Defining the Blockchain Economy: What is Decentralized Finance?

The aim of this article is to explore the intersection of blockchain technology and finance from a practical, theoretical, and conceptual standpoint.

1. Practical Blockchain Finance
Financial services is one of the last sectors of the economy to become modernized by the Internet and the possibilities of digitalization. Broadly, the first main phase of the Internet can be seen as enabling the transfer of information. However, additional features are necessary in economics and finance for the secure transfer of value, and to avoid the double-spend problem. Whereas it is possible to make an arbitrary number of copies of a digital file sent in email for example, money should only be spent once. Now in what could be the second major phase of the Internet, blockchains have arisen as a crucial enabling technology to allow the secure transfer of value, and thus for economics and finance to uplift into the modern Internet era. This could be a rapid move given the computational and infrastructural network resources already in place.

Blockchains allow the digital payments layer the Internet never had, and more broadly contemplate an era whereby all forms of secure value transfer could take place via the Internet. This could include all monetary assets (the cash or spot market), and all assets and liabilities over any future time frame (the futures and options market, mortgages, debt and equity securities, treasury issuance, and public debt). The implication is that there could be a digital future of cryptographically-activated assets and actions, where 1) all physical and intellectual property might be registered and transacted via blockchains as smart property, and 2) all agreements, contractual relationships, societal record-keeping, and governance might be enacted through code-based smart contracts. For maximum resiliency and adoption accustomation, the two systems would likely run in parallel until there was gradually enough comfort in the digital system to drop the analog system.

Global financial institutions are rapidly adopting the single-ledger technology of blockchains, which is essentially, having one database of securities transactions instead of many proprietary versions that need to be reconciled. The benefit is that the time to clear securities transactions may be reduced significantly from days to hours, which confers a tremendous decrease in risk and cost from the time savings. These cost savings could be passed on to the customers of securities trades. The need for independent custody functions and other costly aspects of the securities value chain could also be greatly reduced in having a single asset registry of securities, including because ownership can exist in an open and readily-confirmable mode as opposed to having to be researched and verified in every transaction.

Crypto-synecdoche
A valuable property of blockchains for the digital automation economy is synecdoche (where a part represents a whole). Blockchains simultaneously connect many layers or levels of detail in that in the connected database tree, any one items calls or refers to all other levels, so it is easily possible to drill up and down levels of detail. For example, with a hard-currency dollar bill, there may be twenty levels of aggregation upstream from the actual unit of the bill, all of which could be rolled up at the click of a mouse. Another case of the crypto-synecdoche property in action is in the idea of hospital inventories (including controlled-substance pharmaceuticals) instantiated as blockchain-based smart property, where a hospital, county, state, or nation’s inventory could be viewed at any instant. The crypto-synecdoche property could be used to roll up the whole of an economy for an on-demand real-time assessment (essentially automating NBER). As in all industries, in finance too, blockchains are a next-generation technology that enables the secure, trackable, automated coordination of large-scale projects with arbitrarily-many detailed items.

Blockchains, HFT, and Smartnetwork Automatic Markets
Beyond digitalizing money, payments, economics, and finance, blockchains are a next-generation information technology and a new form of general computational substrate. Blockchains solve a long-standing computing challenge called the Byzantine General’s Problem, which entails how to securely update far-flung nodes in a distributed computing network. The issue is knowing whether Byzantine generals out in the field are defecting and colluding, or remaining loyal and fighting; i.e.; how to determine if network nodes have become befouled. By enforcing integrity and security in distributed computing, blockchains dramatically extend the scale and scope of what might be possible in networks into a whole new tier. HFT (high-frequency trading) is already one of the most automated computational network activities, and could become even more so if instantiated in blockchain-based smart contract DACs (distributed autonomous corporations (i.e.; packages of smart contracts)). A heightened speed-up in concentration, processing power, and returns in HFT might be available in the short-term (until extirpated). The bigger point is that more of our human activity and patterns might be instantiated in smart contract DACs that look like HFT financial instruments (not in the sense of securities requiring regulation, but in the sense of automated pricing and execution behavior). Real-time bidding networks for advertising are already a kind of financial instrument in this sense, and more human-intervened processes could be implemented in the automatic markets format. Energy, logistics, fulfillment, and transportation (autonomous driving Uber-nets) could all be automatically orchestrated by tradenets and smart contract DACs, unobtrusive and backgrounded to the consumer. Pricing as an external heuristic (currently assessed and imposed by human agents) is no longer needed to price the resource in smartnetworks because the most effective pricing is when the resource prices itself. In this fit-ordered model, the underlying resource determines its own real-time minute-to-minute value, prices itself as a smart resource on a smartnetwork, and might enter into future contracts for its availability too.

2. Theoretical Blockchain Finance
As economics has been traditionally conceived with scarcity as its basis (the production and consumption of scarce resources), so too has finance been conceived as the control or prediction of the future value of assets and liabilities. However, the scarcity view of economics no longer holds in an era of digital services, non-rival goods, and complementarity. Likewise, the controlled future value of assets view of finance also no longer holds in an era where all of the variables concerning assets, capital, and investment might be changing. In economics, three crucial mindset shifts are moving from scarcity to abundance, labor to fulfillment, and hierarchy to decentralization. In finance, three similar mindset shifts could be moving from ownership to access, point values to topological ranges, and insufficiency to assurity (cognitive easing). Already there are indications that a significant transformation to autonomous driving might be underway, turning transportation into a fungible on-demand resource with a focus on access as opposed to ownership. Cars could become like air, a resource that one does not generally (on terrestrial Earth) have to think about owning, or expounding cognitive effort towards its ongoing attainment. Other examples in the emergence of the blockchain economy include the centralized version moving to the decentralized alternative: OpenBazaar to eBay, datt.co to Reddit, and LaZooz to Uber. Many decentralized versions have been conceptualized, even if they are not yet fully available.

Kickstarter, Crowdfunding, and Ambient Finance
One of the most rooted assumptions in economics is that any large-scale project requires financing, which would necessarily be in the form of debt capital. There is really just one mode of undertaking large-scale projects now, and that is to raise a chunk of capital that is spent down over time. This is a tremendously inefficient process at every step of the value chain, but there has been no viable alternative so far. The inefficiency of capital is highly visible in the case of startups (in the recent failures of Clinkle and Color). Institutional capital in public and corporate projects likely has greater inefficiency, and much less transparency, particularly regarding the degree of corrupt appropriations.

Now available: Configurable Smartmoney 
The immediate benefit of blockchains is that they have the capacity to bring greater transparency, accountability, and monitoring to the effective use of capital. The more profound contribution of blockchains is that they invite a new class of thinking about all financial matters including capital. Currently, there is just one mode of capital-raising for projects and it is narrowband; the “big chunk of capital” method. Other methods such as pledged capital calls have traditionally failed because monies are not escrowed and thus unavailable when needed. Blockchain-based smart contracts can change all of this, and vastly open up the range and type of financing choices that might be available. At minimum, pledges can be confirmed and escrowed. At a higher level of resolution, a whole new mode of finance might be implemented whereby capital is an available on-demand resource disbursed continuously in real-time per the assessed level needed. This more ambient version of capital as a resource can fluctuate with greater correspondence to objectively-determined and objectively-monitored underlying project needs.

Capital budgeting becomes an on-demand resource assignation process like just-in-time inventories or Uber rides. 

As smart resources automatically price themselves on smartnetworks, so too could smart contracts automatically call from escrowed pledges and “drip” capital into projects as needed. Some of the technical modes of effectuating this are Ricardian contracts and Hash Time-Locked Contracts (such as on the Lightning payment network); essentially ways to escrow-pledge capital and secure bi-directional payment channels without cheating.

