Blockchain for Global Inclusion: Enablement or Precarization?

Overall we expect that the benefits will outweigh the costs of blockchain distributed ledgers. (A blockchain (distributed ledger) is an accounting ledger (an account of who owns what) running on a distributed network, operated by cryptographic protocols, without any centralized control.) However, we should design this new class of information technology being mindful of both sides of the equation and address identifiable risks to the extent possible ahead of time. Here are some possible risks and benefits when considering blockchains for global inclusion, and the enablement or precarization that might result.

Benefits of Distributed Ledgers
Distributed ledgers could be the next important leapfrog technology for enabling human potential. Blockchains might be used to deliver peer-based services that support financial inclusion, identity-credentialing, and health inclusion. 

Globally, there are

• 2 billion under-banked (PWC, 2016) 
• 1.1 billion without an officially-recognized identity (UN, 2017)
• 70% of the world lacks access to land registries (Heider and Connelly, 2016)
• 400 million without access to essential health services (World Bank, 2015) 

It does not make sense to build out brick-and-mortar bank branches and medical clinics to every last mile in a world of digital services. Instead, eWallet banking, identity credentials, property registries and deep learning medical diagnostic apps might be used to deliver these services.

Risks of Distributed Ledgers
On the other hand, one risk of global blockchain services is that perhaps liberty is diminished if all persons worldwide are explicitly or implicitly forced to join blockchain systems. Precarization may be heightened if everyone must join the global labor market, if that means that one is subject to a constant sense of be measured and controlled by computational algorithms over which one has no control. Individuals are marketized, financialized, and precaritized.

Is a blockchain just a worse version of a FICO credit score? A blackbox over which one has no control? 

The risk would be losing the plethora of diversity in value systems, ways of solving problems, and orchestrating our daily lives if we are all subject to monolithic blockchain systems that do not support this diversity. Another risk is that economically, with blockchains more tightly integrating the economic sector, risk may become even more concentrated that it already is. At worst, distributed ledgers operated by algorithmic smart contracts might essentially turn the global economy into one giant HFT (high-frequency trading) vehicle, where there would not be any form of uncorrelated risk.

References

• Heider, Caroline, and Connelly, April. 2016. Why Land Administration Matters for Development. https://ieg.worldbankgroup.org/blog/why-land-administration-matters-development 
• Pricewaterhouse Coopers. 2016. The un(der)banked is FinTech's largest opportunity. DeNovo Q2 2016 FinTech ReCap and Funding ReView. https://www.strategyand.pwc.com/media/file/DeNovo-Quarterly-Q2-2016.pdf
• UN. 2017. http://id2020.org/ 
• World Bank. 2015. http://www.who.int/mediacentre/news/releases/2015/uhc-report/en/

The Future of AI: Blockchain and Deep Learning

First point: considering blockchain and deep learning together suggests the emergence of a new class of global network computing system. These systems are self-operating computation graphs that make probabilistic guesses about reality states of the world.

Second point: blockchain and deep learning are facilitating each other’s development. This includes using deep learning algorithms for setting fees and detecting fraudulent activity, and using blockchains for secure registry, tracking, and remuneration of deep learning nets as they go onto the open Internet (in autonomous driving applications for example). Blockchain peer-to-peer nodes might provide deep learning services as they already provide transaction hosting and confirmation, news hosting, and banking (payment, credit flow-through) services. Further, there are similar functional emergences within the systems, for example LSTM (long-short term memory in RNNs) are like payment channels.

Third point: AI smart network thesis. We are starting to run more complicated operations through our networks: information (past), money (present), and brains (future). There are two fundamental eras of network computing: simple networks for the transfer of information (all computing to date from mainframe to mobile) and now smart networks for the transfer of value and intelligence. Blockchain and deep learning are built directly into smart networks so that they may automatically confirm authenticity and transfer value (blockchain) and predictively identify individual items and patterns.

Detailed Slides available here.

PSD2 Open Banking Initiative and Blockchain Economics

Compulsory upcoming implementations of the European Union’s Revised Directive on Payment Services (PSD2) supporting the Single Euro Payments Area (SEPA) could spur blockchain adoption for two reasons. First, the shared ledger technology provided by blockchain is a crucial underlying functionality for real-time payments. Second, blockchains offer not only real-time payment capability, but also identity confirmation, so that risk management and fraud prevention may be improved for banks.

