) that is open

to anyone, citizen scientists and

institutional researchers alike, to

perform data analysis. The hypothesis is

that integrating big health data streams

(genomics, lifestyle, medical history,

etc.) and running machine learning and

other algorithms over them might yield

correlations and data relationships that

could be helpful for wellness

maintenance and preventive medicine. 152

In general, health research could be

conducted more effectively through the

aggregation of personal health record

data stored on the blockchain (meaning

stored off-chain with pointers on-chain).

The economic feature of the blockchain

could facilitate research, as well. Users

might feel more comfortable contributing

their personal health data to a public

data commons like the blockchain, first

because it is private (data is encrypted

and pseudonymous), and second for

remuneration in the form of Healthcoin

or some other sort of digital token.

Blockchain Health Notary

Notary-type proof-of-existence services

are a common need in the health

industry. Proof of insurance, test results,

prescriptions, status, condition,

treatment, and physician referrals are

just a few examples of health document–

related services often required. The

“notary function” as a standard

blockchain application is equally well

deployed in the context of blockchain

health. Health documents can be

encoded to the blockchain as digital

assets, which could then be verified and

confirmed in seconds with encryption

technology as opposed to hours or days

with traditional technology. The private-

key functionality of the blockchain could

also make certain health services and

results delivery, such as STD screening,

more efficient and secure.

Doctor Vendor RFP Services

and Assurance Contracts

Blockchain health could create more of a

two-way market for all health services.

Doctors and health practices could bid

to supply medical services needed by

patient-consumers. Just as Uber drivers

bid for driver assignments with

customers, doctor practices could bid

for hip replacements and other needed

health services—for example, in

Healthcoin—at minimum bringing some

degree of price transparency and

improved efficiency to the health sector.

This bidding could be automated via

tradenets for another level of autonomy,

efficiency, and equality.

Virus Bank, Seed Vault Backup

The third step of blockchain health as a

standardized repository and a data

research commons is backup and

archival, not just in the operational sense

based on practitioner needs, but as a

historical human data record. This is the

use case of the blockchain as a public

good. Blockchain backup could provide

another security layer to the physical-

world practices of virus banks, gene

banks, and seed vaults. The blockchain

could be the digital instantiation of

physical-world storage centers like the

Svalbard Global Seed Vault (a secure

seedbank containing duplicate samples

of worldwide plant seeds), and World

Health Organization–designated

repositories like the CDC for pathogen

storage such as the smallpox virus. A

clear benefit is that in the case of

disease outbreaks, response time can be

hastened as worldwide researchers are

private key–permissioned into the

genetic sequencing files of pathogens of

interest.

Blockchain Learning: Bitcoin

MOOCs and Smart Contract

Literacy

Blockchain-based smart contracts could

have myriad uses. One possibility is

smart literacy contracts. Bitcoin MOOCs

(massive open online courses) and smart

literacy contracts encompass the idea of

opening up emerging-market smart-

contract learning to all individuals

worldwide the same way that traditional

MOOCs opened up educational courses

to all individuals worldwide. Just as

Bitcoin is reinventing the remittances

market and bringing about financial

inclusion, so too the foreign aid market

can be reinvented with blockchain-

based, peer-to-peer smart contracts. The

concept is like Kiva, Grameen

microlending, or Heifer International

2.0, which could include peer-to-peer

financial aid, but more importantly

allows the configuration of peer-to-peer

aid that is not currency-based but

personal development-based.

Blockchain Learning is decentralized

learning contracts.

One way to improve literacy in emerging

markets (perhaps the key metric for

poverty eradication) could be via

decentralized smart contracts for literacy

written between a donor/sponsor peer

and a learning peer. Much in the way that

Bitcoin is the decentralized (very low

fee charging, no intermediary) means of

exchanging currencies between

countries, a decentralized contract

system could be helpful for setting up

learning contracts directly with

students/student groups in a similar

peer-to-peer manner, conceptually

similar to a personalized Khan Academy

curriculum program. Learners would

receive Bitcoin, Learncoin, or the local

token directly into their digital wallets—

like 37Coins, Coinapolt, or Kipochi

(used as Bitcoin or converted into local

fiat currency)—from worldwide peer

donors, and use this to fund their

education expenses at school or

separately on their own. A key part of

the value chain is having a reporting

mechanism (enabled and automated by

Ethereum smart contracts, for example)

to attest to learner progress. Rules

embedded in learning smart contracts

could automatically confirm the

completion of learning modules through

standardized online tests (including

confirming the learner’s digital identity,

such as with short-handle names for

Bitcoin addresses provided with

services like OneName, BitID, and

Bithandle). Satisfying the learning

contract could then automatically trigger

the disbursement of subsequent funds for

the next learning modules. Blockchain

learning contracts can be coordinated

completely on a peer-to-peer basis

between the learner and the learning

sponsor; and really directly with the

automated software contract. Again, the

idea is like Kiva or Heifer International

(i.e., peer-to-peer direct) for blockchain

literacy for individualized learning

contracts.

Learncoin

Learncoin could be the currency of the

smart contract literacy system, with

schools, student groups, or individuals

issuing their own token:

MthelieLearncoin, Huruma Girls High

School tokens, or PS 135 tokens (that all

convert to Learncoin, and to Bitcoin).

School fundraising in any area

worldwide could be conducted with

Learncoin and LocalSchoolName tokens.

Just as physician RFPs make the health

services market two-sided, students or

student groups could post their open

learning contracts (or funding needs and

budget) to a Learning Exchange, which

could be fulfilled by learning-funders on

the other side of the transaction.

Learning Contract Exchanges

Learning contract exchanges could apply

in a much broader sense—for example,

as a universal learning model. This

could apply to government workforce

retraining, graduate students, and

employees within corporations. Learning

contract exchanges could be a way of

reinventing or improving the

orchestration of the continuing

professional education (CPE) programs

required for many fields like law,

information technology, and medicine.

Learning contracts in the development

context could be extended to many use

cases in emerging markets. There could

be many categories of “literacy”

contracts, such as basic reading for

elementary school children, but also for

every area of education, such as

vocational learning (technical literacy

and agricultural literacy), business

literacy, social literacy, and leadership

literacy.

Blockchain Academic

Publishing: Journalcoin

As every category of organized human

activity has moved onto the Internet and

currently has the possibility of being

reinvented and made more efficient, fair,

and otherwise attribute-enabled with the

blockchain, so too could academic

publishing be put on the blockchain.

There have been innovations toward

openness in the academic publishing

field, such as open-access journals,

which although they provide open access

to article content instead of keeping it

behind a paywall, force authors to

support possibly prohibitive publication

fees. So far, the Bitcoin convention of

making open source code available by

publishing software for cryptocurrency

blockchains and protocols on GitHub

has extended to some forms of

“academic” publishing in the area, too,

as white papers are posted as “Readme

files” on GitHub. For example, there is

blockchain venture capitalist David

Johnston’s Dapp paper (“The General

Theory of Decentralized Applications”)

and Factom’s concept for batching the

notarization of digital artifacts paper

(the “Notary Chains” white paper).

An interesting challenge for academic

publishing on the blockchain is not just

having an open-access, collaboratively

edited, ongoing-discussion-forum

journal per existing examples, or open-

access, self-published blockchain white

papers on GitHub, but to more

fundamentally implement the blockchain

concepts in blockchain journals. The

consideration of what a decentralized

direct peer-to-peer model for academic

publishing could look like prompts the

articulation of the functions that

academic publishing provides and how,

if these are still required, they might be

provided in decentralized models. In

terms of “publishing,” any manner of

making content publicly available on the

Web is publishing; one can easily self-

publish on blogs, wikis, Twitter,

Amazon, and the like. A blockchain

model in terms of decentralized peer-to-

peer content would be nothing more than

a search engine linking one individual’s

interests with another’s published

material. This is a decentralized peer-to-

peer model in the blockchain sense. So,

academic (and other publishers) might

be providing some other value functions,

namely vouching for content quality.

Publishers provide content curation,

discovery, “findability,” relevancy,

advocacy, validation, and status

ascribing, all of which might be useful

attributes for content consumers. One

way to improve a centralized model

with blockchain technology is by

applying an economy as a mechanism for

making the incentives and reward

structures of the system fairer.

Journalcoin could be issued as the token

system of the publishing microeconomy

to reward contributors, reviewers,

editors, commentators, forum

participants, advisors, staff, consultants,

and indirect service providers involved

in scientific publishing. This could help

improve the quality and responsiveness

of peer reviews, as reviews are

published publicly, and reviewers are

rewarded for their contribution. With

Journalcoin, reviewers can receive

reputational and remunerative rewards,

and more transparency and exchange is

created between authors, reviewers, and

the scientific community and public.

ElsevierJournalcoin and

SpringerJournalcoin, for example, could

be issued as metacoins, running on top of

the Bitcoin blockchain, say as

Counterparty assets, fully convertible at

any time to Bitcoin or other

cryptocurrencies.

A token-based coin such

as Researchcoin could be used for

individuals to collectively indicate

interest and purchase the rights to read a

certain research paper that is otherwise

buried behind a paywall. Medicinal

Genomics envisions a multisig, Bitcoin-

based voting system for the public to

indicate their demand to open source

scientific papers related to pandemic

disease (which the public ironically

funds in the first place with tax dollars,

yet cannot access). 153 For example,

individuals with a mutation in the NPC1

gene have been found to be resistant to

Ebola infection.154 This kind of

information could be easily used by

empowered biocitizens to look up in

their own personalized genomic data to

see if they have higher conferred

resistance to Ebola or other diseases

such as HIV, which also has higher

resistance in individuals with certain

genotypes. 155 Although some are in favor

of individuals having access to their

own data, others feel that they may read

too much into it without appropriate

medical counsel. The Alzheimer’s

disease study mentioned previously,

however, does hint that the benefits seem

to outweigh the costs.

