The Blockchain Enters UrbanTech

Most of the technologies that we now take as a vital part of the modern world were dismissed, disregarded, and bet against when they first appeared. The internet has only been around for two decades and already much of the global stock market is made up of companies based on it. It no longer seems impossible to take a business from a $0 to a $1 billion dollar valuation in a matter of a few years, developing a purely digital product. 

For better or for worse, much of the global value has been summarily abstracted from the physical world. If one sees markets as a rational pool of individual interests, concerns, and expectations then starting in the 1990s, it all promptly left the earthly surface and escaped to the cloud.

When universities and military research institutions were developing the internet across the United States in the 1970s, it was primarily to distribute the load of complex mathematical calculations. The real potential of constructing a secondary digital reality would not come until decades later. 

The internet was revolutionary because it brought all human transactions to your fingertips. But both because of the libertarian dreams of its creators and the large infrastructure required to run a cross-country connection, the question of trust never entered the equation of packet switching (the algorithm that allowed different internet networks to function together, on one large platform). 

This means that interactions that might otherwise have to cross multiple time zones and take weeks, can now be performed at lightning speed. But it also means that they cross the globe mostly unsecured.All the while, the function of individual interaction has remained the same: you want to conduct business, but you still lack the trust for the transaction to be guaranteed. Outside of the internet, this trust function has been performed by banks, insurance companies, governments, the mob, your older relatives, or any other more powerful entity that can exert pressure so you uphold your side of the bargain (be it through artful persuasion, legal code, or a baseball bat).

Much of the financial and bureaucratic safeguards created throughout human history have been erected to keep scammers at bay. (Question, what happens when scammers run the safeguards? Answer, revolutions). A lack of trust was the fundamental part of the internet’s design, it has made scamming faster, easier, and more profitable. 

The older institutions that were the beacons of trust are still trying to be the turnstile of internet transactions, and they are failing miserably. Not only because they misunderstand the fundamentals of internet trust, but also because they try to continue creating trust with hole-punchers and staplers. The fastest-growing companies in the world have tried to upend these industries by abstracting trust faster, better, and making it stronger. 

In less than a decade, these trust-infusing institutions have become household names: Visa, Paypal, Square, Stripe, Credit Karma, etc. But all of these companies simply try to abstract the power of hole-punchers and staplers to computer code. 

Paypal must still stand between you and your customer to guarantee the transaction will go smoothly and everyone upholds their side of the bargain. Yes, they are backed up by hundreds of engineers. But their fundamental job has remained hole-punching and stapling, even if it is millions of transactions per second. 

Fundamentally, there is little difference between trust of the spoken word in the real world and trust given to you by a third party on the internet. Authority is abstracted, but it nonetheless remains institutional. 

The hacks of Equifax should remain an admonition. No single institution of trust is safe from outside threats. The Code of Hammurabi and Moses’ Stone Tablets both stand testament to the social need of permanent laws inscribed into an immutable source. Two thousand years later, we have finally gotten to a point where a permanent legal record can exist and it doesn’t have to be guaranteed by an institution.

Blockchain is the immutable stone into which the laws of human transactions can be written into. It is backed by practically indestructible encryption (which is in turn backed by the fundamental laws of mathematics) and hundreds of computers trading their processing power for a reward. 

Both the way we understand blockchain and the way it technically functions has changed drastically. But one fundamental foundation persists: the desire to create a decentralized authority out of the hivemind of computing authentication. 

Consider it the final iteration of Mandeville’s Fable of the Bees: when each computer node pursues its individual interest, everyone benefits.

Most of the technologies that we now take as a vital part of the modern world were dismissed, disregarded, and bet against when they first appeared. The internet has only been around for two decades and already much of the global stock market is made up of companies based on it. It no longer seems impossible to take a business from a $0 to a $1 billion dollar valuation in a matter of a few years, developing a purely digital product. 

For better or for worse, much of the global value has been summarily abstracted from the physical world. If one sees markets as a rational pool of individual interests, concerns, and expectations then starting in the 1990s, it all promptly left the earthly surface and escaped to the cloud.

When universities and military research institutions were developing the internet across the United States in the 1970s, it was primarily to distribute the load of complex mathematical calculations. The real potential of constructing a secondary digital reality would not come until decades later. 

The internet was revolutionary because it brought all human transactions to your fingertips. But both because of the libertarian dreams of its creators and the large infrastructure required to run a cross-country connection, the question of trust never entered the equation of packet switching (the algorithm that allowed different internet networks to function together, on one large platform). 

This means that interactions that might otherwise have to cross multiple time zones and take weeks, can now be performed at lightning speed. But it also means that they cross the globe mostly unsecured.All the while, the function of individual interaction has remained the same: you want to conduct business, but you still lack the trust for the transaction to be guaranteed. Outside of the internet, this trust function has been performed by banks, insurance companies, governments, the mob, your older relatives, or any other more powerful entity that can exert pressure so you uphold your side of the bargain (be it through artful persuasion, legal code, or a baseball bat).

Much of the financial and bureaucratic safeguards created throughout human history have been erected to keep scammers at bay. (Question, what happens when scammers run the safeguards? Answer, revolutions). A lack of trust was the fundamental part of the internet’s design, it has made scamming faster, easier, and more profitable. 

The older institutions that were the beacons of trust are still trying to be the turnstile of internet transactions, and they are failing miserably. Not only because they misunderstand the fundamentals of internet trust, but also because they try to continue creating trust with hole-punchers and staplers. The fastest-growing companies in the world have tried to upend these industries by abstracting trust faster, better, and making it stronger. 

In less than a decade, these trust-infusing institutions have become household names: Visa, Paypal, Square, Stripe, Credit Karma, etc. But all of these companies simply try to abstract the power of hole-punchers and staplers to computer code. 

Paypal must still stand between you and your customer to guarantee the transaction will go smoothly and everyone upholds their side of the bargain. Yes, they are backed up by hundreds of engineers. But their fundamental job has remained hole-punching and stapling, even if it is millions of transactions per second. 

Fundamentally, there is little difference between trust of the spoken word in the real world and trust given to you by a third party on the internet. Authority is abstracted, but it nonetheless remains institutional. 

The hacks of Equifax should remain an admonition. No single institution of trust is safe from outside threats. The Code of Hammurabi and Moses’ Stone Tablets both stand testament to the social need of permanent laws inscribed into an immutable source. Two thousand years later, we have finally gotten to a point where a permanent legal record can exist and it doesn’t have to be guaranteed by an institution.

Blockchain is the immutable stone into which the laws of human transactions can be written into. It is backed by practically indestructible encryption (which is in turn backed by the fundamental laws of mathematics) and hundreds of computers trading their processing power for a reward. 

Both the way we understand blockchain and the way it technically functions has changed drastically. But one fundamental foundation persists: the desire to create a decentralized authority out of the hivemind of computing authentication. 

Consider it the final iteration of Mandeville’s Fable of the Bees: when each computer node pursues its individual interest, everyone benefits.