Long-tail Economics and Ambient Capital
Kickstarter and the legalization of crowdfunding have already been a shift towards alternative more resilient network models of ambient finance. The greater effect of blockchains is that we might now have additional trustable cryptographic methods to administer capital commitment calls in greater correspondence, ambience, and monitoring with the underlying project needs. Most essentially, finance concerns credit, and credit concerns trust. With the creation of algorithmic trust and other blockchain-type mechanisms, the possibility is that the long-tail of economics and finance can meet. Like eBay for investors and projects, any two long-tail parties can meet and transact in a secure blockchain-based environment without having to know each other. The effect could be that many more projects and micro-starter projects might be able to receive the funding needed to advance. In the abundance economy of the future, credit to explore one's project ideas could come to be seen as a basic human right, in a sort of singularity-class financial inclusion operation of blockchains.

3. Conceptual Blockchain Finance
There may be two nodes in the adoption of any new technology. Initially the innovative idea, such as blockchains, might be grasped in its capacity as a “better horse;” as an improved version of something familiar. Most simply, blockchains are merely a modernizing information technology. Blockchains might help to do everything that we are already doing better. Blockchains streamline and modernize the operations of the financial services enterprise. In the second moment, after having implemented a new technology in its “better horse” applications, a new tier of possibilities, perhaps anticipated at the outset, can come into view more strongly, with the new technology now being conceived as a “car;” as a transformative and novel paradigm that completely reconfigures the former operation. At present, “better horse” implementations of blockchain technology are underway, modernizing the existing financial services industry with single-ledger technology, private ledgers (known confirmed identity of transaction-submitting parties) that are still centralized. In the second moment, “car” implementations might be the longer-term future. Digitalizing money, payments, economics, and finance renders all of these factors infinitely more composable, malleable, fungible, distributable, automatable, and configurable in a plurality of ways and novel applications that has not been possible before. With blockchains, the implication is not just that all modes of financial activity could be modernized, but that the very foundations of the concept of finance could be rethought.

Raising a Trust Bond: Using financial structures to expand into the economy of the future
In one potential near-future world of having transitioned to an automation economy, successful economies may be attending to the production and consumption of intangible social goods like autonomy and recognition, in addition to materials goods (where all needs might be met via GBIs (guaranteed basic income initiatives) or other measures). The same financial system could be used to deploy the new intangible social goods economy, for example, for community initiative X, there could be a trust bond. For example, the government might need to raise trust (as an intangible currency) to launch a certain program, such as a digital identity system. The same financial structure can be used, but instead of raising capital, trust is the commodity required to be raised or amassed for this particular initiative. Another example is raising the intangible social good of agency for personal health and fitness care-taking. These were two examples using the familiar financial structure with the alternative currencies of trust and agency. Another example using familiar financial structures for alternative “future finance” purposes could be simply the decentralized version. This would be the same capital-raising supply chain for example, but now populated by Kickstarter-like crowdfunding sources. In another example of similar concepts in a decentralized structure, Medici has been envisioned as a decentralized public capital market for stock and bond offerings.

4. Conclusion: The new finance – Cognitive Easing
Blockchains are a new form of cryptographic information technology that allows the digitalization of money, payments, economics, and finance. The stakes are high – blockchains could be instrumental in orchestrating an orderly transition to the automation economy (the outsourcing of unelected labor to technology). There could be two core objectives to such an orderly transition to the automation economy. One is material easing (less efforting required to attain material sustenance requirements), and the other is cognitive easing (less mental efforting required to attain tangible material goods and intangible social goods such as autonomy, recognition, and trust). Beyond the modernization of economics and finance, successful implementations of blockchain technology could point themselves towards the broader societal goal of cognitive easing over cognitive efforting for resource attainment in both the present (economics) and the future (finance).

Melanie Swan is a philosopher and economic theorist at the New School for Social Research in New York, has an MBA in Finance from the Wharton School of the University of Pennsylvania, and is the author of the best-selling book: Blockchain: Blueprint for a New Economy.

This post is dedicated to Lee Corbin, a reader of this blog and always-thoughtful interlocutor.

Decentralized Crypto-Finance: Blockchains, Automatic Markets, and Algorithmic Trust

A revolutionary set of concepts and underlying technology enablement has arisen in the form of blockchain technology. Blockchains allow the digital payments layer the Internet never had, and more broadly contemplate an era whereby all forms of secure value transfer could take place via the Internet. This includes all monetary assets (the cash or spot market) and all assets and liabilities over any future time frame (the futures and options market, mortgages, debt and equity securities, treasury issuance, and public debt).

The implication is not just that all modes of financial activity could be modernized, but that the very application of finance could be rethought. Scarcity has been the assumption for structuring economic systems for the production and distribution of scarce material goods. This no longer holds in an era of digital services, non-rival goods, and complementarity. Likewise, the governing assumption for the organization of financial systems has been the control or at least prediction of the future value of assets and liabilities. This too could change per the advent of decentralized technology like blockchains. A more rooted assumption that could also change is that any project requires financing, which would necessarily be in the form of debt capital.

One aim is to challenge the monolithic philosophical foundations of financial and economic systems. Within this context, another aim is to investigate the concept of synecdoche as applied to developing a theory of cost, pricing, and valuation that is not derivative of and so many layers away from, but more closely linked to the underlying asset or liability. My thesis is that new mechanisms such as algorithmic trust and automatic markets could allow departure from the mode of finance as currently conceived to alternatives that emphasize access over ownership, topological ranges over point values, and assurity over insufficiency.

Crypto Enlightenment: A Social Theory of Blockchains

There is something new and fundamental happening in the world which could be the start of the next enlightenment period. The core of this is shifting from centralized to decentralized models in all aspects of our lives, both individual and societally.

Cryptocurrencies (Bitcoin), blockchains, and decentralization) are not just about 1) digitizing and modernizing money, payments, economics, assets, legal contracts, and governance, thereby 2) accelerating the transition to the automation and actualization economy from the labor economy, but 3) more fundamentally, these factors are allowing us to re-explore our reality, and specify it as more internally-determined than externally-determined.

Figure 1: The Crypto Enlightenment: Social Theory of Blockchains

Societal Shared Trust is Algorithmic Trust
The tip of the iceberg is Bitcoin – digital money. Bitcoin runs on software called blockchain technology, which is a distributed ledger, a decentralized computational memory of human interactions. As individuals, we can place our trust in the computational system, and no longer need to trust institutions, third-party intermediaries like banks and governments, to coordinate our patterns of activity. Blockchains are a more trustworthy trust: algorithmic trust, not institutional trust.

Blockchain technology is technical (cryptographic ledgers); economic and political (a flatter more-extensible mode of organization); and psychological, sociological, and philosophical (new ways of conceiving reality). The real invitation and potentiality of blockchain technology is to radically rethink reality – what is it to decentralize everything we do and reconstitute life through a frame of abundance and immanence, attending to what is possible and desirable mindfully, not merely a reaction to a reality which seems determined by scarcity.

A New Philosophy of Economic Theory
A philosophy of economic theory is necessary since nearly all existing economic theories have taken scarcity as a central precept. These antiquated models configured by scarcity are weak philosophically because they are conceptually limited, and are also weak empirically since there is emerging and existing evidence of situations in the world where scarcity is not a parameter, and not the governing parameter. A ready example of this is digital goods, such as software or digital images, where there is essentially zero cost to producing another unit by copying the goods electronically.

Crypto Enlightenment is a Rethinking of Authority
There have been some paradigm-shifting moments in human history. The Enlightenment (1650-1800) concerned knowledge, and also importantly, authority. While there has been much rethinking and progression regarding knowledge, there has been less regarding authority since the modern notion of the individual as an agent in society arose during the Enlightenment. Now with the advent of blockchain technology and decentralized models, there can be a new consideration of authority. There is a possibility of constructing alternatives to centralized institutional power which has become a juggernaut of extraction instead of support; a less-trustworthy diminisher of rights and social goods instead of an extender and promulgator. Decentralized models empower the individual in radical new ways and call for the rethinking of authority for both the individual and society. Per the Internet revolution, we as individuals now taking self-responsibility for many activities such as deciding what and how we consume news media, entertainment, financial services, (stock-trading, credit services, portfolio management), and health services. Next is economic and governance systems.

