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: I’m going to be very straight. In one word: close to zero. At least for this side of the movement, blockchain is a delusional fad.

This does not mean 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 fintech, and perhaps others. But these ideas that it will somehow support societal decentralization, that it might allow us to be more democratic in some way have zero credibility. I will explain why I say that in a moment.

In terms of this talk, this points to something important which i want to highlight – 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 TED Talks 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?

As an example, I hang out with a lot of people who do civic tech and care about voting, and who are really activated about Trump and Brexit. And one of them 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 tech 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.

Let me explain that by breaking it down: what are the problems of democracy? Or of collective action in general?

Has anyone here lived in a shared house in their life? Like a house in which it was not just them, and maybe their partner and their children but other people too? For example, 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? YES?

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 really two specific problems.

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. For example, I know you’re going to do the washing up, so I can just leave it, or, we need to put together money for the ministry of defense but if you pay I don’t need to so 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 “principal agent problem”, which is where 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 ‘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.

Tech makes a little bit of difference. For example, now I can read online about what happens in parliament instead of having to go there. 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 this brings me 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%’.1 They say the Blockchain is going to solve these hard collective action problems like democracy. Well if you then ask: can you explain to me how exactly that 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 is this: My story is about political action to create new rules. Political action requires us to get together collectively and do something. It isn’t a tech story. Tech is the driver of a world of costless copying, but the way that works out, 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 it’s classic techno-solutionsim and it diverts the energy of the activist, or non activist, community to techno-solutionist pipe-dreams. It makes us lazy – or allow us to be lazy. We’re like ‘oh, yeah, democracy is hard, so we’ll come up with an app for that’.

Now I’M LAZY, we all are, and I get that. But the Blockchain represents this tendency to think we’ve got some technological solution to these social problems and it diverts us. The real answers are political and about the rules of the game, and how we build them. It’s the rules we create that shape the impact of technology. Technology is important only in that it is the driver of one fundamental change: costless copying. But we don’t need to do anything about that – it will just go on happening as Moore’s law continues playing out. What we need to do is be putting in place the rules that make sure those tech-driven changes result in a better, freer, fairer world.

  1. 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. ↩︎