Related to Journalcoin,

ExperimentalResultscoin could be

another idea, implemented in the context

of science journals, to incentivize and

reward science experiment replications

(helping to solve the problem of the 80

percent irreplicability of scientific

experimental results), the publishing of

negative results and raw data (just 45

percent are willing to make this

available), and counter other biases in

scientific publishing, such as priming,

duplicate results, and carelessness. 156

Just as Bitcoin is a digital payment

mechanism for transactions between

humans but could also empower the

machine economy in machine-to-

machine (M2M) and Internet of Things

(IoT) payments,

ExperimentalResultscoin could likewise

serve as a mechanism for incentives,

coordination, and tracking science

executed by both humans and machines.

Increasingly, both robotic lab aides and

algorithmic programs are facilitating and

generating scientific discovery. Some

examples include Lipson’s computing

algorithms that have distilled physical

laws from experimental data,157

Muggleton’s microfluidic robot

scientist,158 and Waltz and Buchanan’s AI

scientific partners. 159

The 3.0 sense of applying blockchain

technology to publishing would be

having the blockchain completely fulfill

the functions of the publisher (like a

“semantic Verisign,” vouching

mechanism for qualitative content). A

DAO/DAC/AI/VM model might be able

to use data-based metrics (like the

number of reads both in general and by

affinity peers or colleagues, the number

of comments, semantic keyword

matching, and concept matching) to

determine targeted content of quality and

interest. The micropayment aspect of the

blockchain could be used to make this a

fee-based service. The idea is semantic

peer-to-peer search, integrating the

social networking layer (to identify

peers) and adding blockchain economic

and privacy functionality. Automatic

nonpeer, nonhuman content-importance

ascription models might also be a

possibility.

Another means of employing the

blockchain in academic publishing could

be using it for plagiarism detection and

avoidance, or better, for autocitation (an

Ethereum smart contract/DAO that does

a literature search and automatically

cites all related work would be a

tremendous time-saver). This could be

accomplished through off-chain indexed

paper storage repositories linking the

asset by key to the blockchain. The

blockchain could become the universal

standard for the publication of papers,

and of the underlying raw data and

metadata files, essentially creating a

universal cataloging system and library

for research papers. Blockchain

economics could make digital asset

purchase of the papers easier by

assigning every paper a Bitcoin address

(QR code) instead of requiring users to

log in to publisher websites.

The Blockchain Is Not for

Every Situation

Despite the many interesting potential

uses of blockchain technology, one of the

most important skills in the developing

industry is to see where it is and is not

appropriate to use cryptocurrency and

blockchain models. Not all processes

need an economy or a payments system,

or peer-to-peer exchange, or

decentralization, or robust public record

keeping. Further, the scale of operations

is a relevant factor, because it might not

make sense to have every tiny

microtransaction recorded on a public

blockchain; for example, blog-post tip-

jar transactions could be batched into

sidechains in which one overall daily

transaction is recorded. Sidechains are

more broadly proposed as an

infrastructural mechanism by which

multiblock chain ecosystems can

exchange and transfer assets. 160

Especially with M2M/IoT device-to-

device communication, there are many

open questions about the most effective

ways to incorporate market principles

(if at all) to coordinate resources,

incentivize certain goal-directed

behavior, and have tracking and

payments remuneration. Even before we

consider the potential economic models

for M2M/IoT payments, we must work

out general coordination protocols for

how large swarms of devices can

communicate, perhaps deploying control

system and scheduling software for these

machine social networks, adding new

layers of communication protocols like a

“chirp” for simple microcommunications

such as on, off, start, and stop. 161

In the farther future, different classes of

blockchains for different kinds of

applications could be optimized. Maybe

there could be daily purchase

blockchains for the grocery store and

coffee shop purchases, and others for

large-ticket items like real estate and

automobiles. More stridently different

functionality is needed for noneconomic-

market blockchains, for government

services, intellectual property

registration, notary services, science

activities, and health-record keeping.

The key question is distinguishing the

economic principles needed for the

different range of functions with which

blockchain technology could be helpful.

However, not every operation is one of

value registration and exchange.

Not all of the ideas described need a

blockchain; they do not require

sequential, public, and distributed data

storage. They could instead be

implemented through other technology

such as cloud storage or distributed

computing models more generally.

However, blockchain technology could

be included to provide additional

functionality, and further, it is not

possible at present to see all of the

potential future benefits and uses of

blockchain technology that might

emerge.

Another reason that the blockchain is not

for every situation is because we do not

want to “economify” everything. We do

not want to reduce the qualitative

aspects of life to a purely and nakedly

economic situation. The idea of a

remunerative coin accompanying many

more situations and making the

economics of situations more explicit is

welcome in some ways but repugnant in

others. However, the broader

conceptualization of economy evoked by

blockchain technology invites a new

consideration of the notions of transfer,

exchange, and acknowledgment that is

deeply qualitative and could persist

even as blockchain-enabled features do

not (and should not) become

omnipresent.

Centralization-

Decentralization Tension and

Equilibrium

There is a mix of forces both toward

centralization and decentralization

operating in the blockchain industry. In

fact, it is the blockchain that has defined

the landscape of models to comprise

those that are both centralized and

decentralized. Aside from the Internet,

there have not been many large-scale

standardized decentralization models

that have been readily conceptualized

and used in different contexts to organize

activity. Even though decentralization is

the core enabling functionality of

blockchain technology (the decentralized

trustless cryptographic transaction

recording system and public ledger),

there are also many centralization

pressures. One is the centralization

forces toward developing the standard

plumbing layers of the blockchain

economy. The Bitcoin blockchain has 90

percent cryptocurrency market

capitalization, and some projects

consider it safest and easiest to build

protocol 3.0 ideas on this installed base

without having to mount a mining

operation on a new altcoin blockchain.

Mining is another area upon which there

are many centralization pressures. The

fierce competition has driven mining

from individuals with mining rigs to

mining pools and custom ASICs such

that a few large mining pools register

most of the new Bitcoin blocks and have

started to reach the 51 percent threshold

of controlled hash power, which could

result in a mining takeover. It remains to

be seen how forces toward economic

efficiency through centralization and

trustless exchange through

decentralization will come to

equilibrium.

Chapter 5. Advanced Concepts

Terminology and Concepts

The blockchain economy is triggering

the invention of many new ideas and the

reappropriation of existing concepts and

terminology in innovative ways. It

prompts investigating the definition of

terms that have been taken for granted

and passed unquestioned for years, such

as money, currency, property,

government, sovereignty, and

intellectual property. The questioning of

underlying definitions and the

reappropriation of terms position these

concepts more openly and accessibly for

application to current situations.

Blockchain-related concepts are more

actively in people’s minds and ready to

apply at the generalized level. For

example, consider a library. At the more

generalized conceptual level, a library is

a system of value exchange; there are

product and service offerings, like books

and research, being taken up by those

with whom the value proposition

resonates. New models like blockchain

technology force us to consider reality at

the more generalized level of the

concepts behind a specific instantiation.

This leads us to imagine other specific

situations that could be realized with

those concepts. For example, a

blockchain is a technology for

decentralization. Bitcoin is the

instantiation of decentralization as a

digital currency, but decentralization

could be instantiated in many ways, such

as smart property, delegate democracy

governance services, and community-

based credit bureaus. In short, we start

to see the world of possibility, or the

world as possibility, as French

philosopher Deleuze would say. 162

Further, we need to have tools for

realizing this possibility; in the

generalized conceptualization process,

blockchain-related concepts become

ready at hand or available to us, as

Heidegger would say. 163

In this fomentive environment, we can

more easily create new conceptssuch as

GoToLunchcoin or Whatevercoin,

applying a fuller conceptualization of

coin in the cryptocurrency sense to a

new situation. A coin or apptoken

becomes a signifier that facilitates some

application. I as a community member

have earned some coin or token by

performing some service like mining

(transaction ledger administration) or

via crowdfunding that I can burn, spend,

or use in the network to acquire or

consume something of value. In this

sense, GoToLunchcoin is earned free

time from work completed in the

morning that can now be spent in

refreshing and re-energizing. The

economic principle of a cycle of

resources expended and replenished is

invoked. In this more elemental mode of

concept generation, we can more

immediately and intuitively understand

the innovations of other ideas as we hear

them. For example, if we heard of

Precedentcoin in the legal setting, it

would be easy to quickly intuit that it

would likely be the apptoken or

remunerative coin for performing the

function of establishing precedents, and

that there is probably some sort of new

decentralized peer-based method for

doing so.

New conceptualization can shift thinking

back and forth between the levels of the

general and the specific. An example of

specific versus general thinking is the

notion of an economy. An economy at the

immediate, already-specified level is

people buying and selling things, but at

the higher, more generalized conceptual

level, it is the production and

consumption of things of value.

Blockchain technology at the immediate,

specified level is a decentralized public

ledger for the recording of

cryptocurrency transactions. Blockchain

technology at the higher, more

generalized conceptual level is a new

class of thing like the Internet, a

society’s public records repository, a

high-resolution tracking system for

acknowledging human activity, a

revolutionary organizing paradigm for

human collaboration, an anticensorship

mechanism, a liberty and equality

enhancement tool, and a new organizing

model for the discovery, transfer, and

coordination of all quanta or discrete

units of anything. These are just some of

the things that blockchain technology is

at this higher level. Comprehending

blockchain technology at this more

generalized level—with so many

meanings of “what it is” conceptually—

helps to demonstrate its significant

potential impact.

Currency, Token, Tokenizing

Currency is just one idea that the

cryptoeconomy is forcing us to rethink.

One traditional dictionary definition of

currency is “a system of money in

general use in a particular country.” This

definition is already almost humorously

and hopelessly outdated by Bitcoin’s

transnationality, not to mention that a

“system of money” connotes centralized

top-down issuance and sovereign

control over money supplies. A

secondary definition is perhaps more

useful: “the quality or state of being used

or accepted by many people.” This

claim is more applicable for

cryptocurrencies, as we notice that

although there is nothing backing Bitcoin

like a gold standard, there is also

nothing backing fiat currencies. What

“backs” currency is the high adoption

rate, being accepted by many people, the

populace buying into the illusion of the

concept of money. If more people were

to accept the notion of cryptocurrencies

and begin to use and trust them, they too

could become as liquid as fiat

currencies.