The objectives of PSD2 dovetail nicely with the capabilities of blockchain. One of the most obvious kinds of functionality to facilitate real-time payments is having a shared ledger of account balances. User identity and balances are confirmed and known in banking blockchains, and reside in a secure and immutable ledger waiting for upcoming transactions. Blockchains render the preliminary validating phase already complete, and therefore qualifying transfers can be executed automatically. Blockchain is the perfect infrastructure for real-time payments.

Regarding blockchain innovation and the development of new payment processes and systems, one implication of the PSD2 requirement for banks to open up their APIs to third parties is that the payments business could become more like a utility. On one hand, this could have banks scrambling to focus on higher margin customers and services. On the other hand, the technically-savvy might see PSD2 as a means of reaching new markets with technology-based solutions. The economic structure is different with blockchain in that the cost of offering services is reduced, while security is improved at the same time through blockchain-based identity confirmation. Banks could use low-cost eWallet solutions to offer light banking services on-demand to customer tiers that were previously unattractive from a credit and margin perspective. Lightweight banking services delivered by eWallet could be the analog to prepay phone services. A surprise benefit of PSD2 could be supporting financial inclusion as a policy result.

One effect of PSD2 is inviting agile fintech companies into the market. These vendors are well-versed in contemporary fintech solutions using Ripple and blockchain-based digital ledgers. This is important because it is not clear that more established payments systems such as SWIFT have the infrastructure to support real-time payments initiatives, despite their efforts to consider blockchain technology as a front-end overlay.

Digital ledger technology like blockchain facilitates payment and also compliance. Future payments regulation such as PSD3 could almost require the technical capabilities afforded by digital ledgers. For endusers, payment services could be more seamless than cash. A further effect of rethinking payments with blockchain could be rethinking other monolithic financial models such as how debt, loans, and capital are structured.

Status of Blockchain Adoption
PSD2 underlines that the industry is becoming more of an institutional investor and enterprise software market. The big source of investment in the sector is existing financial and governmental institutions who are developing private blockchains (where user identity is known and approved with KYC/AML practices; like a VPN).

Private enterprise blockchains could serve as a counterweight to worries about money laundering and other illegal uses of public blockchains. It is not that public blockchains should be banned or heavily regulated. Digital ledgers should be recognized as a new and complex digital venue where illegal activities may be taking place alongside bonafide activities, such that regulatory agencies are called upon to become savvy about the risks presented by the new technology and operate within this domain (anonymity does not mean lack of forensics). This is a small detail against enterprise blockchains as the bigger trend in the digital ledger space at present.

Cognitive Easing: Human Identity Crisis in a World of Technology

Cognitive Easing is the aim of much of our endeavor, whether explicit or implicit. We have never wavered from trying to create a life of ease, enjoyment, and fulfillment. The definition of Cognitive Easing is spending less mental effort to achieve a result.

A contemporary problem seems to be technology’s controlling presence in the world. Jobs are disappearing due to technological unemployment. News is fed to us that does not correspond to reality. Mysterious big data algorithms direct from the background. We no longer seem able to think for ourselves with “the cloud” automatically piloting our lives. What happened to caprice and serendipity, to our very humanness?

However, I argue the opposite. It is not the infantilization of humans by technology that is happening, but rather the opportunity for cognitive easing. We are not always accustomed to using our brains in the most creative and productive ways. Therefore we feel dumbed-down by technology when cognitive easing is actually freeing us from mental drudgery. Consider the amount of effort spent on “last-mile cognition problems” such as planning and coordination. Instead, cognitive load could be increasingly outsourced to algorithms. This has been the promise of technology from the beginning, easier lives.

A pushback is that lower-level cognitive tasks might seem like part of the definition of what it is to be human. However, while we have had to occupy our time this way, it does not have to be who we are. We need to challenge the false and nostalgic notion of defining our humanness by the tasks we do, and this might not be easy. Even scarier than how we will spend our time after technological automation is the question of who we are – our very identity.

Technology is forcing us to question what it is to be human. We have defined ourselves by physical labor and lower-level mental tasks, and it is abrupt to have to change this, especially because we do not know who we are. Worse, there is a timing lag with technology replacing what we think our humanness consists of before we have had a chance to redefine what it could be. We feel out of step with technology, and that we are regressing instead of greatly progressing. We think paradoxically that technology robs us of our humanity when in fact it is doing what we wanted all along, providing physical and cognitive easing.