To rethink the place and definition of authority, a philosophy of immanence is helpful and necessary. Immanence is the idea of self-determination from within; everything comes from within in a system, world, or person; structure and content are emergent and not pre-specified. Immanence contrasts with transcendence where everything comes from outside a system, world, or person; pre-determining the system externally per fixed specifications. One way of seeing reality is as immanence and transcendence; there is one side that is focused on recouping a pre-specified baseline ideal, and the other of open-ended immanence. Human emotion is an example from the natural world of baseline-immanence, where negative emotions (fear, anger) physiologically narrow possible pathways of action to fight, flight, or flee, where as positive emotions (love, compassion) trigger general, non-directional cognitive activation, a widened range of unspecified novel, creative, and unscripted courses of thought and action.

Much of human psychological activity might be said to be concerned with the attempt to attaining a baseline ideal that has been pre-specified and externally imposed, and as an ideal impossible to ever attain. Some of the contexts where these ideals impossibly govern behavior and psychology are ethics, justice, equality, liberty, subjectivation, and the pursuit of the good life. Attaining the baseline is an idea rooted in fixity, where the form (morphology) one begins with pre-determines possible outcomes. Baseline is a stance oriented to negating and critiquing, to narrowing, circumscribing, and closing-off; a ‘no’ energy. Certainly ideas of ideals may come from outside an individual, and the distinction is not acquiescing and adopting them wholesale, but introspecting as to how they would be useful appropriated individually for me; internally, reworked and reclaimed with autonomy to empower the individual. (Seeing how immanence and transcendence interact, Hegel terms this dialectics, or conversation of appropriation, as an immanent process of transcendence.)

The other side of reality is immanence, a determining from within. This is the open-ended stance of novel construction up and out from baseline into new territory; “yes-and” improvisation energy, collaboration, creativity, novelty, the new, thinking out-of-the box, greenfield, emergent, dynamic, serendipitous, flow, complexity, fractalization, and multi-dimensionality. Moving out open-endedly from baseline is an idea rooted in capability; growth is dictated by capacity (which can grow) and not morphology (which is fixed); capability and attitude determine possibility. Immanence is a stance oriented towards the affirmation of the positive, to “yes-and” energy.

Cryptocitizen Sensibility
The sensibility of the cryptocitizen is being in a stance of immanence with ourselves; trusting our internal selves more. There is more self-responsibility-taking; questioning, deciding, and designing which economic systems, political systems, communities, and labor systems (productive work effort) in which we would like to participate. The distinction is between ‘selecting governance services’ and ‘being governed,’ where increasingly, there is the possibility of a much higher degree of self-determination and self-creation in selecting the communities and structures in which we participate, particularly those related to economics and politics. Per a singularity-class technology like decentralized cryptographic models, these systems for organizing multi-party activity can scale way down to backgrounded trust-invoking microlevels in ways that were not previously possible in hierarchical models.

Abundance Theory of Flourishing
Theories of flourishing address how we might organize ourselves individually and societally towards the endeavor of the good life. Leaving aside the problematic language and valorization of the ‘good’ life, there are been three traditional types of theories of flourishing (Parfit, Reasons and Persons, 1984). Theories of flourishing have been hedonistic (seeking the greatest balance of pleasure over pain), conative (seeking desire fulfillment), and objective list theoretic (seeking to list other aspects that might constitute well-being in addition to pleasure and desire fulfillment).

1. Immanent Flourishing of Abundance: Sustenance + Actualization
A new theory can be proposed in line with modern themes, an Abundance Theory of Flourishing. An abundance theory of flourishing can be developed first through the baseline-immanence framework. The traditional conception of abundance has most-often been one-sided, focusing exclusively on reaching the baseline of post-scarcity, having all needs for material goods satisfied. Instead, an immanence theory also envisions the open-ended upside of potentiality that is now possible with this baseline of material goods satisfaction having been reached. An abundance theory of flourishing includes the two sides of reality, focusing on both survival and actualization. To count as flourishing, there is not just an alleviating of suffering in the form of having sustenance needs met, there would also need to be something in the positive register of immanence, allowing new and emergent potentiality to develop; this would constitute a true immanent flourishing of abundance.

2. Scarcity is a Social Pathology
An abundance theory of flourishing can be developed second through conceiving of scarcity as a social pathology. The conceptualization is that scarcity is not merely a constitutive parameter of existing economic theory, but that more pervasively, the notion of scarcity has been a psychologically harmful construct of thinking that needs to be overcome for a fuller realization of human potential. In an abundance theory of flourishing, scarcity is a social pathology to be resolved. Part of the justification for seeing scarcity as a social pathology is noticing the new and contributive social goods that are unavailable in the scarcity model and created by abundance. Some of these social goods include certainty, availability, reduced contingency, willingness, and cognitive easing and cognitive surplus.

Abundance creates a psychology of certainty and availability, a reliable ongoing feeling of certainty that material survival needs will be met, as opposed to the continuous uncertainty and attending-to required by scarcity. Much current human cognitive and physical effort (as individuals and groups; families, corporations, institutions, and nation-states) is devoted to anti-scarcity measures: hoarding, manipulation, and control for the purpose of ascertaining the future availability of resources. It is like doing for emotional and cognitive attending what just-in-time inventories did for manufacturing; it is an invoking of certainty and reliance about the real-time availability for need fulfillment. Through abundance, there could be the considerable social good of relief and certainty, where a whole class of cognitively-exertional activities drop off the reality of what has to be considered for basic living. This would be unprecedented in human history, a trustable source of having basic needs met such that we do not even have to think about this.

Cryptosustainability: Collaborating in the Self-sustaining Micropolis
The cryptocitizen sensibility of the individual extends to embodying new ways for the individual to be in society. Reviving the notion of the Greek statesman, there is a sense of civic duty to serve the republic. This can be recast as the self-directed cryptocitizen’s sense of civic collaboration, where part of meaning and purpose may be derived from participating in community sustainability. The new polis could be the micropolis as groups of individuals form self-sustaining cryptocommunities.

Peergrid Cryptosustaining Micropolises
The cryptocitizen’s civic collaboration is through providing peergrid resources. Here in communities of 20-50, I have a solar panel on my roof, my neighbor has a City Blooms hydroponic greens unit, the next person has a Tesla power wall, the next person is an ISP and hosts a Bitcoind node; etc. Each of us provides a piece of peergrid infrastructure supporting the overall sustainability of us as a community. The kids paper route of the future is maintaining the hydroponic greens unit. Individuals are civic infrastructure providers. Peergrids then are local community mesh networks of all needed resources including physical (energy, ICT, food, infrastructure) and emotional (empathy, belonging, contribution, meaning). Peergrid cryptosustaining micropolises can then federate, so the smartcity becomes a federation of local autonomous self-sustained communities. Blockchains are the trustable unobtrusive system for managing all of this in the background, allowing communities to move beyond free rider problems and other concerns that have prohibited easeful cooperative collaborations. Blockchains facilitate the ownership of community infrastructure (financing, transferring, operating, drawing assessments) in a community-based manner.

Crypto-Enlightenment Governance
Thus through the volitional responsibility-taking of the cryptocitizen as an individual self-determining economic and political systems of choice, and as an individual in society, collaboratively participating in self-sustaining micropolises, governance can be recast as a process of support (immanence) as opposed to extraction (baseline erosion). The actualization economy can thereby focus on (1) sustainable material survival and (2) the social goods of liberation: self-respect, self-esteem, and self-realization. Cryptosustainability communities are finally a means of prescriptively destabilizing non-value-added elites, implementing the original esprit of Rousseau, Rawls, and Locke.

Blockchains: a Grey Goo-Resistant Singularity-class Technology
The crypto-enlightenment includes seeing the potential impact of blockchains beyond the flexible recasting of human economic and political processes; blockchains are singularity-class technologies. A singularity-class technology is a technology for the large-scale trustful automated orchestration of vast and detailed processes. The power of singularity-class technologies, this level of technological orchestration of processes, possibly without our human participation, has given way to the fear of runaway technologies. The fear of runaway technology is in the same form, and persists across all singularity-class technologies, that AIs, robots, nanobots, 3D printers, matter compilers, space terraformers, synthetically-replicating bioengineered life, etc. will take over the world.