Just as the term Bitcoin can be used in a

threefold manner to denote the

underlying blockchain ledger, the

Bitcoin transaction protocol, and the

Bitcoin cryptocurrency, the term

currency is being employed similarly to

mean different things. In the

cryptoeconomy context, one relevant

way that the word currency is being

used is in a generalized sense to connote

“a unit of value that can be earned and

used in a certain economic system,”

which is then likely to be fungibly

tradable into other economic systems.

The nomenclature coin could just as

easily be token—that is, a digital token

or access or tracking mechanism for

different activities. There could be

Appcoin, Communitycoin, Apptoken, or

other terms all referring to different

kinds of economic operations taking

place within a community.

For example, the Counterparty currency

(XCP) grants access to special features

such as the ability to issue new assets,

like a new appcoin, with the

Counterparty protocol or economic

system, that will be at any time

convertible to XCP or Bitcoin, which is

therefore convertible to USD, EUR,

CNY, or any other fiat currency.

Similarly, LTBcoin is a Counterparty-

enabled coin issued by the Let’s Talk

Bitcoin media network to support its

“local” economy. LTBcoin is used to

transact incoming sponsorships,

donations, and tips, and compensate

outgoing listener rewards, community

participation acknowledgment, content

creation, reviews, and other forms of

contribution. LTBcoin functions in the

context of its own local economy, and is

always immediately convertible to

Bitcoin. 164 Other currencies could have

similar use in their own local economies

—“local” in the sense of interest

community, not necessarily geography. In

fact, one benefit of cryptocurrencies is

their potential use as a tool for managing

globally dispersed interest groups.

Additionally, Communitycoin like the

BoulderFarmersMarketcoin could

provide additional features in its locality

beyond just economic transactions,

helping to build community cohesion and

a more coordinated effort toward shared

goals. Community cryptocoin could be a

mechanism for increasing the resolution

of interest group activities by being a

more specific means of organizing and

coordinating group behavior toward

some goal.

Communitycoin: Hayek’s

Private Currencies Vie for

Attention

The explosion of altcoin and

Communitycoin, tokens or coins

enabling economic function in a specific

community context like the LTBcoin just

described, suggests that some of the

aspects of the world envisioned by

Austrian School economist Friedrich

Hayek might be coming to fruition. In

Denationalization of Money, Hayek

advocates a competitive private market

for money instead of an arbitrary

government monopoly.165 He articulates

other foundational thinking for the

blockchain industry by arguing against

Keynesian inflationary money in his

essay The “Paradox” of Savings, 166 and

points out the improved ability of

vendors to respond in decentralized

markets. 167 Regarding decentralized

currency, Hayek posits a model in which

financial institutions each issue their

own currency and compete to maintain

the value of their currencies through

earnest productive activity.168 There can

be multiple concurrent currencies. This

model could be deployed on a much

wider basis in the blockchain economy,

with the possibility that not just every

financial institution, but every person,

organization, and society, would issue

their own currency or token (which

could have a completely legitimate use

within its locality and always be

fungibly convertible to other currencies

like Bitcoin). The idea would be to let a

million currencies bloom; everyone

could have their own coin, or multiple

coins, just like everyone has their own

blog, Twitter, and Instagram account. An

example of this is Tatianacoin, a musical

artist coin issued by singer-songwriter

Tatiana Moroz on the Counterparty

protocol ( @tatianacoin). Just as

everyone became an author in the

information revolution and their own

personal health advocate in the genomic

revolution, now everyone can become

their own banker in the blockchain

revolution. Some groups of currencies

could and should compete, whereas

other classes of currencies could coexist

cooperatively as complements in

discrete and separate venues.

Campuscoin

Some of the most obvious communities

with their own economies for which

currency issuance makes sense are

business and university campuses. There

should be an open source, templated

solution for any university

(administrators and student groups alike)

to easily issue Campuscoin (e.g.,

ASUcoin). The same templated altcoin

issuance could extend to groups within

these communities, like DeltaChiCoin or

NeuroscienceConferenceCoin, to

support any specific group’s activities.

The Campuscoin issuance template

could have specific prepackaged

modules. First, there could be a module

for buying and selling assets within the

local community, an OpenBazaar- or

Craigslist-like asset exchange module.

Second, there could be a sharing

economy module, a decentralized model

of Airbnb for dorm rooms, Getaround

for transportation including cars and

bikes, and LaZooz peer-based ride

sharing. Third, there could be a

consulting or “advisory services”

module for all manner of advice,

mentoring, coaching, and tutoring related

to classes, departments, majors, and

careers. Recent graduates could earn

Campuscoin by consulting to job-seeking

seniors with specific services like

advice and mock interviews; freshmen

could provide counsel to high school

seniors; and former students in a class

could provide advice to current students.

Campuscoin could provide a

remunerative mechanism for these

activities, which have been supplied on

a volunteer basis and thus have been

scarce where they could be abundant. By

providing remuneration and

acknowledgment, Campuscoin could

provide a much more dynamic and

connected network of those who have

had similar experiences. In addition to

remunerative economics, Campuscoin

can be used to connect communities. A

fourth module could be a “peer-to-peer

learning network” for notes sharing,

book sharing (solving the problem that a

certain book is checked out until the end

of the term), finding team members,

forming study groups, studying for tests,

and providing other kinds of support.

Fifth, there could be a RealJobs module

connecting local employers with

students for topical internships and jobs

with industry exposure and job force

readiness training, all in a rewards-

structured environment.

There are several efforts under way to

support students learning about and using

cryptocurrencies on university

campuses. The student-founded Campus

Cryptocurrency Network counts 150

clubs in its network as of September

2014 and is a primary resource for

students interested in starting campus

cryptocurrency clubs. In the future, this

network could be the standard repository

for templated Campuscoin applications.

Likewise, students founded and operate

the Bitcoin Association of Berkeley and

organized their first hackathon in

November 2014. MIT, with the MIT

Bitcoin Project, has made a significant

commitment to encourage the use and

awareness of cryptocurrency among

students, and it plans to give half a

million dollars’ worth of Bitcoin to

undergraduates. Students were invited to

claim their $100 of Bitcoin per person in

October 2014.169 Stanford University has

made an effort to develop cryptography

courses, which it offers for free online.

Coin Drops as a Strategy for

Public Adoption

The MIT Bitcoin Project is effectively a

coin drop, the simultaneous distribution

of Bitcoin to entire populations to spur

mainstream learning, trust, and adoption.

A similar but larger-scale coin drop, the

BitDrop, is scheduled for the Caribbean

island nation of Dominica for March 14,

2015, as part of the Pi Day mathematical

festival. Bitcoin will be sent by SMS via

Coinapult to all 70,000 residents. 170 The

goal is to create the world’s largest and

highest density Bitcoin community. The

project began as a brainstorming

exercise to facilitate adoption and put

Bitcoin into the hands of as many people

as possible. Dominica was chosen as

optimal because the country has a

relatively small population, a high

cellular telephony penetration rate, and a

position as a regional education center,

and it is the center of an active

intraisland, intracurrency trade and

remittance economy. Bitcoin ATMs and

merchant point-of-sale (POS) systems

are to be installed as part of the project

to help foster ongoing use of Bitcoin

after the coin drop.

Coin drops or airdrops have been used

in other situations; for example,

“Nationcoin” has been used to shore up

national identity. Iceland targeted

residents with free cryptocurrency in the

Auroracoin project, and similar efforts

include Scotcoin, Spaincoin, and

Greececoin, although there does not

appear to have been a high degree of

ongoing activity with these Nationcoin

cryptocurrencies. 171 One reason that

Ecuador banned Bitcoin was because it

plans to launch its own national

cryptocurrency.172 Nationcoin could help

bolster a sentiment of national

patrimony, especially as many Eurozone

nations have suffered from European

Central Bank regulation impositions as a

result of participating in the Euro. The

same kind of Nationcoin benefits could

be available in the idea of Tribecoin as

the patrimony-supporting coin issuance

of native peoples. The Pine Ridge Indian

Reservation in South Dakota was the

first American Indian tribe to launch its

own cryptocurrency, MazaCoin, using

the tribal nation’s sovereignty to set its

own rules on cryptocurrencies. 173

Currency: New Meanings

The key point is that the term currency

could begin to mean different things in

the cryptoeconomy context, especially

much more than in the basic money sense

of serving as a payment mechanism for

goods and services. A second important

sense of the word currency in the

cryptoeconomy context is emerging as

“something of value that can be usefully

deployed in some situation,” or, as

described previously, “a unit of value

that can be earned and used in a certain

economic system.” There is the general

idea of a token, currency, or appcoin

allowing access to certain features of an

economic system. Having Bitcoin, for

example, allows access to performing

transactions on the blockchain.

Privileges are accorded to users in some

cases just by their holding Bitcoin, as

this confirms ownership, and in other

cases by their actually spending the

Bitcoin. Considering currency more

broadly in these ways starts to widen its

applicability to many other situations. A

currency is a token of value that can be

earned and deployed. A currency stores

value and is transmissible. This

generalized definition supports the claim

that there can be many nonmonetary

currencies that are conceived in the

same structure. For example, reputation

is a unit of value that can be earned and

deployed in certain situations; it is a

nonmonetary currency in the sense that it

is a proxy for status or some kinds of

tasks that a person can do. Likewise,

health is a commodity of value that may

be earned and can be deployed in

specific situations. This broader notion

of currency as an earnable and

deployable commodity extends to many

other nonmonetary currencies beyond

reputation and health, such as intention,

attention, time, ideas, and creativity.

