(Part 4: The future of bitcoin and the social/political implications of crypto currencies)
I am not able to predict the future either but I think it reasonable to bring in our human nature, social dynamics, our ability to adopt change as individuals but also our resistance to change as a society. Whether you think in terms of “the creation of a world of plenty” or “the disappearance of the middle class” in both scenarios the distribution of the wealth available will have to be dealt with politically. In both scenario’s the capitalist view where work = income = share-in-the-wealth does not work as a fair – or practical – way to share the available prosperity over the citizens any longer.
Most of my criticism on the article „Bitcoin: It’s the platform, not the currency, stupid!” is about things which are implicit to what is explicitly suggested. The arguments given are as strong as their – often implicit – assumptions.
Even though science explains us „time” is non-linear we as humans are caught in a linear appreciation of time. We are caught in a small time-frame which we call NOW. We have an apprehension of the past – being mostly distorted as it is – and tend to expect the linear continuation of the present into the future.
We have a hard time predicting the future. To show the unpredictability of the future and therefore the futility of such an exercise I referred in an earlier post to:
NRC: Column Maarten Schinkel, dated 01/14/2013, from “India casts shadow over their own future”[Translation RPD]:
There is a simple trick to make yourself fully aware of the non-linearity of history. Take each of ten years, and ask yourself what the world have looked ten years later. In 1960 would people have apprehended how the world looked like in 1970, with a wage explosion, the youth revolution and the emergence of an entirely new music and culture? What would they have thought in 1970 when they had told us in 1980 were ready for the second oil crisis, and in 1980 if you had said that ten years later the whole Eastern bloc had disintegrated and the Wall fell? Or in 1990, ten years later the world massively mobile rang, emailed and fairs were under the spell of the Internet revolution? Or, in 2000, in 2010 the biggest financial crisis raged ever?
Aside from the problem to look into the future we have trouble to observe long-term changes (From RPD post:
What I find interesting at a meta-level is the observation that we have trouble observing complex relationships, especially if there is also a time delay involved. We construct our realities on assumptions of our “own truths” without realizing that we are usually just guessing. We do this however so convincingly to ourselves and others that we really believe that these ideas and explanation of our reality are the right ones and true.
Sander Duivestein and Patrick Savalle(The Next Web) in this regard refer to futurist Peter Schwartz and his book ‘The Art of the Long View’:
“The single most frequent failure in the history of forecasting has been grossly underestimating the impact of technologies. […] The reason we underestimate the impact of science and technology is that they are so difficult, if not impossible, to foresee.”
From there on Duivestein and Savalle are elaborating on a prophecy about a new economy and the enormous impact this could have on our society as a consequence of the introduction of the bitcoin protocol. Their argument is a fallacy though, paraphrasing them: „because we humans underestimate the impact – see Schwartz – from changes in general our own prediction is right.”
The central theme of Duijvestein and Savale about the new economy / society is based on the – in my view flawed – notion that technology is pushing scalability in general towards smaller economic entities (see: “Different Scalability in Different Circumstances”). In a bitcoin protocol network people, companies and “machines” will be able to transact with each other indiscriminately:
- Not only does The Internet of Things give machines a digital identity, the bitcoin API’s (machine-machine interfaces) gives them an economic identity as well. Next to people and corporations, machines will become a new type of agent in the economy.
- ….Machines can manage a corporation all by themselves. Bitcoin introduces the world to the new nature of the firm: the Distributed Autonomous Corporation (DAC).
- This new type of corporation also adds a new perspective to the discussion on technological unemployment. The DAC might even turn technological unemployment into structural unemployment.
The effects of a bitcoin protocol enabled network layer on top of the internet will potentially be incredible, but also potentially leading to massive social unrest. Exactly a year ago today I posted Back to the excesses of early industrial age or guided distribution of wealth?:
Our economic / political system is based on a real middle class. If this group is compromised, the question is how the distribution of wealth can come without disturbing the established social balances drastically. As long as our system is based on the theorem of „work = income = share-in-the-wealth” competition and tensions in the labor market will continue to grow. In an extreme degree that would create the same circumstances that led to great excesses in the labor market In the early industrial era.
I am not able to predict the future either but I think it reasonable to bring in our human nature, social dynamics, our ability to adopt change as individuals but also our resistance to change as a society. Whether you think in terms of “ the creation of a world of plenty” or “the disappearance of the middle class” in both scenarios the distribution of the wealth available will have to be dealt with politically. In both scenario’s the capitalist view where work = income = share-in-the-wealth does not work as a fair – or practical – way to share the available prosperity over the citizens any longer.
What will be stronger: technological induced change or social/political processes to find a new equilibrium? I do not have the answer ready; what I do know is that long term political views and processes will form a strong counter weight against unrestrained technological change.
Part 3: Will the „middle man” disappear?