Technology, automation, and cognitive easing are requiring us to redefine what it is to be human based on the higher-level capacities we have. These higher-level faculties include creative problem solving, artistic expression, storytelling, and quirky ingenuity. Only humans have the ability to perceive the world and react with unique and inventive solutions. We can now contemplate a new class of problems that we did not have the luxury of addressing before, deploying our creative problem-solving capability to a greater extent. The vision for the future is engaging with more of our unique humanness, increasingly freed from both physical and mental drudgery, to be more of who we really are, creative, serendipitous, problem-solving beings exploring and enacting our world in new and ingenious ways.

Blockchain Fintech: Programmable Risk and Securities as a Service

Access instead of Ownership
One of the most radical and potentially disruptive ideas for the near-term blockchain financial services market is Securities as a Service. Consider the music industry, where in the past, it was quite normal to purchase and own records and CDs, but now music is often accessed through digital media services like Spotify. There is access to music, but not much thought of ownership. “Listening to music” is the consumable asset, which is priced per network models for its access and consumption. Autos are in the middle of a similar transition now, where the asset “transportation” may be more readily fulfilled by services such as Uber, including by autonomously-driven vehicles. In the future, securities and other hard assets could be similarly presented to the market as a service. Securities could be the kind of asset where the “access to the benefit provide by the asset” is the consumable good, not the ownership of the asset. Financial services could thus have a shift from transaction-based pricing to services, as has been the case in other industries. The key point is focusing on the economic conditions under which securities as a service would start to make sense. The only reason securities ownership is required now is because the future value of assets is highly uncertain. The only way to feel comfortable about the future value of assets is by owning them. However, if the future value of assets were more assured, or really the access to the benefits conferred by assets were assured, then ownership might be obviated, and the benefits of securities ownership could be delivered as a service.

Future of Finance: Decentralized Blockchain Smartnetworks
One of the deeper philosophical implications behind the fintech innovation of blockchain is that all economic and financial concepts might be questioned and rethought. This includes risk, value, uncertainty, probability, resources, assets, liabilities, interest, time, transaction, and exchange. The current economic and financial systems are just one way that we have thought about organizing access to resources, and responding to the assumed problem of the protection of the future value of assets, but there could be others, including those that are non-hierarchical and decentralized. One salient question is what risk might mean in decentralized financial networks. The idea that risk would somehow become decentralized too (i.e.; more manageable and predictable, and possibly even decreased or evaporated) since assets can be settled instantaneously via blockchain, is perhaps facile. It is more likely that risk is shifted to other dimensions that need to be articulated. The notion of risk needs to be rethought in a different conceptualization that involves network ecologies. Risk is just one effect of decentralized networks. Other parts of the overall financial services structure are changing too, and also mindset paradigms. There are already some key mindset shifts starting to occur at the systemic level to support a transition to decentralized networks. In economics, these include shifting from labor to fulfillment as the object of productive activity in the economy, scarcity to abundance, and centralization to decentralized network models. In finance, these include moving from ownership to access, point values to topological ranges, and insufficiency to assurity.

Rethinking Risk: Greater Correlation in Blockchain Financial Markets?
One of the key risks of blockchain technology that is not yet being discussed is the implications for systemic risk. With blockchain making the financial sector more tightly integrated, markets and trading instruments might be even more correlated than they already are. The fear is that at worst, it could be that distributed ledgers operated by algorithmic smart contracts could essentially turn the market into one giant HFT (high-frequency trading) vehicle. Already, without current fintech advances, black swan events in markets indicate that what might seem to be diversified portfolios are not, and that regional markets, asset classes, and time frames are much more correlated than imagined. Systems-level complexity simulations of market behavior would be useful. One perspective is that more tightly-correlated financial markets could be seen as progress. As finance moves into the automation economy as itself an automated operation of efficiency, it could behave more like a utility than a margin-rich business. This could trigger significant disruption in the structure of financial and investment services industries. This would be fine if overall risk were also declining, but corresponding steps to reduce global risk such as orchestrating an orderly transition to the automation economy do not seem to be contemplated.