Currency Multiplicity:

Monetary and Nonmonetary

Currencies

Altcoin multiplicity is just one venue of

currency multiplicity in the modern

world. More broadly, we are living in

an increasingly multicurrency society

with all kinds of monetary and

nonmonetary currencies. First, there is

currency multiplicity in the sense of

monetary currency in that there are many

different fiat currencies (USD, CNY,

EUR, GBP, etc.). Second, there are many

other nonfiat, non-blockchain-based

currencies like loyalty points and airline

miles; one estimate is that there are

4,000 such altcurrencies. 174 Now there is

also a multiplicity of blockchain-based

cryptocurrencies like Bitcoin, Litecoin,

and Dogecoin. Beyond monetary

currencies, there is currency multiplicity

in nonmonetary currencies too (as just

discussed), such as reputation, intention,

and attention. 175

Market principles have been employed

to develop metrics for measuring

nonmonetary currencies such as

influence, reach, awareness, authenticity,

engagement, action taking, impact,

spread, connectedness, velocity,

participation, shared values, and

presence. 176 Now, blockchain technology

could make these nonmonetary social

currencies more trackable,

transmissible, transactable, and

monetizable. Social networks could

become social economic networks. For

example, reputation as one of the most

recognizable nonmonetary currencies

has always been an important intangible

asset, but was not readily monetizable

other than indirectly as an attribute of

labor capital. However, social network

currencies can now become transactable

with web-based cryptocurrency tip jars

(like Reddcoin) and other micropayment

mechanisms that were not previously

feasible or transnationally scalable with

traditional fiat currency. Just as

collaborative work projects such as

open source software development can

become more acknowledgeable and

remunerable with GitHub commits and

line-item contribution tracking,

cryptocurrency tip jars can provide a

measurable record and financial

incentive for contribution-oriented

online activities. One potential effect of

this could be that if market principles

were to become the norm for intangible

resource allocation and exchange, all

market agents might begin to have a

more intuitive and pervasive sense and

demonstration of exchange and

reciprocity. Thus, social benefits such as

a more collaborative society could be a

result of what might initially seem to be

only a deployment of economic

principles.

Demurrage Currencies:

Potentially Incitory and

Redistributable

Currency is one such core concept in

blockchain technology that is being

stretched, extended, and reunderstood:

currency as a digital token, a facilitation

mechanism for quantized transfer. Within

the notion of currency is the idea of a

demurrage currency. Demurrage means

carrying cost—that is, the cost to carry

an asset. The term originated in the

freight and shipping industry to indicate

the extra charge or cost associated with

the detention in port of a vessel by the

ship owner, as in loading or unloading,

beyond the time allowed or agreed upon.

In the cryptocurrency sense, demurrage

can mean being deflationary (value

losing) over time, thus incitory

(stimulatory) in that it incites some form

of action taking (i.e.; spending) in the

shorter term to realize value before it is

lost. The currency itself thus encourages

economic activity. Demurrage, then, is

the compact concept of an attribute, the

idea of an automatic motivating or

incitory property being built in to

something. Further, another aspect of

demurrage currencies (or really all

digital network–based asset allocation,

tracking, interaction, and transaction

structures) is the notion of periodic

automatic redistribution of the currency

(the resource) across all network nodes

at certain prespecified times, or in the

case of certain events. Demurrage

features could become a powerful and

standard currency administration tool.

Freicoin and Healthcoin are two

examples of uses of a demurrage

currency with a built-in mechanism for

action taking in the form of spending.

Demurrage currencies might be ideal for

the implementation of Guaranteed Basic

Income initiatives (GBIs), systems

whereby all citizens or residents of a

country would regularly receive an

allowance—a sum of money sufficient to

meet basic living expenses. GBIcoin or

Freicoin could be a straightforward

currency for basic living expenses that

runs out or resets on a periodic basis

such as weekly, monthly, or annually to

keep the system streamlined and efficient

without artificial overhangs created by

hoarding. The money would be more

like a coupon, expiring after certain

amounts of time. The currency loses

value, so the incentive is to spend it or

just not use it.

A GBIcoin like Freicoin would likely

not be the only currency, but would be a

special-use currency, like Healthcoin,

and would exist in the context of a

Hayekian complementary or

multicurrency society. This is the idea of

having multiple currencies (not just

multiple asset classes), but different

currencies for different purposes. The

Freicoin Cashcoin might be like a debit

card for short-term consumable basic

living expenditures. Spending could be

in one coin and savings in another.

Different classes of coins could have

features adapted to specific contexts for

savings, investment, and real estate

transactions, and so on. The concept of

GBIcoin or Freicoin is essentially a

Spendcoin, Cashcoin, or Debitcoin that

could be denominated in the basic

national currency (Nationcoin) like

UScoin or Americoin for supporting

basic day-to-day living expenses, or

perhaps more administratively efficient

at the state level in Statecoin, like

NYcoin.

More broadly, complementary currency

systems and multicurrency systems are

just the application of the same

phenomenon that has been used to

reinvent many other areas of modern

life. Multicurrency systems are the

granularification of currency, finance,

and money; the seemingly infinite

explosion of long-tail power-law

personalization and choice making that

has come to coffee (Starbucks), books

and movies (Amazon, Netflix),

information (blogs, Twitter), learning

(YouTube, MOOCs), and relationships

(polyamory). Now is merely the advent

of these various systems of personalized

multiplicity coming to money and

finance.

Healthcoin could be similarly

conceived as a demurrage currency.

Health-services spending could be

denominated in Healthcoin. In the United

States, many health plans such as Health

Savings Accounts (HSAs) and Cafeteria

Plans are already demurrage currencies

in that they are set up to expire each

year. The system resets, so strange

bubbles and artificialities are not

introduced. All national health services

could be denominated and paid in

Healthcoin.

In addition to the potential value loss

and therefore “incentive to spend”

aspect of a demurrage currency, another

feature of a demurrage currency, which

could be a feature of any cryptocurrency,

is the possibility of periodic

redistribution across network nodes.

This also incentivizes currency holders

to spend out the currency. At the more

extreme end, and as an indication of

connecting currency operations to policy

objectives, this feature could provide the

means for a society to periodically

redistribute income across the populace.

An obvious limitation of managed

demurrage currency systems is that

because enterprising human agents are

the constituents, it is likely, if incentives

were not aligned, that they would find

all manner of clever mechanisms and

loopholes to circumvent the system—for

example, to get around the antihoarding

property of a demurrage currency if

there were some benefit or perceived

benefit to hoarding. However, the goal

would be to appropriately align

incentives, and really to move into a

world in which circumvention incentives

would be irrelevant because the

currency distribution system would be

able to meet the panoply of personalized

needs a society has with money for basic

expenditure. The certainty of GBIcoin,

Freicoin, or Cashcoin reissuance in

subsequent time periods, assuming not

inconsequentially that the system is

stable and that there is trust in the

system, could create a mindset of

abundance, which together with the

demurrage or value-losing aspect of the

currency obviates the need for hoarding

and antiscarcity measures. This would

be a conceptualization of money and the

means of meeting basic survival needs

that is unprecedented in human history—

a trustable source of having basic needs

met such that individuals do not even

have to think about this. The great

potential benefit of having basic survival

needs met could be that it might usher in

not just an era of abundance, but also

free up human cognitive surplus to work

on other higher-order interests,

challenges, and concerns, thus

architecting a new era of human society,

collaboration, and productivity.177

Extensibility of Demurrage

Concept and Features

The action-incitory and dynamic

redistribution features of a demurrage

currency are not just useful for

developing special-purpose currencies

in a multicurrency society, but, like many

blockchain concepts, potentially

extensible on a much broader basis

beyond the context of currency,

economics, and financial systems. The

presupposition is that many things are in

some way a currency, an economy, or a

network, and that we are living in an

increasingly multicurrency society,

literally for monetary systems and also

in the sense of currency, reputation,

intention, attention, and ideas as

currency.

In this framework, we can see that Fitbit

and smartwatch are demurrage health

currencies. A demurrage currency is an

action-inciting currency, a stimulatory

currency, because it gets you to do

something. Fitbit is a demurrage (action-

inciting) health currency, a currency that

prompts you to take action. The

demurrage (incitory) mechanism is that

perhaps in the evening, you see a

notification on your Fitbit or smartwatch

telling you that you have taken 19,963

steps today, thus encouraging you to

reach 20,000; the way that Fitbit and

smartwatch present information is a

demurrage mechanism that encourages

you to take action. Thus, health as a

demurrage currency can be used as a

design principle in developing

technology to facilitate action taking that

is in the interest of the agent.

The dynamic redistribution property of

the demurrage concept can also be

applied to many other contexts, such as

when resources are distributed across

networks. Networks are an increasingly

pervasive feature of the modern world.

A clear use case for the demurrage

dynamic redistribution feature is in the

case of resource allocation through

automatic networks or tradenets. Here,

more efficient, larger, more scalable,

more trackable systems are sought for

the distribution of consumable resources

like gas and electricity, transportation

quanta (i.e., Uber/LaZooz, self-driving

vehicles, or automated pod transport

systems envisioned in the farther future),

clean water, food, health-care services,

relief aid, crisis-response supplies, and

even emotional support or mental-

performance coaching (for individuals

permissioned in consumer EEG rigs).

This is the idea of using the demurrage

concept in other network systems to

dynamically, automatically redistribute

resources for optimization. The concept

is combining networks and demurrage

currency to enable new functionality like

dynamic automatic redistribution across

network nodes and enable the predictive

and on-demand smart clustering of

resources where needed. Some

examples are predicting and delivering

an increased load of Ubers and cabs to

the airport when more flights are due to

arrive, and preparing available

electricity units on hotter days and fuel

oil units on colder days. This is the idea

of automatic resource redistribution in

smart networks, possible using

demurrage as a design element.

There are other examples of deploying

the demurrage concept in smart

networks. Health is itself a network and

a demurrage currency; an earnable and

spendable commodity; a linked,

continually autoredistributing enabler

operating fractally at multiple

organizational levels, among synapses,

cells, organisms/humans, and societies.

We can start to see the body and brain as

a Dapp, DAO, or DAC where already

many systems are automatically

operating at the unconscious level, and

where more systems like cognitive

enhancement, preventive medicine, and

pathology treatment could be explicitly

managed with Dapp AI systems. This

concept combines a demurrage resource-

allocation system with a Dapp, enabling

the functionality of the automatic

redistribution of any resource

commodity within a system. This could

be useful, for example, in the case of

neural potentiation in a brain, increasing

nerve impulses along pathways, for

which systemwide resource

redistribution could optimize

performance. We want to redistribute

and equalize potentiation capability

among synapses in a physical brain with

our cognitive enhancement technology or

in an artificial intelligence or software-

simulated brain. Different kinds of

brain-based resources—such as

potentiation capability, optogenetic

excitation (manipulating living cells

with inserted genetically adapted

proteins and light), or transcranial direct

stimulation—could be the demurrage

currencies targeted for redistribution

across a brain or mindfile. Another

example of demurrage redistribution in

the health context could be for cellular

resources such as oxygen, waste

removal nanobots, and circulating lab-

on-chips as the physical enablement

currencies of the body. Likewise, ideas

could be the redistributable currency of

collaborative teams, and liberty, trust,

and compassion the currency of society.