Blockchains are a potential solution to the fear of runway technology in any of these areas. The fear of runaway technology can be allayed in noticing that the very nature and design principles of singularity-class technologies, certainly blockchains, and by extension, perhaps any singularity-class technology, are that the large-scale orchestration cannot proceed otherwise than through a system of checks and balances. The key blockchain functionality principles are being a very-large scale automated system of checks and balances where all ‘transactions’ must be validated, confirm via a reputation or other mechanism, employing algorithmic trust and smartnetwork consensus mechanisms.

Singularity-class Technology Safety: Consensus Signing and Design Signing
This structure can carry into the implementation of singularity-class projects like friendly AI, autonomous lab robots (on-chain DAC IP discovery tracking), blockchain nano-compilers (Grey Goo worry: unchecked nanotech proliferation). Two key safety design principles in singularity-class technologies are 1) the required confirmation of any transaction or activity by smartnetwork consensus mechanisms which prevents non-bona fide behavior, and 2) signing; all transactions cannot help but be signed. Just as physical-world engineers sign the bridges they build (literally, as a claiming and responsibility mechanism), synbio, AI, space, etc. engineers cannot help but ‘sign’ their own building blocks like DNA designs. With traces as an inherent feature of technology, signing is unavoidable, so singularity-class technologies like propositional nanotech constructions would be either 1) signed by bona fide engineers, and 2) not be able to avoid having a traceable signature by befouled players (intentionally malicious or otherwise).

Spacechains: Blockchains in Space
A further as yet unconsidered application area for singularity-class technologies like blcockhains is spacechains: blockchains in space. The idea is that blockchains are not just an Earth-class technology, but also an extra-terrestrial-class technology for space projects. Blockchains can be used to coordinate very-large Earth-class terrestrial projects like billion-member DNA databanks and EMRs, and space-class problems too. Some of the many potential space applications of blockchains include space settlement, terraforming, asteroid mining, fuel generation, bombardment monitoring, and basic science observation. There could be colored-coin ledgers for energy, settlement, transport, and supplies. Further, spacechains are a fragility alleviation mechanism for terrestrial applications. It is surprising that we do not yet have backup for many terrestrial operations. Spacechains could help with this, providing data center back-up, geomagnetic solar protection, existential risk reduction, and Bitcoins in space (where there is an articulated project, (BitSats (like CubeSats)).

Curious what "Bitcoin and Blockchain are? Educational Resources: 
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Blockchain Financial Networks: Rethinking Risk and Finance with Automated Value Transfer

Internet transfers Information, and now Value
Blockchains are important because they constitute the next phase of the Internet, not just transferring information, but now transferring value: money, assets, and contracts. Blockchains are secure distributed ledgers, which can be implemented as globally-distributed financial networks. Ultimately, blockchain financial networks could automatically and independently confirm and monitor transactions, without central parties like banks or governments.

Fast-moving Crypto-economy
The crypto-economy is evolving quickly and it is crucial to watch and actively participate because
the uptake of blockchains could be extremely rapid, particularly by institutions. The crypto-economy is important to watch because:

1. whereas a year ago crypto-technology was heresy, it is now becoming commonplace
2. blockchains as a modernizing technology have a pervasive reach – including all cash, financial instruments, and contracts in economics and finance; and all legal, legislative, political, and governance operations 
3. the decentralized structure of crypto-technology implies a reorganization of the existing financial system; and eventually, political system

The key benefit of blockchains as a modernizing technology is that they allow assets to be transferred immediately, not taking 3 days to settle (t=0, not t+3). This has a number of efficiency improvements including decreasing counterparty risk, reducing cost, improving liquidity, and instilling trust in the system.

Figure 1. Crypto-economic Theory: Blockchain Financial Networks

Rethinking Risk
Blockchains, crypto-economics, and decentralization invite an explicit reconsideration of risk. Four risk regimes can be identified ranging from 1) traditional mutuality risk models (Lloyd’s of London) to 2) classical portfolio theory (CAPM, efficient frontiers, trinomial tress, value-at-risk) to 3) black swan risk models (more frequent unpredictable outsized events) to now 4) decentralized risk models. As we rethink the world of science through complexity, now too complexity is a model for rethinking risk. Part of the more robust consideration of risk is moving to a conceptualization of causality that is not exclusively straightforward and linear. Complexity math allows a rethinking of risk in decentralized network models of consensus trust.

Rethinking Finance
An institutional crypto-economy also calls into question the definition of finance. Finance can be seen as a spot and future contingency management system for assets and liabilities. In this definition, blockchains are improved form of contingency management, with greater precision, automation, and lower-risk. The Internet becomes a contingency management system with programmable money, smart contracts DACs, and distributed ledger transactions, all contributing to automated value transfer.

Figure 2. Transition: Labor Economy to Automation Economy

Realizing the Automation Economy
Distributed ledgers allow a more serious move into the Automation Economy, via secure value transfer previously unavailable with the Internet. Internet 1.0, the ‘non-secure’ Internet allowed the automation of several sectors such as news, information, entertainment, manufacturing, and to some extent health. Now Internet 2.0 seen as secure value transfer networks could facilitate the automation of the entire economic, money, finance sectors, as well as government, politics, and legal services. What is at stake is a fair and orderly transition from the Labor Economy to the Automation and Actualization Economy.

Automated value transfer is the bigger project of decentralization, algorithmic trust, and the automation economy.

Blockchain Crypto-economics: The Actualization Economy of Immanence

Phase I: P2P Economies
There is considerable room for exploration in defining what the new possibility space of personalized, self-defined, emergent economic systems might comprise. Opening up economic systems could have different stages and phases. The first position could be having the same structure of current economic systems, but opening up the parties, interaction types, and business models. The idea of ‘decentralized reddit’ is an example of one such first position. It is still the same Internet pipes, providing the same news items to consumers. What could be different is the hosting, pricing, and business model. The web property reddit could be hosted in a decentralized manner, p2p-hosted by community peers, as opposed to being centrally-served by the company, reddit, Inc. Once the content is hosted by peers, the business model too can change. Instead of indirect advertising-supported centralized models coordinating the serving of eyeballs to vendors, direct pay-for-consumption or freely-contributed content models could go more naturally with a p2p-based content community. This means perhaps leaner economic models with greater price rationalization and value assessment of consumption by users.

Phase II: Rethinking Economic Systems as Coordination Systems
However, what is possible is not just different economic systems from a business model perspective, but something more fundamentally radical, a blueprint for a new economy. All of the first position, ‘decentralized reddit,’ no matter how decentralized, is still in the same structure, in the traditional structure of how economics has been conceived – of some parties producing goods of value consumed by others for some price (including for free in gift-economies). Extending this, the fully-fledged second position challenges and redesigns what is meant by economic systems, and claims that the purpose and value of economic systems is much broader. Markets have been the only application of economic systems, but the concept is more extensive.

Economics is a coordination system, of resources, but more broadly, of reality. 

Economics is a mediating and coordination system of our interactions with reality. Elements of economic theory might still make sense, like inputs, outputs, and resources, within this broader conceptualization of mediating reality. Resources could be more expansively defined, such as 'what resources are needed as inputs to brains being able to have ideas' as opposed to 'number of units of lumber sold.' Economics, instead of being defined as the production and consumption of scarce goods and services, could be reconceived more generally as a facilitation response to reality, concretized as a discovery and interaction process where something is discovered and valorized by a party, possibly in acknowledgement, interaction, and exchange with another party.

Phase III: Crypto-economics Facilitates the Shift from the Labor Economy to the Actualization Economy
Reconceiving economics as the more generalized form of (ontologically) what it is, a coordination system, allows its purpose to be substantially opened. The primary focus of what economics is about can shift. The locus of focus can change from how scarce goods are produced and distributed to instead, something much more generalized, to what our experience of reality is, and therefore to what kinds of responses to reality we would like to facilitate and enable. The notion of reality mediation design is so greenfield that the first question is 'what is important?' Economics can become a greenfield design frame about what might be possible in general in the world.

