Forget left versus right politics. The more interesting schism is bottom-up (emergent) versus top-down systems and thinking. The old guard worships a linear, top-down governance model. This system is broken, and the internet has amplified its brokenness.
Bottom-up, emergent systems offer a degree of decentralization that allows individual parts of the system to compete and iterate in a flat, free-market-type exchange with each other, benefiting the whole. This includes everything from peer to peer businesses, cryptocurrency and blockchain to evolution and natural selection. Consciousness also is an emergent phenomenon (rather than a linear one originating top-down from the “self”): “thoughts emerge from chemical processes and electrical stimuli in the brain and wander in various ungoverned directions,” –Matt Ridley, The Evolution of Everything
Even the creation of life itself was an emergent, decentralized event.
It wasn’t a top-down, zero-sum event where everything started from one singularly identifiable cell. Rather, as astrophysicist Bruce Damer’s groundbreaking discovery of the origins of life unveiled in his 2017 research, life on earth began as a community—a cycling pool of protocells that cycled itself into existence in hot-spring ponds, like foam emerging from a bathtub’s swirling water when it drains. This non-linear, cycling property of the universe is seen in everything from lunar and tidal cycles to speculative market cycles.
Top-down systems are centralized, and depend on designated entities to administer information to the different parts of the system. While top-down systems have some advantages—such as fashioning orderliness—the costs are material. Top-down, bureaucratic chains of command squash innovation, add frictional costs, and, as BitGold creator Nick Szabo has it, trusted third parties—the necessary arbiters of information flow in these systems—are security holes as they contain single points of failure. Top-down systems include tyrants, kings, governments, big data companies, religious institutions, and the legacy banking system.
“We’re fast approaching a world in which most major conflict is simply a manifestation of the centralization vs decentralization debate: AI vs Crypto, China vs HK, China vs Taiwan, Media vs Memes, Europe vs Brexit, Group Identity vs Individualism, Spain vs Catalonia, Banks vs Hedge Funds.”
Colin Goltra
I expect several existing top-down systems and structures to fail during the 2020’s. Their replacements will be (more) decentralized and emergent in nature, using blockchain rather than centralized leaders to govern. AngelList Co-founder Naval Ravikant brilliantly captures the macro governance implications of blockchain in the following tweetstorm:
Blockchains will replace networks with markets.
Humans are the networked species. The first species to network across genetic boundaries and thus seize the world.
Networks allow us to cooperate when we would otherwise go it alone. And networks allocate the fruits of our cooperation.
Overlapping networks create and organize our society. Physical, digital, and mental roads connecting us all.
Money is a network. Religion is a network. A corporation is a network. Roads are a network. Electricity is a network…
Networks must be organized according to rules. They require Rulers to enforce these rules. Against cheaters.
Networks have “network effects.” Adding a new participant increases the value of the network for all existing participants.
Network effects thus create a winner-take-all dynamic. The leading network tends towards becoming the only network.
And the Rulers of these networks become the most powerful people in society.
Some are run by kings and priests who choose what is money and law, sacred and profane. Rule is closed to outsiders and based on power.
Many are run by corporations. The social network. The search network. The phone or cable network. Closed but initially meritocratic.
Some are run by elites. The university network. The medical network. The banking network. Somewhat open and somewhat meritocratic.
Dictatorships are more efficient in war than democracies. The Internet and physical commons are overloaded with abuse and spam.
The 20th century created a new kind of network — market networks. Open AND meritocratic.
Merit in markets is determined by a commitment of resources. The resource is money, a form of frozen and trade-able time.
The market networks are titans. The credit markets. The stock markets. The commodities markets. The money markets. They break nations.
Market networks work where there is a commitment of money. Otherwise they are just mob networks. The applications are limited.
Until now.
Blockchains are a new invention that allows meritorious participants in an open network to govern without a ruler and without money.
They are merit-based, tamper-proof, open, voting systems.
The meritorious are those who work to advance the network.
As society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants.
It’s important to note that blockchains pay in their own coin, not the common (dollar) money of financial markets.
Blockchains pay in coin, but the coin just tracks the work done. And different blockchains demand different work.
Bitcoin pays for securing the ledger. Ethereum pays for (executing and verifying) computation.
Blockchains combine the openness of democracy and the Internet with the merit of markets.
To a blockchain, merit can mean security, computation, prediction, attention, bandwidth, power, storage, distribution, content…
Blockchains port the market model into places where it couldn’t go before.
Blockchains’ open and merit based markets can replace networks previously run by kings, corporations, aristocracies, and mobs.
It’s nonsensical to have a blockchain without a coin just like it’s nonsensical to have a market without money.
It’s nonsensical to have a blockchain controlled by a sovereign, a corporation, an elite, or a mob.
Blockchains give us new ways to govern networks. For banking. For voting. For search. For social media. For phone and energy grids.
Networks governed without kings, priests, elites, corporations and mobs.
Networks governed by anyone with merit to the network.
Blockchain-based market networks will replace existing networks. Slowly, then suddenly. In one thing, then in many things.
Ultimately, the nation-state is just a network (of networks).
Thank you, Satoshi Nakomoto. And to all the shoulders that Satoshi stands upon.
@naval