Bitcoin is already effectuated as a

demurrage currency and smart network

resource allocation mechanism in the

sense of redistributing the currency of

liberty across society.

Chapter 6. Limitations

The blockchain industry is still in the

early stages of development, and there

are many different kinds of potential

limitations. The classes of limitations

are both internal and external, and

include those related to technical issues

with the underlying technology, ongoing

industry thefts and scandals, public

perception, government regulation, and

the mainstream adoption of technology.

Technical Challenges

A number of technical challenges related

to the blockchain, whether a specific one

or the model in general, have been

identified.

The issues are in clear sight of

developers, with different answers to the

challenges posited, and avid discussion

and coding of potential solutions.

Insiders have different degrees of

confidence as to whether and how these

issues can be overcome to evolve into

the next phases of blockchain industry

development. Some think that the de

facto standard will be the Bitcoin

blockchain, as it is the incumbent, with

the most widely deployed infrastructure

and such network effects that it cannot

help but be the standardized base. Others

are building different new and separate

blockchains (like Ethereum) or

technology that does not use a

blockchain (like Ripple). One central

challenge with the underlying Bitcoin

technology is scaling up from the current

maximum limit of 7 transactions per

second (the VISA credit card processing

network routinely handles 2,000

transactions per second and can

accommodate peak volumes of 10,000

transactions per second), especially if

there were to be mainstream adoption of

Bitcoin.178 Some of the other issues

include increasing the block size,

addressing blockchain bloat, countering

vulnerability to 51 percent mining

attacks, and implementing hard forks

(changes that are not backward

compatible) to the code, as summarized

here:179

Throughput

The Bitcoin network has a potential

issue with throughput in that it is

processing only one transaction per

second (tps), with a theoretical

current maximum of 7 tps. Core

developers maintain that this limit

can be raised when it becomes

necessary. One way that Bitcoin

could handle higher throughput is if

each block were bigger, though right

now that leads to other issues with

regard to size and blockchain bloat.

Comparison metrics in other

transaction processing networks are

VISA (2,000 tps typical; 10,000 tps

peak), Twitter (5,000 tps typical;

15,000 tps peak), and advertising

networks (>100,000 tps typical).

Latency

Right now, each Bitcoin transaction

block takes 10 minutes to process,

meaning that it can take at least 10

minutes for your transaction to be

confirmed. For sufficient security,

you should wait more time—about

an hour—and for larger transfer

amounts it needs to be even longer,

because it must outweigh the cost of

a double-spend attack (in which

Bitcoins are double-spent in a

separate transaction before the

merchant can confirm their reception

in what appears to be the intended

transaction). Again, as the

comparison metric, VISA takes

seconds at most.

Size and bandwidth

The blockchain is 25 GB, and grew

by 14 GB in the last year. So it

already takes a long time to

download (e.g., 1 day). If throughput

were to increase by a factor of 2,000

to VISA standards, for example, that

would be 1.42 PB/year or 3.9

GB/day. At 150,000 tps, the

blockchain would grow by 214

PB/year. The Bitcoin community

calls the size problem “bloat,” but

that assumes that we want a small

blockchain; however, to really scale

to mainstream use, the blockchain

would need to be big, just more

efficiently accessed. This motivates

centralization, because it takes

resources to run the full node, and

only about 7,000 servers worldwide

do in fact run full Bitcoind nodes,

meaning the Bitcoin daemon (the full

Bitcoin node running in the

background). It is being discussed

whether locations running full nodes

should be compensated with

rewards. Although 25 GB of data is

trivial in many areas of the modern

“big data” era and data-intensive

science with terabytes of data being

the standard, this data can be

compressed, whereas the blockchain

cannot for security and accessibility

reasons. However, perhaps this is an

opportunity to innovate new kinds of

compression algorithms that would

make the blockchain (at much larger

future scales) still usable, and

storable, while retaining its integrity

and accessibility. One innovation to

address blockchain bloat and make

the data more accessible is APIs,

like those from Chain and other

vendors, that facilitate automated

calls to the full Bitcoin blockchain.

Some of the operations are to obtain

address balances and balances

changes, and notify user applications

when new transactions or blocks are

created on the network. Also, there

are web-based block explorers (like

https://blockchain.info/),

middleware applications allowing

partial queries of blockchain data,

and frontend customer-facing mobile

ewallets with greatly streamlined

blockchain data.

Security

There are some potential security

issues with the Bitcoin blockchain.

The most worrisome is the

possibility of a 51-percent attack, in

which one mining entity could grab

control of the blockchain and

double-spend previously transacted

coins into his own account. 180 The

issue is the centralization tendency in

mining where the competition to

record new transaction blocks in the

blockchain has meant that only a few

large mining pools control the

majority of the transaction recording.

At present, the incentive is for them

to be good players, and some (like

Ghash.io) have stated that they

would not take over the network in a

51-percent attack, but the network is

insecure. 181 Double-spending might

also still be possible in other ways

—for example, spoofing users to

resend transactions, allowing

malicious coders to double-spend

coins. Another security issue is that

the current cryptography standard

that Bitcoin uses, Elliptic Curve

Cryptography, might be crackable as

early as 2015; however, financial

cryptography experts have proposed

potential upgrades to address this

weakness.182

Wasted resources

Mining draws an enormous amount

of energy, all of it wasted. The

earlier estimate cited was $15

million per day, and other estimates

are higher. 183 On one hand, it is the

very wastefulness of mining that

makes it trustable—that rational

agents compete in an otherwise

useless proof-of-work effort in

hopes of the possibility of reward—

but on the other hand, these spent

resources have no benefit other than

mining.

Usability

The API for working with Bitcoind

(the full node of all code) is far less

user-friendly than the current

standards of other easy-to-use

modern APIs, such as widely used

REST APIs.

Versioning, hard forks, multiple chains

Some other technical issues have to

do with the infrastructure. One issue

is the proliferation of blockchains,

and that with so many different

blockchains in existence, it could be

easy to deploy the resources to

launch a 51-percent attack on

smaller chains. Another issue is that

when chains are split for

administrative or versioning

purposes, there is no easy way to

merge or cross-transact on forked

chains.

Another significant technical challenge

and requirement is that a full ecosystem

of plug-and-play solutions be developed

to provide the entire value chain of

service delivery. For example, linked to

the blockchain there needs to be secure

decentralized storage (MaidSafe, Storj),

messaging, transport, communications

protocols, namespace and address

management, network administration,

and archival. Ideally, the blockchain

industry would develop similarly to the

cloud-computing model, for which

standard infrastructure components—

like cloud servers and transport systems

—were defined and implemented very

quickly at the beginning to allow the

industry to focus on the higher level of

developing value-added services instead

of the core infrastructure. This is

particularly important in the blockchain

economy due to the sensitive and

complicated cryptographic engineering

aspects of decentralized networks. The

industry is sorting out exactly how much

computer network security,

cryptography, and mathematics expertise

the average blockchain startup should

have—ideally not much if they can rely

on a secure infrastructure stack on which

this functionality already exists. That

way, the blockchain industry’s

development can be hastened, without

every new business having to reinvent

the wheel and worry about the fact that

its first customer-facing ewallet was not

multisig (or whatever the current

industry standard is, as cryptographic

security standards will likely continue to

iterate).

Some of the partial proposed solutions

to the technical issues discussed here are

as follows:

Offline wallets to store the majority of

coins

Different manner of offline wallets

could be used to store the bulk of

consumer cryptocoins—for example,

paper wallets, cold storage, and bit

cards.

Dark pools

There could be a more granular

value chain such that big crypto-

exchanges operate their own internal

databases of transactions, and then

periodically synchronize a summary

of the transactions with the

blockchain—an idea borrowed from

the banking industry.

Alternative hashing algorithms

Litecoin and other cryptocurrencies

use scrypt, which is at least slightly

faster than Bitcoin, and other hashing

algorithms could be innovated.

Alternatives to proof of work for

Byzantine consensus

There are many other consensus

models proposed—such as proof of

stake, hybrids, and variants—that

have lower latency, require less

computational power, waste fewer

resources, and improve security for

smaller chains. Consensus without

mining is another area being

explored, such as in Tendermint’s

modified version of DLS (the

solution to the Byzantine Generals’

Problem by Dwork, Lynch, and

Stockmeyer), with bonded coins

belonging to byzantine

participants. 184 Another idea for

consensus without mining or proof of

work is through a consensus

algorithm such as Hyperledger’s,

which is based on the Practical

Byzantine Fault Tolerance algorithm.

Only focus on the most recent or unspent

outputs

Many blockchain operations could

be based on surface calculations of

the most recent or unspent outputs,

similar to how credit card

transactions operate. “Thin wallets”

operate this way, as opposed to

querying a full Bitcoind node, and

this is how Bitcoin ewallets work on

cellular telephones. A related

proposal is Cryptonite, which has a

“mini-blockchain” abbreviated data

scheme.

Blockchain interoperability

To coordinate transactions between

blockchains, there are several side

chains projects proposed, such as

those by Blockstream.

Posting bond deposits

The security of proposed alternative

consensus mechanisms like

Tendermints’s DLS protocol (which

requires no proof-of-work mining)

could be reinforced with structural

elements such as requiring miners to

post bond deposits to blockchains.

This could help resolve the security

issue of the “nothing at stake in short

time ranges” problem, where

malicious players (before having a

stake) could potentially fork the

blockchain and steal cryptocurrency

in a double-spend attack. 185 Bond

deposits could be posted to

blockchains like Tendermint does,

making it costly to fork and possibly

improving operability and security.