Yes-and! Abundance Economies of Immanence expand Reality
There are arguably two levels of ‘what is important’ – sustenance and actualization. First, certainly one dimension that is important is a post-scarcity situation for the material inputs required for healthy, flourishing human lives. The blockchain automation economy is making great strides towards this. Second, once basic needs are met, the focus can become one of immanence: open-ended expansion up from baseline survival to actualization in terms of growth, learning, creativity, collaboration, and contribution. True abundance is having these two levels; not just having survival-level needs met but also and more importantly, entering more fully into an existence of immanence, of open-ended upside potentiality - the actualization economy - and spending more cognitive time in this space. Abundance Theory Studies recognizes both of these dimensions: the immanent potentiality upside of existence, together with the baseline-attaining post-scarcity situation for material goods. True Abundance Economies focus on expanding the position of yes-and improvisation energy directed to self-expression, creativity, and novelty; expanding reality in ways that matter.

DIYastronomy Drones and Vertical DAS (Distributed Autonomous Space)

The Planetary Science Institute has announced plans for the Atsa Suborbital Observatory. Suborbital observatories are a new category of infrastructure that fits into the overall landscape of astronomical observational infrastructure between sounding rockets (expensive with only a momentary window for observation) and higher-altitude space-based observatories (Hubble, Chandra, Spitzer, Webb). Atsa is airborne-based, in this sense similar to SOFIA, though Atsa is able to access 3-5 minutes of zero-g, and is more modular, flying infrared, ultraviolet, and visible range observational equipment. For perhaps as low as $125,000, you might be able to specify your own commercial observing flight, possibly crowdfunded through Fiat Physica (‘kickstarter for physics’); in a sort of community supercomputing for astronomy.

DIYdrones and Vertical DAS (Distributed Autonomous Space)
The idea of on-demand modular observatories suggests the notion of "distributed autonomous space in space" more generally. Distributed autonomous space (self-delivering pod spaces, like mobile Airbnb for lodging, co-working, etc.) could be terrestrial, and also aerial. There is the idea of airsteading, the vertical analog to seasteading, maybe with self-flying dockable airpods; a potential feature of the future along with the road-steading one might do with self-driving vehicles. Short of funding one’s own concierge observations on Atsa, personalized drones might be employed for DIYastronomy (including via QS mind-controlled rigs). Personalized drone observatories might significantly expand the reach of both professional and amateur astronomers. There is also the possibility of adding astronomical observational nodes to space elevator stations. 3-5 minutes of zero-g time, even if expanded to 9-15 minutes by coordinated Atsa flights from Florida, Texas, and California; essentially a very-large array telescope in space, is still just a few minutes. Instead, modular, ubiquitous space elevator infrastructure might provide continual observational functionality, and other self-financing uses like solar power generation.

Cryptocitizen Decentralization Sensibility: Providing Peer Infrastructure
The emerging mindset of decentralization could include participating in networks by providing infrastructure. Citizen-supported infrastructure could supplement and eventually supplant government institution-provided infrastructure. Resilient community infrastructure and the idea of supplying peer node hosting for network resources was a hope of WiFi mesh networks. The concept of community-provided infrastructure did deploy in peer-to-peer file-sharing with Napster and BitTorrent, and community supercomputing projects like SETI@home and Protein Folding@home, and is now being considered for more kinds of infrastructure. Peer-hosted networks might be more resilient both technically and sociopolitically. Decentralized networks are more technologically sustainable and extensible. There is also a sense of self-empowerment and economic self-determination in peer-provided infrastructure, particularly as an important counterweight to corporate power in the developing blockchain industry.

Some examples of community-supported infrastructure could include self-hosted Bitcoin blockchain full transaction-history nodes (Bitcoind), datt.co (decentralized reddit), and personalized drone observation cams. DIYastronomy drones could give the world a mesh network architecture for asteroid watch and the monitoring of other space debris, and also the capture of terrestrial-based events and phenomena. Thus, the sensibility of the digital cryptocitizen could include participating in peer-supported network infrastructure for any variety of affinities; whether DIYastronomy drones for asteroid watch, blockchain ledger hosting, content hosting, decentralized Uber-Airbnb space providing, sustainable foodagtech microgreens hydroponic units, or other activities.

A New Kind of Economic Philosophy: Network Economies of Abundance

Blockchain technology, as revolutionary as it is, is perhaps most revolutionary in exposing the corner of a whole new philosophy of economics that can be formulated as a Network Economics of Abundance. Not just a new economic theory, but a new philosophy of economics is required because the entirety of existing economic theory has been constructed around the assumption of scarcity, and reconfiguring our economic thought around abundance instead as a central parameter requires rethinking economics so profoundly as to be a new philosophical position that is outside the field of economics. Thus, it is timely to articulate a Philosophy of Abundance. Many different pieces have been emerging in the world that can be assembled into a description and future vision for this Network Economies of Abundance (Figure 1).

Figure 1: Network Economies of Abundance: A transformational philosophy of economics.

Click for a bigger chart.

Shifting from the Labor Economy to the Actualization Economy
First considering Paradigms, two positions can be articulated. First is Traditional Economies. We are familiar with traditional economic models where the organizing parameters are scarcity, control, hoarding, hierarchies, and relationships of power being held over others. The definition of economics concerns the production and consumption of goods and services, and success is measured by output (GDP). The goods and services that are valorized and measured in the formal economy are produced by monetary-based labor.

A second position is Network Economies of Abundance where the organizing parameters are completely reversed. This economics is based on abundance, access, availability, yes-and collaborative willingness, and power shared with others. Network Economies of Abundance are measured in fulfillment; though actualization, connection, purpose, and meaning. In a full, liberation economics, the measurement metrics are self-chosen by individuals and groups. The definition of economics has shifted, away from transactions, even if game theoretic, to interactions. Economics can be seen as a facilitation mechanism rather than a transaction mechanism. Economics becomes a discovery and exchange process, one of interaction, acknowledgement, collaboration, and creation.

Evolving Positions in Network Economies of Abundance

Network Economy: Already in the current world, distinctly different economic models have arisen and co-exist alongside the traditional model. This has always been true regarding the informal sector, and is now more recognizable. One feature that characterizes network economies is a free flow of information, and engaging and interacting with that information, and more generally active participation. Another feature is that there is a mindset shift to access rather than ownership, or at least an attunement to different ownership models, and the notions of rights, responsibilities and stewardship attached to each. There are peer-produced commons goods like Wikipedia, sharing economy properties like Uber and Airbnb, and there is a multi-currency society where other currencies such as attention and intention are monetized. Societal shared trust stems from individual identity being known by others.

Resource Grid Economy: This is what is starting to unfold now, the idea of Ubiquitous on-demand Resource Network Grids, which is fundamental in the mindshift to abundance. More and more resources are becoming fully dynamically available, lurking in the background as a resource blanket, to be called forth on-demand for use at any moment. For example, mind-controlled personalized drones could deliver on-demand items from an intention picked up by personalized QS EEG neuro-hacking rigs or smarthome personalized robots like Jibo, or the Nest. Ubiquitous resource grids are practical, and contribute to the ongoing mentality shift from scarcity to abundance. Time is freed for other higher-level cognitive engagement and enjoyment when resources are always-available on-demand, instead requiring cognitive effort to plan for availability. A simple example is having to know the bus schedule (keeping it loaded in memory) versus walking outside, opening up an app and seeing what bus is next. Societal shared trust is a function of agent reputation.

Crypto-Economy: The emerging crypto-economy uses blockchain technology and cryptocurrency tokens like Bitcoin to automate and facilitate human (and human-technology) interaction patterns. Decentralization as a new organizational paradigm extends our capabilities beyond hierarchical organizational models (both practically and values-wise (e.g.; more autonomy for all agents)) into trustless very-large scale models for coordinating world-scale activity. A million cryptocurrency tokens could bloom as the community token of individual cryptocitizens and groups for coordinating local post-monetary economies like basic income initiatives and demurrage programmable currency redistributions. Cryptographic ledgers could coordinate spot transactions (cryptocurrency) and t+n interactions with smart contracts and autonomous dapp, DAO, DAC, DCO, and datt.co entities and all physical and intangible assets registered as smart property. Societal shared trust is instantiated though smartnetwork consensus, independently non-totalizingly (integrity-preservingly) signed.

