Thoughts on Blockchain in Geneva

MAY 11, 2017

Following my Building a Sustainable Digital Age Talk at the United Nations Library in Geneva, during Q&A, I was asked a question about Blockchain, below is a video (and transcript) of my response.


Question: I have a question I’m sure you’ve given some thought. What do you see as opportunities of Blockchain technology in connection with the ‘open movement’?

Rufus Pollock: This is where I’m basically going to be very straight, ZERO. Blockchain is a delusional fad for this side of the movement. This doesn’t mean that I think that Blockchain is not an interesting technology, I’m from a mathematical background, and I understand Blockchain, I think it will have uses in some areas of fin-tech. BUT the kind of ideas of decentralization and some weird ideas that it might allow us to be more democratic in some way. Ahm, they just have zero credibility in some sense. I mean I will explain why I say that in a moment. I am also a bit concerned about the Blockchain. In terms of this talk, and I will get back to Blockchain in a moment. There is a wave of techno-solutionism sweeping our society, it’s represented in many TedTalks and discussions about digital technology. It’s like we have some social problem, maybe it’s climate change… maybe it’s not enough voting… AND we’re going to build an app for that. ’Not enough people voting?’… I’VE GOT AN APP FOR THAT. ‘People not doing enough on climate change?’… I’VE GOT AN APP FOR THAT. Right. In a deeper sense we have a techno-solutionsim. And the best exemplification of that is some guys I know… I hang out a lot with people who do, like, civic tech and care about voting, and who are really activated about, like, Trump and Brexit… And the guy was like ‘You know, look at it, look at how much we’ve innovated in 20-years and we haven’t innovated in democracy in the last 2000-years’. Now for me, the chain of logic goes the other way. For him it goes, ‘we have this chain of innovation and let’s just apply it to democracy’. And I’m like, no, what that implies is that democracy is a hard problem. The problems democracy have, have no easy solutions from tech. So let me just break it down: what are the problems of democracy? Or just of collective action? Has anyone here lived in a shared house in their life in which it was not just them, and maybe their partner and their children? When they were a student for example? Yeah… Put your hand up if you’ve ever done that. Was there ever a problem about the washing up? YEAH? Now, there are people building apps for that. ‘I’ll take a picture of the washing up, it was my turn, I’ve done it now.’ I mean, they are a LITTLE BIT useful, I’m not saying that they have no use. But they have minimal use. Because what the problem of living in a shared house is, is a collective action problem, it’s a coordination problem, right? Basic problems of democracy are the same as living in the same house… In fact they’re just two. One is called the ‘collective action problem’ which is what happens when we get together in a group to do something and then maybe I can then just not bother… right… like you’re going to do the washing up, so I can just jerk off… or we can put together money for the ministry of defense but I am going to shirk on my taxes. That way I still get to get the army, because you’re all going to pay and I don’t have to do anything for it. Right? That is a classic problem. The other (second) problem is the ‘principle agent problem’, which is that I appoint someone to look after things for me. I’m an investor in a company, but that doesn’t mean that I want to run the company every day. Or, I am a citizen in a democracy, that doesn’t mean that I want to everyday sit and have to think about ‘what are we going to do about pension rights for veterans’ or like, ‘how to improve the sewerage system in my city’. I want someone who I have hired or voted for to deal with those issues. Just like we appoint managers in the company, or elect officials to represent us. But the problem is that person is not me. So they often go off and do things I don’t want them to do. Or they do not powerfully represent me. NOW, those are just hard problems. And tech makes very little difference to them. Unfortunately. They make a little bit of difference. But you know what doesn’t get any cheaper, is reading up and understanding what the vote was actually about, and making an informed decision about what you want your actual elected official to do. And writing a sensible letter to them that isn’t just a copy-and-paste of someone else’s letter. None of that gets cheaper. Well you might answer, ‘but we’ll have AI’, ‘we’ll have an avatar completely representing all our political preferences and it will just represent me’. Oh right, well at that point we will basically just have full AI and a lot of the bets are off at that point about what’s going on in society. Let’s be honest. So, you know, those are just hard problems. And I am just therefore coming back to the Blockchain. The people who are getting excited about the Blockchain aren’t just saying ‘hey, it will allow us to run stock exchanges at 0.5% transaction fees as opposed to 1.5%’. And yes, that’s a benefit, but if you actually look at transaction fees, they have come down over the last century anyway. And I’m not sure it’s actually improved the allocation of capital as much as we would’ve liked. Hint-hint, the recession. Well, Blockchain, people think is going to solve these hard collective action problems, well if you look at this Blockchain… can you explain to me how it is going to work? It disappears in a puff of smoke. There is absolutely no explanation REALLY of how that is going to really make any difference. What worries me, and it brings me back to my story today. My story is about political action to create new rules. It isn’t a tech story. Tech is the driver of a world of costless copying, but the way that works out, but the way that wealth gets divided, depends on us getting together politically and creating new rules of the game. There’s no tech part in it really. The only tech part in it is ’hey, trace where money goes a bit more obviously now’. And so what worries me about the Blockchain is its classic techno-solutionsim, where it diverts the energy of the activist, or non activist, community to techno-solutionist pipe-dreams because we’re lazy, right? We’re just like ‘oh, yeah, democracy is hard, so we’ll come up with an app for that’. I’M LAZY, we all are, and I get that but that’s what concerns me about the Blockchain. It represents this tendency to think we’ve got some technological solution to these social problems. But the answers are political about these rules of the game, and how we build them really. It’s the rules we create that shape the technology that we use, and there is one fundamental change that has happened and it’s costless copying. That is the fundamental huge change that has happened.