REST APIs

Essentially secure calls in real time,

these could be used in specific cases

to help usability. Many blockchain

companies provide alternative

wallet interfaces that have this kind

of functionality, such as

Blockchain.info’s numerous wallet

APIs.

Business Model Challenges

Another noted challenge, both functional

and technical, is related to business

models. At first traditional business

models might not seem applicable to

Bitcoin since the whole point of

decentralized peer-to-peer models is

that there are no facilitating

intermediaries to take a cut/transaction

fee (as in one classical business model).

However, there are still many

worthwhile revenue-generating products

and services to provide in the new

blockchain economy. Education and

mainstream user-friendly tools are

obvious low-hanging fruit (for example,

being targeted by Coinbase, Circle

Internet Financial, and Xapo), as is

improving the efficiency of the entire

worldwide existing banking and finance

infrastructure like Ripple—another

almost “no brainer” project, when

blockchain principles are understood.

Looking ahead, reconfiguring all of

business and commerce with smart

contracts in the Bitcoin 2.0 era could

likely be complicated and difficult to

implement, with many opportunities for

service providers to offer

implementation services, customer

education, standard setting, and other

value-added facilitations. Some of the

many types of business models that have

developed with enterprise software and

cloud computing might be applicable,

too, for the Bitcoin economy—for

example, the Red Hat model (fee-based

services to implement open source

software), and SaaS, providing Software

as a Service, including with

customization. One possible job of the

future could be smart contract auditor, to

confirm that AI smart contracts running

on the blockchain are indeed doing as

instructed, and determining and

measuring how the smart contracts have

self-rewritten to maximize the issuing

agent’s utility.

Scandals and Public

Perception

One of the biggest barriers to further

Bitcoin adoption is its public perception

as a venue for (and possible abettor of)

the dark net’s money-laundering, drug-

related, and other illicit activity—for

example, illegal goods online

marketplaces such as Silk Road. Bitcoin

and the blockchain are themselves

neutral, as any technology, and are “dual

use”; that is, they can be used for good

or evil. Although there are possibilities

for malicious use of the blockchain, the

potential benefits greatly outweigh the

potential downsides. Over time, public

perception can change as more

individuals themselves have ewallets

and begin to use Bitcoin. Still, it must be

acknowledged that Bitcoin as a

pseudonymous enabler can be used to

facilitate illegal and malicious

activities, and this invites in-kind “Red

Queen” responses (context-specific

evolutionary arms races) appropriate to

the blockchain. Computer virus detection

software arose in response to computer

viruses; and so far some features of the

same constitutive technologies of

Bitcoin (like Tor, a free and open

software network) have been deployed

back into detecting malicious players.

Another significant barrier to Bitcoin

adoption is the ongoing theft, scandals,

and scams (like so-called new altcoin

“pump and dump” scams that try to bid

up new altcoins to quickly profit) in the

industry. The collapse of the largest

Bitcoin exchange at the time, Tokyo-

based MtGox, in March 2014 came to

wide public attention. An explanation is

still needed for the confusing irony that

somehow in the blockchain, the world’s

most public transparent ledger, coins can

disappear and still remain lost months

later. The company said it had been

hacked, and that the fraud was a result of

a problem known as a “transaction

malleability bug.” The bug allowed

malicious users to double-spend,

transferring Bitcoins into their accounts

while making MtGox think the transfer

had failed and thus repeat the

transactions, in effect transferring the

value twice. 186 Analysts remain unsure if

MtGox was an externally perpetrated

hack or an internal embezzlement. The

issue is that these kinds of thefts persist.

For example, recent headlines inform us

that the Moolah CEO disappeared with

$1.4 million in Bitcoin (October

2014), 187 $2 million of Vericoin was

stolen (July 2014), 188 and $620,000 was

stolen in a Dogecoin mining attack (June

2014). 189

Blockchain industry models need to

solidify and mature such that there are

better safeguards in place to stabilize the

industry and allow both insiders and

outsiders to distinguish between good

and bad players. Oversight need not

come from outside; congruently

decentralized vetting, confirmation, and

monitoring systems within the ecosystem

could be established. An analogy from

citizen science is realizing that oversight

functions are still important, and

reinforce the system by providing checks

and balances. In DIYgenomics

participant-organized research studies,

for example, the oversight function is

still fulfilled, but in some cases with a

wholly new role relevant to the

ecosystem—independent citizen ethicists

—as opposed to traditional top-down

overseers (in the form of a human-

subjects research Institutional Review

Board). 190 Other self-regulating

industries include movies, video games,

and comic books.

There is the possibility that the entire

blockchain industry could just collapse

(either due to already prognosticated

problems or some other factor as yet

unforeseen). There is nothing to indicate

that a collapse would be impossible.

The blockchain economy does have a

strong presence, as measured by diverse

metrics such as coin market

capitalizations, investment in the sector,

number of startups and people working

in the sector, lines of GitHub code

committed, and the amount of

“newspaper ink” devoted to the sector.

Already the blockchain industry is

bigger and better established than the

previous run at digital currencies

(virtual-world currencies like the

Second Life Linden dollar). However,

despite the progress to date and lofty

ideals of Bitcoin, maybe it is still too

early for digital currency; maybe all of

the right safeguards and structures are

not yet in place for digital currencies to

go fully mainstream (although Apple

Pay, more than any other factor, may

pave the way to full mainstream

acceptance of digital currencies). Apple

Pay could quite possibly be enough for

the short term. It will be a long time

before Bitcoin has the same user-

friendly attributes of Apple Pay, such as

latency of confirmation time.

Government Regulation

How government regulation unfolds

could be one of the most significant

factors and risks in whether the

blockchain industry will flourish into a

mature financial services industry. In the

United States, there could be federal-

and state-level legislation; deliberations

continue into a second comment period

regarding a much-discussed New York

Bitlicense. 191 The New York Bitlicense

could set the tone for worldwide

regulation. On one hand, the Bitcoin

industry is concerned about the

extremely broad, wide-reaching, and

extraterritorial language of the license as

currently proposed. The license would

encompass anyone doing anything with

anyone else’s Bitcoins, including basic

wallet software (like the QT wallet). 192

However, on the other hand, regulated

consumer protections for Bitcoin

industry participants, like KYC (know

your customer) requirements for money

service businesses (MSBs), could hasten

the mainstream development of the

industry and eradicate consumer worry

of the hacking raids that seem to plague

the industry.

The deliberations and early rulings of

worldwide governments on Bitcoin raise

some interesting questions. One issue is

the potential practical impossibility of

carrying out taxation with current

methods. A decentralized peer-to-peer

sharing economy of Airbnb 2.0 and Uber

2.0 run on local implementations of

OpenBazaar with individuals paying

with cryptocurrencies renders traditional

taxation structures impossible. The usual

tracking and chokehold points to trace

the consumption of goods and services

might be gone. This has implications

both for taxation and for the overall

measurement of economic performance

such as GDP calculations, which could

have the beneficial impact of drawing

populaces away from being overly and

possibly incorrectly focused on

consumption as a wellness metric.

Instead, there could be an overhaul of

the taxation system to a consumption-

based tax on large-ticket visible items

such as hard assets (cars, houses).

Chokehold points would need to be

easily visible for taxation, a “tax on

sight” concept. A potential shift from an

income tax–based system to a

consumption tax–based system could be

a significant change for societies.

A second issue that blockchain

technology raises with regard to

government regulation is the value

proposition offered by governments and

their business model. Some argue that in

the modern era of big data, governments

are increasingly unable to keep up with

their record-keeping duties of recording

and archiving information and making

data easily accessible. On this view,

governments could become obsolete

because they cannot fund themselves the

traditional way—by raising taxes.

Blockchain technology could potentially

help solve both of these challenges, and

could at minimum supplement and help

governments do their own jobs better,

eventually making classes of

government-provided services

redundant. Recording all of a society’s

records on the blockchain could obviate

the need for entire classes of public

service. This view starkly paints

governments as becoming redundant

with the democratization of government

features of the blockchain.

However, just as there might be both

centralized and decentralized models to

coordinate our activities in the world,

there could likely be roles for both

traditional government and new forms of

blockchain-based government. There

might still be a role for traditional

centralized governments, but they will

need to become economically

rationalized, with real value

propositions that resonate with

constituencies, shrink costs, and

demonstrate effectiveness. There could

be hybrid governments in the future, like

other industries, where automation is the

forcing function, and the best “worker”

for the job is a human/algorithmic

pairing. 193 Perfunctory repetitive tasks

are automated with blockchain registries

and smart contracts, whereas

government employees can move up the

value chain.

Privacy Challenges for

Personal Records

There are many issues to be resolved

before individuals would feel

comfortable storing their personal

records in a decentralized manner with a

pointer and possibly access via the

blockchain. The potential privacy

nightmare is that if all your data is online

and the secret key is stolen or exposed,

you have little recourse. In the current

cryptocurrency architecture, there are

many scenarios in which this might

happen, just as today with personal and

corporate passwords being routinely

stolen or databases hacked—with broad

but shallow consequences; tens of

thousands of people deal with a usually

minor inconvenience. If a thorough

personal record is stolen, the

implications could be staggering for an

individual: identity theft to the degree

that you no longer have your identity at

all.

Overall: Decentralization

Trends Likely to Persist

However, despite all of the potential

limitations with the still-nascent

blockchain economy, there is virtually

no question that Bitcoin is a disruptive

force and that its impact will be

significant. Even if all of the current

infrastructure developed by the

blockchain industry were to disappear

(or fall out of popularity, as virtual

worlds have), much of their legacy could

persist. The blockchain economy has

provided new larger-scale ideas about

how to do things. Even if you don’t buy

into the future of Bitcoin as a stable,

long-term cryptocurrency, or blockchain

technology as it is currently conceived

and developing, there is a very strong

case for decentralized models.