Needs-based Economy: A final position in the Network Economies of Abundance could be one in which the focal point is needs, where the needs of all entities readily surface and can be met. A needs-based economy focuses on the most important aspects and deeper level of what occurs in economic transactions. Each entity (person, group, community, country, technology entity) has needs. Some of the most important needs for humans tend to include acknowledgement, connection, contribution, meaning, and action in the world. Economics is a strategy for getting these and other needs met. Smartnetwork code entity DAOs/DACs could unobtrusively orchestrate patterns of interaction among biocryptocitizen agents to maximize needs-meeting, including by registering needs as smart assets to which token is posted to indicate degree of met-ness (basic income smart needs). Another example could be secure user-permissioned cloudmind collaborations with other human and technology entities for the purpose of problem-solving and creative expression. Societal shared trust is a priori, based on agent capacity, in digital society smartnetworks of the future.

Reference: Swan, M. (2015). Blockchain: Blueprint for a New Economy. O’Reilly Media.

Economic Liberation: Network Economics of Abundance

Economics as API: System Design
The possibility of creating true network economies of abundance and designing personalized economic systems raises a host of issues about what kinds of behavior might result from programmed economic parameters. In moving from indirect advertiser-supported models to direct peer-supported models, for example, one first issue might be the business model - which parts of the system should (can) be free and which paid? For any paid parts, certain externalities and artificial behaviors might be created.

P2P Business Model
One of the great values of peer-produced commons goods like Wikipedia is that it is group-generated content, in part because participation has been free and easy. Further, peer-production not only powers the generation of commons resources but also flexibly shapes them into better products per multiple voices and crowd-structuring of the content. The ethos and objective of crowd-based content has been towards more participation not less. One risk is that the introduction of p2p economic system parameters might inhibit peer production by asking payment for actions that were formerly free, even if users gain more control over how their own personal data is used. Donated resources in p2p networks, freely contributed gift-economy content and hosting, are already the norm and this could persist.

Hybrid Economic Systems (economics as a system parameter)
Personalized economic systems are an equality technology and an illiberty eradication strategy, reversing the lack of liberty of not being able to self-determine one’s own economic reality. Instead, there could be greater empowerment for all individuals in being able to choose and design the economic models in which to participate. As individuals and communities, we might now be able to select the economies that correspond best to our own value systems. This could include specifically selecting a centralized or a decentralized web property or software platform. The floodgates are only just starting to open on the degree of economic system experimentation that might happen before specific models in the decentralized space become standards. Hayek advocated for each financial institution having its own currency as a market barometer of health and competitiveness (The Denationalization of Money (1976)), and this could be extended such that each individual and community has its own currency too.

Migration Plan to Hybrid Economies – Icons identify Economic System
For existing web properties, there could be a strategy to test and explore decentralized models, and ways to incorporate centralized and decentralized economic models simultaneously. This could lead to a propitious migration over time from centralized to decentralized models. One way that this could work is that the landing page of a news website could have the usual content modules of a headline and a few lines of text. This could be accompanied by two (or more) icons at the upper right of the headline identifying the economic system, for example centralized and decentralized. The user could then decide, if wanting to read the full content, whether to click for free content knowing that their data might be monetized however the site wants in the backend, or having control that their data is not going anywhere (confirmed via an inspection of the open-source software) and peer-supporting the content with a micropayment in a pre-specified and known amount. The key point is an overall sense of parameter malleability and feature-selectibility in economic systems, where the user has the freedom to decide. Users can now select economic system like any other parameter in content consumption.

Community-Voted Multi-tier Programmable Economic Systems
Economic system as a selectable parameter might be applied at different levels. For example, at the level of the content item, web property community or vertical (like Stack Exchange or Stack Overflow’s hundreds of communities), the overall website, or the collection of websites in a media consortium (all the ‘Yahoo properties’ or ‘Google properties’ have a certain economic model, for example). Each newly launching sub-property could have its own economic model, specified by the overall site owner, community moderators, facilitators, or organizers, or the community itself. Why not enroll community votes to select the economic model, or maybe launch with one model and then vote at certain liquidity intervals (e.g.; the community now has 100 or 1000 members) regarding economic model to allow different community economic models and preferences to develop over time.

Network Economies: Economic System as a Configurable Parameter

We personalize everything else, why not economic systems too? Starbucks selectability comes to economic system participations! Some interesting implications for personalized economic system design arise per a recent post about ‘Decentralized Reddit.’

The New World: Network Economies of Abundance (chart)
There are two archetypal economic systems. First is the usual indirect model that we are used to as consumers: content is free to consume, and supported by advertising, where personalized data might be sold in the backend to other parties in any number of undisclosed ways; this is true for radio, TV, and Internet content. Second is the direct model of content producers and consumers existing in a network where users (content consumers) might pay for content or for certain premium actions they can do with content like up/down-voting it. The business model is that consumer micropayments support content providers and the cost of content-hosting – this is a true peer-to-peer network ecology. The direct model is now possible due to having large and available liquid networks where supply and demand can meet in an automated auto-discovered way. Examples of decentralized p2p network concepts have been Tor, Napster, the Internet itself, and also now Bitcoin, cryptocurrencies, and blockchain technology. One way to implement the direct model is through micropayments, where users click on icons to allocate pre-specified amounts of Bitcoin or token to take community actions. The central issue in decentralized p2p content systems to be prototyped and tested is user willingness to micropay for content operations.

Economic System as a Configurable Parameter
Datt.co is engaged in developing a software platform for decentralized content hosting communities. Conceptually, this could be like a standalone decentralized reddit. The software platform could also be deployed by existing centralized content communities (like Stack Exchange and Stack Overflow) as an offered parameter at the launch of new communities. Community participants or facilitators could choose the economic model for their community, either 1) advertising-supported (the centralized indirect model), or 2) peer-supported (the decentralized direct model). Other web properties could experiment with this platform to test both kinds of economic models, for example offering private-labeled decentralized versions of Instagram, Twitter, etc. Already-existing blockchain-based decentralized versions of social networking properties like Diaspora, Twister, Gems, Reveal, and BitCloud could further extend their functionality with the decentralized content-hosting platform.

What is decentralization?
In this potentially burgeoning era of personalized economic system design at every level ranging from individual agents to group participations, there is a questioning and defining of key parameters. For example, an ongoing question is ‘What is decentralization?’ Decentralization is more than peer production. While peer production and peer participation might be a feature in decentralized economic systems, true decentralization connotes that the model itself should be decentralized, with decision-making made in a flat, non-hierarchical manner. For example, ‘peer production properties’ like AirBnB, Wikipedia, and Reddit are still centrally organized, hosted, and coordinated, and users or community participants are not able to participate in decision-making, for example about how the content they contribute is monetized, or if some of that monetization could be returned to them as content creators. The content is produced by decentralized peers, but decisions about the economy are centralized.

Smart Contract Cryptolaw to accelerate the Automation Economy

Smart contracts are agreements between parties posted to the blockchain, possibly for automated execution. The agreements can be and among humans and technology entities (like machine to machine communications). Smart contracts don't make anything possible that was previously impossible, but rather, allow solving common problems in a way that minimizes trust. Minimal trust often makes things more convenient by allowing human judgements to be taken out of the loop, thus allowing complete automation. Ethereum and Eris Industries are open-source software projects developing smart contract platforms. Some examples of smart contracts are betting on the high temperature tomorrow, without an intermediary, automated mortgage rate resets, inheritance payouts, and peer-to-peer insurance.

Economy Outsourced to Smart Contract DAOs/DACs?
Smart contracts bring up the distinction between technically-binding and legally-binding frameworks, where code contracts run inexorably even if conditions have changed whereas human contracts are more flexibly binding. The quintessential example of a smart code contract is a vending machine. If the vending machine is not broken, every time you put in money, you get your selected item. The machine is not thinking of when or how to comply with your request, there is no discretion, the machine always complies. The key shift is that we want to be aware of is that we are starting to have a world not just where we have vending machines, but where smart contracts might be running big sectors of our economy, for example the whole mortgage industry.

Cryptolaw: intersection of Technological and Legal Frameworks
Cryptolaw then is the intersection of technological and legal frameworks. One key question is whether we want a separate legal system for smart contracts since they may be unenforceable in our current legal system. For example, a decentralized program already launched and running is difficult to control, regulate, or sue for damages. Further, smart contracts impact not just contract law, but the notion of the social contract within society more generally. What kinds of social contracts do we humans want with technological entities?

Compliant and A-compliant Smart Contracts
As with blockchain applications being in two modes, enterprise and individual, the thinking is that there may be two modes of smart contracts: compliant and a-compliant. Compliant smart contracts would have the four parameters of mutual assent, consideration, capacity and legality, and features such as a kill switch, automated consumer protection, assurity funds escrowed, and identity transparency. The other mode, a-compliant smart contracts, would be operating outside but not necessarily in opposition to, the current legal structure. Another way of looking at this is by the counterparty, are these human-human, human-entity, or entity-entity contracts? We may have a future world where there are new forms of legal entity status like personhood granted to smart contract entities like with corporations. http://www.slideshare.net/lablogga/blockchain-consensus-protocols

Material inspired by: Primavera de Filippi and Gavin Woods.
More Details: Cryptocitizen: Smart Contracts, Pluralistic Morality, and Blockchain Society

Blockchain Government

Blockchain technology is starting to arrive to the extent that applications are being defined for different sectors, most prominently markets/finance/banking, government/legal, IOT, and health. In all of these venues, the thinking is that centralized models may be something of the past, and could be supplemented or improved by secure decentralized frameworks that could be more efficient, quicker, and less expensive. For example, in finance and banking interbank transfers currently take three days to clear, but this could be immediate.

The reason that secure decentralized ‘smartnetwork’ operations are possible is the maturity of the Internet. The Internet is now large enough and liquid enough in terms of global reach, billions of participants, and in-place infrastructure such that a whole new tier of applications is enabled like those using blockchain technology. Blockchain technology creates secure decentralized transaction networks. The technology combines the peer-to-peer file-sharing of BitTorrent with public key cryptography to form a network where independent parties (rather than a centralized authority) can confirm that transactions are unique and valid, and record them into a ledger. This means that transaction networks can be more decentralized, secure, and resilient, and also accommodate a much greater scale of activity since parties do not need to know and trust each other, just the system.

Government is a sector where blockchain applications could have a significant benefit and finally allow services that are personalized instead of one-size-fits all. Public services could be as individually-specific as a Starbucks coffee order. Blockchains could be a liberty-enhancing equality technology allowing individuals to be more empowered, participative, and involved. Governance might be the next venue where individuals can take more authority and responsibility for themselves. The Internet made this possible with financial instruments, an intermediary like a stock broker is no longer needed for selecting and buying-selling financial instruments like stocks, bonds, CDs, and mortgage products. Likewise in information and entertainment, the Internet has fractured traditional centralized industries and created a new sensibility where individuals select their own content. Health services is another example where patient-driven EMRs (electronic medical records), web-based test data, personalized genomics, and quantified-self wearables have led to a new sensibility of individuals self-advocating for health as biocitizens. The key point is that the nexus of authority has shifted to the individual per decentralized Internet models. Blockchain-based government services could trigger a similar shift in sensibility and a rethinking of authority

Decentralization concepts are already underway in government (Rescaling the State) with a focus on the important role of mayors as non-partisan administrators (If Mayors Ruled the World), and the rise of metropolitanism (21st Century is the Metropolitan Century and Metropolitan Revolution). These ideas could be deployed in more detail per several key properties of blockchain technology in government services, for example its being secure, decentralized, scalable, universal, granular, auditable, trackable, and transparent. Applications could roll out in two phases:

Basic Blockchain Government Applications

• Transnational organizations – Correspondingly transnational governance structures for world-scale organizations like WikiLeaks, ICANN, and Wikipedia could be accountably and transparently coordinated by blockchains 
• Document registrations – Blockchains could serve as the whole of a society’s public records repository
• Voting – More secure and universal public electronic voting systems, and more transparent, usable, aggregatable data regarding representative issue voting records; faster results tabulation
• Issue and proposition development – Blockchain-coordinated proposal development, validation, and community dialogue and participation, and short-term delegative democracy instead of elected representatives (Liquid Feedback) 
• Campaign – More immediate, transparent, universal, and interoperable finance disclosure and tracking
• Digital signatures and identity – Blockchain-based digital identity validation, signatures, proof-of-truth functions, escrows, passport services, and inclusive pseudonymous identity services for documented and undocumented individuals alike
• Notary services - using blockchain technology's secure auditable record-logging functionality together with digital timestamping and pointers to electronic documents stored off-chain

Advanced Blockchain Government Applications

• Personalized opt-in governance services – Individuals could enroll in competitive personalized governance services (locality-provided or vendor-provided), paying for preferred services, such as composting, or education. Other personalized government services could include: reputation-based ID systems, voting, dispute resolution, national income distribution, public documents registration and repository (Bitnation, facilitator of the world’s first blockchain marriage October 5, 2014)   
• Blockchain public finance services - Self-directed community bonds (Neighbor.ly), whose creditworthiness could be facilitated and evaluated with blockchain-based mechanisms such as Ricardian contracts, such as those contemplated by Greece to provide assurance regarding tax receipts
• Real-time documented legal services - On-demand tele-attorney consultation, rights advocacy, law enforcement interaction, and private policing (Sidekik)
• Futarchy prediction markets - Two-step voting process on outcomes and strategies for their attainment rather than individuals as representatives 
• Token issuance and management - Civic tokens (convertible to cryptocurrencies like Bitcoin or fiat currency, or accepted directly) could be issued for guaranteed basic income initiatives, health services, EBT/foodstamp programs, or other community spending initiatives to improve efficiency and reduce fraud

Blockchain Thinking: The Brain as a DAC (Decentralized Autonomous Corporation)

Blockchains are a new form of information technology that could have several important future applications. They could be an explosive operational venue for new kinds of autonomous agents like DACs, distributed autonomous corporations. A DAC is a corporation run without any human involvement through a set of business rules based in software code. It is called a ‘corporation’ because it typically engages in corporate operations like fundraising, providing services, and making profits for shareholders. Blockchains are a software protocol upon which digital cryptocurrencies like Bitcoin run.

One potential application is blockchain thinking, formulating thinking as a blockchain process. This could have benefits for both artificial intelligence and human enhancement, and their potential integration. Blockchain thinking could be conceived as an input-processing-output computational system with several features whose benefits might include the ability to orchestrate digital mindfile uploads, advocate for digital intelligences in future timeframes, implement smart-contract based utility functions, instantiate thinking as a power law, and facilitate the enactment of Friendly AI.