Decentralization is an idea whose time

has come. The Internet is large enough

and liquid enough to accommodate

decentralized models in new and more

pervasive ways than has been possible

previously. Centralized models were a

good idea at the time, an innovation and

revolution in human coordination

hundreds of years ago, but now we have

a new cultural technology, the Internet,

and techniques such as distributed public

blockchain ledgers that could facilitate

activity to not only include all seven

billion people for the first time, but also

allow larger-scale, more complicated

coordination, and speed our progress

toward becoming a truly advanced

society. If not the blockchain industry,

there would probably be something else,

and in fact there probably will be other

complements to the blockchain industry

anyway. It is just that the blockchain

industry is one of the first identifiable

large-scale implementations of

decentralization models, conceived and

executed at a new and more complex

level of human activity.

Chapter 7. Conclusion

This book has tried to demonstrate that

blockchain technology’s many concepts

and features might be broadly extensible

to a wide variety of situations. These

features apply not just to the immediate

context of currency and payments

(Blockchain 1.0), or to contracts,

property, and all financial markets

transactions (Blockchain 2.0), but

beyond to segments as diverse as

government, health, science, literacy,

publishing, economic development, art,

and culture (Blockchain 3.0), and

possibly even more broadly to enable

orders-of-magnitude larger-scale human

progress.

Blockchain technology could be quite

complementary in a possibility space for

the future world that includes both

centralized and decentralized models.

Like any new technology, the blockchain

is an idea that initially disrupts, and over

time it could promote the development

of a larger ecosystem that includes both

the old way and the new innovation.

Some historical examples are that the

advent of the radio in fact led to

increased record sales, and ereaders

such as the Kindle have increased book

sales. Now, we obtain news from the

New York Times, blogs, Twitter, and

personalized drone feeds alike. We

consume media from both large

entertainment companies and YouTube.

Thus, over time, blockchain technology

could exist in a larger ecosystem with

both centralized and decentralized

models.

There could be a large collection of both

fiat currencies and cryptocurrencies

existing side by side. In his book

Denationalization of Money, economist

Friedrich Hayek envisions

complementary currencies competing for

consumer attention. He saw multiple

currencies at the level of financial

institutions, but as everyone now has

their own news outlets through their own

blog, Twitter account, YouTube channel,

and Instagram handle, so too could there

be arbitrarily many cryptocurrencies, at

the level of individuals or special

interest groups and communities. Each of

these cryptocurrencies could exist in its

local economy, fully relevant and valid

for value exchange and economic

operation in that local context, like the

Let’s Talk Bitcoin community coin,

musical artistÕs Tatianacoin, or

community coin in your local farmers

market, DIY maker lab, or school

district. The local token would likely

always be readily convertible out to

more liquid cryptocurrencies and fiat

currencies. This is the multiplicity and

abundance property of blockchain

technology. Blockchain technology could

enable currency multiplicity in the form

of many currencies potentially existing

side by side, conceived with more

granularity than fiat currencies, each for

use in specific situations. The overall

effect could be promoting a mindset of

abundance as opposed to scarcity in

regard to the concept of money,

particularly if simultaneously

accompanied by Guaranteed Basic

Income (GBI) initiatives that covered

basic survival needs for all individuals

and thus enabled a higher-level

cognitive focus. Currency could be

reconceptualized in the context of what

kinds of actions it enables in a

community as opposed to exclusively

being a means of obtaining and storing

value.

The Blockchain Is an

Information Technology

Perhaps most centrally, the blockchain is

an information technology. But

blockchain technology is also many

other things. The blockchain as

decentralization is a revolutionary new

computing paradigm. The blockchain is

the embedded economic layer the Web

never had. The blockchain is the

coordination mechanism, the line-item

attribution, credit, proof, and

compensation rewards tracking schema

to encourage trustless participation by

any intelligent agent in any

collaboration. The blockchain “is a

decentralized trust network.” 194 The

blockchain is Hayek’s multiplicity of

private complementary currencies for

which there could be as many currencies

as Twitter handles and blogs, all fully

useful and accepted in their own

hyperlocal contexts, and where

Communitycoin issuance can improve

the cohesion and actualization of any

group. The blockchain is a cloud venue

for transnational organizations. The

blockchain is a means of offering

personalized decentralized governance

services, sponsoring literacy, and

facilitating economic development. The

blockchain is a tool that could prove the

existence and exact contents of any

document or other digital asset at a

particular time. The blockchain is the

integration and automation of

human/machine interaction and the

machine-to-machine (M2M) and Internet

of Things (IoT) payment network for the

machine economy. The blockchain and

cryptocurrency is a payment mechanism

and accounting system enabler for M2M

communication. The blockchain is a

worldwide decentralized public ledger

for the registration, acknowledgment,

and transfer of all assets and societal

interactions, a society’s public records

bank, an organizing mechanism to

facilitate large-scale human progress in

previously unimagined ways. The

blockchain is the technology and the

system that could enable the global-scale

coordination of seven billion intelligent

agents. The blockchain is a consensus

model at scale, and possibly the

mechanism we have been waiting for

that could help to usher in an era of

friendly machine intelligence.

Blockchain AI: Consensus as

the Mechanism to Foster

“Friendly” AI

One forward-looking but important

concern in the general future of

technology is different ways in which

artificial intelligence (AI) might arise

and how to sponsor it such that it

engenders a “friendly” or benevolent

relationship with humans. There is the

notion of a technological singularity, a

moment when machine intelligence might

supersede human intelligence. However,

those in the field have not set forth any

sort of robust plan for how to effect

friendly AI, and many remain skeptical

of this possibility.195 It is possible that

blockchain technology could be a useful

connector of humans and machines in a

world of increasingly autonomous

machine activity through Dapps, DAOs,

and DACs that might eventually give

way to AI. In particular, consensus as a

mechanism could be instrumental in

bringing about and enforcing friendly AI.

Large Possibility Space for

Intelligence

Speculatively looking toward the longer

term, there might be a large possibility

space of intelligence that includes

humans, enhanced humans, different

forms of human/machine hybrids, digital

mindfile uploads, and different forms of

artificial intelligence like simulated

brains and advanced machine learning

algorithms. The blockchain as an

information technology might be able to

ease the future transition into a world

with multiple kinds of machine, human,

and hybrid intelligence. These

intelligences would likely not be

operating in isolation, but would be

connected to communications networks.

To achieve their goals, digital

intelligences will want to conduct

certain transactions over the network,

many of which could be managed by

blockchain and other consensus

mechanisms.

Only Friendly AIs Are Able to

Get Their Transactions

Executed

One of the unforeseen benefits of

consensus models might be that they

could possibly enforce friendly AI,

which is to say cooperative, moral

players within a society. 196 In

decentralized trust networks, an agentÕs

reputation (where agents themselves

remain pseudonymous) could be an

important factor in whether his

transactions will be executed, such that

malicious players would not be able to

get their transactions executed or

recognized on the network. Any

important transaction regarding resource

access and use might require assent by

consensus models. Thus, the way that

friendly AI could be enforced is that

even bad agents want to participate in

the system to access resources and to do

so, they need to look like good agents.

Bad agents have to resemble good agents

enough in reputation and behavior that

they become indistinguishable from good

agents because both behave well. A

related example is that of sociopaths in

real-life society who exist but are often

transparent because they are forced into

good player behavior through the

structure and incentives of society. Of

course, there are many possible

objections to the idea that the blockchain

structure could enforce friendly AI: bad

agents might build their own smart

networks for resource access, they might

behave duplicitously while earning trust,

and so on. This does not change the key

point of seeing blockchain technology as

a system of checks and balances for

incentivizing and producing certain

kinds of behavior while attempting to

limit others. The idea is to create

Occam’s razor systems that are so useful

in delivering benefits that it pays to play

well, where the easiest best solution is

to participate. Good player incentives

are baked into the system.

Some of the key network operations that

any digital intelligence might want to

execute are secure access, authentication

and validation, and economic exchange.

Effectively, any network transaction that

any intelligent agent cares about to

conduct her goals will require some

form of access or authentication that is

consensus-signed, which cannot be

obtained unless the agent has a good—

which is to say benevolent—reputational

standing on the network. This is how

friendly AI might be effectuated in a

blockchain consensus-based model.

Smart Contract Advocates on

Behalf of Digital

Intelligence

Not only could blockchain technology

and consensus models be used

potentially to obtain friendly AI

behavior, the functionality might also be

employed the other way around. For

example, if you are an AI or a digitally

uploaded human mindfile, smart

contracts could possibly serve as your

advocate in the future to confirm details

about your existence and runtime

environment. Another long-standing

problem in AI has been that if you are a

digital intelligence, how can you confirm

your reality environment—that you still

exist, that you are sufficiently backed up,

that you are really running, and under

what conditions? For example, you want

to be sure that your data center has not

shoved you onto an old DOS-based

computer, or deleted you, or gone out of

business. Smart contracts on the

blockchain are exactly the kind of

universal third-party advocate in future

timeframes that could be used to verify

and exercise control over the physical

parameters of reality, of your existence

as a digital intelligence. How it could

work is that you would enact smart

contracts on the blockchain to

periodically confirm your runtime

parameters and decentralized back-up

copies. Smart contracts allow you to set

up “future advocacy,” a new kind of

service that could have many relevant

uses, even in the current practical sense

of enforcing elder rights.

Speculatively, in the farther future, in

advanced societies of billions of digital

intelligences living and thriving in smart

network systems, there would need to be

sophisticated oracles, information

arbiters accessed by blockchain smart

contracts or some other mechanism. The

business model could be “oracles as a

service, a platform, or even as a public

good.” The Wikipedia of the future could

be a blockchain-based oracle service to

look up the current standard for digital

mindfile processing, storage, and

security, given that these standards

would likely be advancing over time.

“You are running on the current standard,

Windows 36,” your smart contract

advocate might inform you. These kinds

of mechanisms—dynamic oracle

services accessible by smart contracts

on universal public blockchains—could

help to create a system of checks and

balances within which digital

intelligences or other nonembodied

entities could feel comfortable not only

in their survival, but also in their future

growth.