Top 4 Killer Apps: Brain as a DAC:

1. Friendly AI – Digital intelligences will likely not be running in isolation, they will want to conduct operations on smartnetworks that are possibly managed by consensus models or other mechanisms. Any agent wanting to conduct transactions on a smartnetwork will need to be in good reputational standing to do so. Smartnetwork operations could include accessing information and other resources, fund-raising, entering into contracts, and offering services. The consensus only validates and records bonafide transactions from ‘good’ agents. Thus only friendly players would be able to have their transactions executed, and that is how friendly AI could be enacted. There are some objections to this argument, but the key point is that blockchains are a checks-and-balances system that could potentially encourage certain kinds of behavior.
2. Blockchain Deep-Learners: A crucial moment in AI research was finally having large enough data stores over which to run machine learning algorithms. Google demonstrated this with news, translation, and most recently image recognition of cats in YouTube videos. A similar ‘big data’ argument can be made for thinking where large databases of personal connectome files might lead to an understanding of how thoughts are actually represented in the brain. This understanding could inspire new classes of AI applications. As is currently being explored for EMRs and personal genomes, blockchains could be a useful privacy and access control mechanism for permissioning different parties to the large and sensitive data files more granularly Personal connectome files could also be orchestrated by blockchain processes.
3. Blockchain Advocates - One of the great potential benefits of blockchains could be instantiating smart contracts as your independent third-party advocates in uncertain future timeframes. An element of the business model that needs to be established is trustworthy oracles for confirming information. The Wikipedia of the future could be a blockchain-based oracle service to look up the current standard for digital mindfile processing, storage, and security as these standards would likely be advancing over time. “You are running on the current standard, Windows 36 and a Lloyd Quantanium 3,” your smart contract valet informs you. Thus, blockchain smart contract advocates could help digital intelligences and AI DACs feel more secure in their future survivability and also humans more comfortable in uploading their digital mindfiles.
4. Digital Mindfile Services – Already there may be many different representations of you online, and your digital identity. Over time these could become more explicitly a full and fidelitous ‘digital you’ for backup purposes (like stroke rehabilitation) or otherwise. There are already some existing online mindfile services like LifeNaut and CyBeRev. Presumably machine-learning and deep-learning algorithms will eventually crawl the web to assemble ‘digital you’ files in an automated manner, aggregating social media, photos, linkedin profiles, forum comments, academic or other published writings, etc. into a composite you, including with imputations about your value system and goals. Later brain scans and personal connectomes can be added to this data store, as well as real-time lifelogs, memory logs, idea logs, and EEG brain activity logs from quantified self EEG rigs. This could lead to being able to instantiate your mindfile as a DAC and personal thinking blockchains, enabled to carry out digital tasks on your behalf.

Beyond these killer apps of Blockchain Thinking, there could be more sophisticated uses of blockchains for computational thinking. One could be logging all of an agent’s memories and ideas as discrete units that are encoded, stored, and universally-accessible, perhaps with multiple copies and versions (such as the soft-hashing of ideas in development) that are then deployed in smart contract DACs. Another is that processing might be instantiated in a massively distributed architecture that is not available in human brains, yet still comprises the non-linearity of human thought. Third, blockchain thinking might give rise to new forms of consensus models such as self-mining ecologies and proof of intelligence, and make use of demurrage principles to redistribute brain currencies like ideas and long-term potentiation. Blockchains and blockchain thinking might be not just a tool for the immediate progress of intelligence, but also for the longer-term transition to a world of multispecies intelligence living cohesively and productively in digital societies.

More details: Texas Bitcoin Conference Presentation, Paper, Video

Top 5 Immediate Money-Making Applications of Blockchain Technology

The right question is not whether Bitcoin is over or under-valued, or over or under-hyped, but what the biggest potential money-making applications might be. While we wait for consumer-ready cryptocurrency applications to be presented to us by the financial services industry and other trusted providers, in the progression of ATMs, online billpay, eStatements, and Apple Pay, there are many other opportunities to be explored.

Blockchains could be the last piece of core infrastructural technology needed to facilitate the machine learning revolution in the same progression as the industrial revolution, only quicker.

1. Banking 2.0: The first and most obvious application of blockchain technology is the opportunity to reinvent the banking and financial services industry. The current monetary system is far too slow - it takes days and weeks to transfer funds, where cryptocurrency transactions are received immediately anywhere in the world. Sending a payment to a software development team in India means people receiving money instantly, and at a fraction of the traditional transaction cost. This could mean a tremendous speed-up in the velocity of money, and a way to allow legacy banking systems to interoperate, reorganize themselves, and make the whole way they do business more efficient. 
2. Financial Markets. In financial markets, one clear application of blockchain technology is algorithmic trading and back office operations. High-frequency trading could be taken to the next level implemented in smart contract DACs (decentralized autonomous corporations) and executed by semiautonomous agents with the ability to act more quickly and better crawl information sources for price, news, and sentiment changes. Similarly, whole tiers of back-office operations like clearing currently handled by people-agents could be handled by blockchain-agents. The automation economy is well under way, and blockchains provide the final required checks-and-balances feature of accountability. Blockchains instantiate a robust technology record of all transactions in a universal ledger system that is available for future lookup on-demand at any moment. Financial services businesses like the mortgage industry could implement smart property via blockchains as a universal asset registry and transfer system, and smart contracts for payment automation, interest rate resets, and securitization packaging. 
3. RTB and BI Automation. In the same vein as smart contract-based algorithmic trading, blockchains are also well-suited for implementation in other automated high-frequency markets like real-time bidding for advertising and business intelligence. These are already heavily machine algorithm-based markets that could be easily facilitated by being instantiated in blockchains. Again there is quicker, better, more-trackable, more-efficient, permanent, universal worldwide execution, together with record-keeping, monitoring, and tracking. The RTB market is billions of dollars at present and estimated to grow to $42 billion in the next three years. Likewise automated business intelligence is big business, and big data, for example, domain name hosting services use machine learning algorithms to continuously obtain competitive data points for standard services such as the cost of 1-year hosting with 2 GB of storage.
4. Blockchain IOT and M2M. We think cryptocurrencies might make our human lives easier, and they do, but even more so, they are for the machine economy. Cryptocurrencies are the economic layer the web never had, and can facilitate not just remuneration, but also the communication, coordination, and tracking of all machine-to-machine and machine-to-human interactions. While two thirds of people are estimated to be online in five years (from the current one-third), 25 billion things are forecast to be online by 2020. A corresponding Internet-of-Money is needed to organize this Internet-of-People and Internet-of-Things, for example seamlessly facilitating a connected car’s progression from smarthome IOT network to smartcity highway to automated city center parking. IBM's Adept announcement at CES is an early example of the idea of smartnetwork IOT coordination using blockchain technology.
5. Blockchain Thinkers. Not only is blockchain technology a potential means of enacting Friendly AI, it is more broadly a new concept and tool for instantiating intelligent computing operations in a blockchain architecture. This could have implications for both the development of artificial intelligence and human cognitive enhancement. DeepMind's Neural Turning Machines as an external memory for machine learning algorithms is an example of this kind of instantiation structure in artificial intelligence. For cognitive enhancement too, a blockchain could be the tool that makes lifelogging useful, recording every thought as a transaction in a blockchain memory, for search and recovery later, for example in the cases of Alzheimer's disease and stroke rehabilitation. One implication of Blockchain Thinkers is Blockchain Advocates. Blockchain Advocates are blockchain-based smart contracts as a new form of independent third-party advocate that can act on your behalf in future time frames. Right now you can set up smart contracts to monitor your smarthome IOT network, for example pinging you if the security system goes offline. In the future, your smart contract advocates could confirm that your digital mindfile is still running and being backed up appropriately, doing future real-time oracle lookups. “You’re still running on the current standard, Windows 36” your smart contract butler informs you. (More information: Blockchain Thinkers: The Brain as a DAC and Cognitive Applications of Blockchain Technology).

Bitcoin and blockchain technology could be just the first application of decentralization as a new form of information technology. 

Overall, blockchains are a new class of decentralized information technology for the potential execution of any kind of administrative task more efficiently, from all applications of money and finance, to government to health. Blockchains are a global-scale coordination mechanism - quicker, more transparent, more participative, and more accessible. Blockchains are a supercomputer for reality in the sense that they are a management tool for any system that can be quantized or divided into discrete elements or constituent parts. Bitcoin as the current ‘legacy’ cryptocurrency with more entrenched network effect adoption than other cryptocurrencies might not be the final or enduring cryptocurrency. Likewise the blockchain architecture as currently instantiated with questionably expensive and wasteful proof-of-work mining operations might not be the final architecture. However, it is harder to argue that decentralization as a new concept and class of information technology is not here to stay given the liquidity and penetration reach of the Internet. Focusing on end-user applications could help Bitcoin shift from its nacency into a more mature phase of cryptocurrency industry development, becoming a value currency, not just a development currency or speculative currency.

More Information: Swan, M. (2015). Blockchain: Blueprint for a New Economy. O'Reilly Media.