Blockchain Consensus

Increases the Information

Resolution of the Universe

In closing, there is ample opportunity to

explore more expansively the idea of the

blockchain as an information technology,

including what consensus models as a

core feature might mean and enable. A

key question is what is consensus-

derived information; that is, what are its

properties and benefits vis-à-vis other

kinds of information? Is consensus-

derived information a different kind or

form of information? One way of

conceiving of reality and the universe is

as information flows. Blockchain

technology helps call out that there are at

least three different levels of

information. Level one is dumb,

unenhanced, unmodulated data. Level

two could be posed as socially

recommended data, data elements

enriched by social network peer

recommendation, which has been made

possible by networked Internet models.

The quality of the information is denser

because it has been recommended by

social peers. Now there is level three:

blockchain consensus-validated data,

data’s highest yet recommendation level

based on group consensus-supported

accuracy and quality. Not just peer

recommendations, but a formal structure

of intelligent agent experts has formed a

consensus about the quality and accuracy

of this data. Blockchain technology thus

produces a consensus-derived third tier

of information that is higher resolution in

that it is more densely modulated with

quality attributes and simultaneously

more global, more egalitarian, and freer

flowing. The blockchain as an

information technology provides high-

resolution modulation regarding the

quality, authenticity, and derivation of

information.

Consensus data is thus data that comes

with a crowd-voted confirmation of

quality, a seal of approval, the vote of a

populace standing behind the quality,

accuracy, and truth value of the data, in

its current incarnation effectuated by a

seamless automated mining mechanism.

The bigger questions are “What can a

society do with this kind of quality of

data?” or more realistically, “What can a

society do with this kind of widespread

mechanism for confirming data quality?”

Thinking of the benefits of consensus-

derived information only helps to

underline that blockchain technology

might be precisely the kind of core

infrastructural element as well as

scalable information authentication and

validation mechanism necessary to scale

human progress and to expand into a

global and eventually beyond-planetary

society. The speculative endgame vision

is that the universe is information, where

the vector of progress means

transitioning toward higher-resolution

information flows. Information may be

conserved, but its density is not. Even

beyond conceiving of blockchain

technology as a core infrastructural

element to scale the future of human

progress, ultimately it might be a tool for

increasing the information resolution of

the universe.

Appendix A. Cryptocurrency

Basics

Bitcoin and other altcoins are digital

cash, a way of buying and selling things

over the Internet. The first step is

establishing a digital wallet, either via a

browser-based web wallet or by

downloading a desktop or smartphone

wallet from Blockchain.info, Mycelium,

Coinbase, Electrum, or other Bitcoin

wallet providers. Your Bitcoin address

as well as your public and private keys

are generated automatically when you

set up your wallet. Your Bitcoin address

is typically an identifier of 26 to 34

alphanumeric characters, beginning with

the number 1 or 3, that represents a

possible destination for a Bitcoin

payment—for example,

1JDQ5KSqUTBo5M3GUPx8vm9134eJRosLoH

represented like this string of characters

or as a QR code. (This example Bitcoin

address is the tip jar of an informative

podcast covering blockchain technology

called Let’s Talk Bitcoin.) Your Bitcoin

address is like your email address;

people with your email address can send

you email; people with your public-key

wallet address can send you Bitcoins.

Because Bitcoin is digital cash, your

wallet does not contain the actual cash

(thus the term wallet is a bit of a

misnomer). Your wallet has your

address, public and private keys, and a

record of the amount of Bitcoin you

control on the blockchain ledger, but not

any actual cash. Your wallet should be

kept as safe as any traditional wallet to

protect your private keys; anyone with

access to them has access to controlling

or spending or transferring your Bitcoin.

You should not give your private keys to

any other party, or store them at an

exchange (poor private-key security has

been one of the contributing factors in

Bitcoin-related thefts and scams).

With your address, anyone can send you

Bitcoins (just as anyone can send you

email with your email address). To send

someone else Bitcoins, you need his

address and the private-key part of your

wallet where the software checks that

you have control over the Bitcoins you

would like to spend or transfer. To send

someone Bitcoins, you scan his wallet

address QR code or otherwise obtain his

address characters or QR code (e.g., by

email or SMS). The sender scans the QR

code address of the receiver’s wallet

and uses the wallet application to enter

additional information about the

transaction, such as amount, transaction

fee (usually affirming the amount

prespecified by the wallet software),

and any other parameters to send the

receiver Bitcoins. When the sender

submits the transaction, a message is

broadcast from the owner of the sending

address to the network that x number of

coins from that address now belong to

the new address. This operation is

authorized by the sender’s private key; if

that wallet does not have the private key

corresponding to those coins, the coins

cannot be spent. A bona fide transaction

is received nearly immediately in the

receiver’s wallet application, with an

“unconfirmed” status. It then takes about

10 minutes for the transaction to confirm

and be inscribed in the blockchain per

blockchain miners. So, for large

purchases such as a car or real estate,

you would want to wait to see the

transaction confirmed, but you wouldn’t

bother to do so for a coffee purchase.

Public/Private-Key

Cryptography 101

When the wallet is initialized or set up

for the first time, an address, public key,

and private key are automatically

generated. Bitcoin is based on public-

key encryption, meaning that you can

give out the public key freely but must

keep the private key to yourself.

Bitcoin addresses are created by the

software picking a random number and

creating a public/private key pair (per

the current standard, Elliptic Curve

Digital Signature Algorithm, or ECDSA)

that is mathematically related, and

confirmed at the time of spending the

Bitcoin. This startup operation generates

the private key, but additional steps are

required to generate the Bitcoin address.

The Bitcoin address is not simply the

public key; rather, the public key is

further transformed for more effective

use. It is cycled through additional

encryption protocols (like SHA-256 and

RIPEMD-160), a hashing operation

(transforming a string of characters into

a shorter fixed-length value or key that

represents the original string), and

administrative operations (removal of

similar-looking characters, like

lowercase L and uppercase I, and 0 and

O; adding a checksum to the end; and

adding an identifying number to the

beginning of the address—for most

Bitcoin addresses, this is a 1, indicating

it is a public Bitcoin network address).

It is infeasible though technically

possible that two different people could

generate the same Bitcoin address. In

such a case, both would be able to spend

the coins on that particular address. The

odds of this happening are so small,

however, that it is almost

99.9999999999 percent impossible. A

Bitcoin wallet can contain multiple

addresses (one security procedure is

using or generating a new address for

each transaction), and one or more

private keys, which are saved in the

wallet file. The private keys are

mathematically related to all Bitcoin

addresses generated for the wallet.

In Bitcoin, a private key is usually a

256-bit number (although some wallets

might use between 128 and 512 bits),

which can be represented in one of

several ways. Here is one example of a

private key in hexadecimal format (256

bits in hexadecimal is 32 bytes, or 64

characters in the range 0–9 or A–F):

E9 87 3D 79 C6 D8 7D C0 FB 6A 57 78

63 33 89 F4

45 32 13 30 3D A6 1F 20 BD 67 FC 23

3A A3 32 62

Here is another example of a private key

and its corresponding public address:

Private key:

79186670301299046436858412936420417076660923359050732094116068951337164773779

Public address:

1EE8rpFCSSaBmG19sLdgQLEWuDaiYVFT9J

Doing some sort of back calculation to

derive the private key from the public

key is either impossible (per the hashing

operation, which is one-way only, or

other techniques) or prohibitively

expensive (tremendous computing power

operating over a longer time than would

be necessary to confirm the transaction).

Only the address is needed to receive

Bitcoins, whereas the public/private key

pair is required to send Bitcoins.

Appendix B. Ledra Capital

Mega Master Blockchain List

New York–based venture capital firm

Ledra Capital has an ongoing attempt to

brainstorm and enumerate the wide

range of potential uses of blockchain

technology. Some of these categories

include financial instruments; public,

private, and semipublic records;

physical asset keys; intangibles; and

other potential applications:

I. Financial instruments, records, and

models

1. Currency

2. Private equities

3. Public equities

4. Bonds

5. Derivatives (futures,

forwards, swaps, options,

and more complex

variations)

6. Voting rights associated with

any of the preceding

7. Commodities

8. Spending records

9. Trading records

10. Mortgage/loan records

11. Servicing records

12. Crowdfunding

13. Microfinance

14. Microcharity

II. Public records

15. Land titles

16. Vehicle registries

17. Business license

18. Business

incorporation/dissolution

records

19. Business ownership records

20. Regulatory records

21. Criminal records

22. Passports

23. Birth certificates

24. Death certificates

25. Voter IDs

26. Voting

27. Health/safety inspections

28. Building permits

29. Gun permits

30. Forensic evidence

31. Court records

32. Voting records

33. Nonprofit records

34. Government/nonprofit

accounting/transparency

III. Private records

35. Contracts

36. Signatures

37. Wills

38. Trusts

39. Escrows

40. GPS trails (personal)

IV. Other semipublic records

41. Degree

42. Certifications

43. Learning outcomes

44. Grades

45. HR records (salary,

performance reviews,

accomplishment)

46. Medical records

47. Accounting records

48. Business transaction records

49. Genome data

50. GPS trails (institutional)

51. Delivery records

52. Arbitration

V. Physical asset keys

53. Home/apartment keys

54. Vacation home/timeshare

keys

55. Hotel room keys

56. Car keys

57. Rental car keys

58. Leased cars keys

59. Locker keys

60. Safety deposit box keys

61. Package delivery (split key

between delivery firm and

receiver)

62. Betting records

63. Fantasy sports records

VI. Intangibles

64. Coupons

65. Vouchers

66. Reservations (restaurants,

hotels, queues, etc.)

67. Movie tickets

68. Patents

69. Copyrights

70. Trademarks

71. Software licenses

72. Videogame licenses

73. Music/movie/book licenses

(DRM)

74. Domain names

75. Online identities

76. Proof of authorship/proof of

prior art

VII. Other

77. Documentary records

(photos, audio, video)

78. Data records (sports scores,

temperature, etc.)

79. Sim cards

80. GPS network identity

81. Gun unlock codes

82. Weapons unlock codes

83. Nuclear launch codes

84. Spam control

(micropayments for posting)

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5 Although it is not strictly impossible

for two files to have the same hash, the

number of 64-character hashes is vastly

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humanity can foreseeably create. This is

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the calculation would take longer than

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6 Nakamoto, S. “Bitcoin v0.1 Released.”

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67 Johnston, D. et al. “The General

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