Very-large Potential Impact of Blockchain Fintech
Decentralized networks like the Internet have been one of the most powerful technological arrivals in the contemporary era. Whereas the first phase of the Internet allowed the transfer of information, the next phase focuses on the secure transfer of value such as money, property, securities, and hard assets, particularly via blockchain technology. Blockchain’s secure value transfer functionality provides a significant opportunity to transform some of the last remaining sectors not yet re-engineered for the Internet era such as economics and finance. The status of blockchain fintech adoption is companies re-inventing the financial services value chain around money and data transaction touchpoints. Any organization conducts operations in a network of money, information, and data coupling points, mostly in repetitive processes. There are two levels to business processes: 1) decision-making and 2) execution and administration, the latter of which might be securely automated with blockchain-based smart contracts. Currently, the most successful financial industry implementations of blockchain fintech are those companies who are already addressing how to fundamentally re-engineer their business models for new opportunity, not merely update their operations for efficiency. In a blockchain economy, financial asset-related (and indeed all) value chains could become increasingly streamlined and automated, obsoleting many current intermediary functions such as custody, titling, and insurance. These functions could be replaced by algorithms and smart contracts. Companies across the financial landscape are realizing that blockchain is not a separate industry as much as a new underlying technology with applications in every sector. Internally, this can mean applications for cost-savings, for example in quality assurance, test, audit, compliance, sales quoting, finance, treasury, accounting, and expense management. Externally, developing a leadership edge can include offering blockchain-based services to clients, and leading industry-wide blockchain initiatives for digital value transfer across the network value chain.

Singularity Global Summit Slides: Blockchain Smartnetworks: The Future of Finance and the Automation Economy

Melanie Swan is speaking at the Economist’s Disrupt Finance conference in New York on October 13, 2016. She is a philosopher and economic theorist at the New School for Social Research in New York, and committed to the beneficial use of technology for global impact. She 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.

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.

Bio-Cryptoeconomy: Nanorobotic DACs for Cell Repair and Enhancement

Blockchains as the new platform for technological innovation invite the creative imagining of applications at both the level of technology use and in the rethinking of economic principles. Some recent developments include optimism about rising Bitcoin prices and the rewards-halving milestone, trepidation about scalability, block size, and the latest hacking scandal of the Ethereum DAO, and fast-paced single ledger adoption by financial institutions. Beyond excitement over these advances, however, the potential for the deployment of blockchain technology is still wide open across many more sectors and contexts. One speculative imagining for blockchain deployment is the bio-cryptoeconomy. The bio-cryptoeconomy is the idea of harnessing cryptographic principles and economic organizational models, particularly in the form of blockchain-based smart contract DACs (distributed autonomous corporations), to automate large classes of ameliorative processes within the human body. It has long been envisioned that in the farther future, fleets of medical nanorobots might be brought on-board the human body for a variety of pathology resolution and enhancement activities.

Medical nanorobots is the idea of having tiny robotic machines at the nanoscale roving within the human body to perform a variety of health and enhancement operations. While autonomous nanomachines are not immanent, already nanoparticles are being deployed clinically in the human body for dynamically-controllable drug delivery and other functions. In the farther future, medical nanorobots could be a crucial technology for pathology resolution, health maintenance, and cognitive performance enhancement. Some classes of medical nanorobots that have been designed include respirocytes, clottocytes, vasculoids, and microbivores. Medical nanorobots could perform a variety of biophysical clean-up, maintenance, and augmentation tasks in the body. One such therapy might target the removal of cellular waste, for example, disposing of neural lipofuscin (un-decomposable waste particles remaining in the cell lysosome despite normal break-down processes). Neural waste accumulation is theorized to be an aspect of neurodegenerative pathologies like Alzheimer’s disease and Parkinson’s disease. The concept is that medical nanorobots would be like having a fleet of IoT sensors on board the body, coordinated by mass automation, which could be increasingly feasible and secure with blockchain technology.

One of the most urgent medical nanorobotic applications could be combatting life-threatening pathologies such as cancer and heart disease. Disposable medical nanorobots could be used to deliver and activate drugs in specific locations in the body as nanoparticles do now. An important related application could be to provide targeted electrical stimulus to the heart and brain, for example using ultrasound to dissolve blood clots. Another application could be to have medical nanorobots residing more permanently or for fixed time frames in the body for preventive medicine and general maintenance including cell repair and rejuvenation. It is not unthinkable that eventually there could be a nanorobotic DAC in many cells throughout the body coordinated by bio-crypto technology to undertake a variety of repair and enhancement activities.

The Nano Crypto Quantified Self: Radical Blockchain Health Apps of the Future
The sheer scale of simple repetitive activity across the human body’s roughly 37 trillion cells suggests that a completely new kind of automation mechanism might be required to coordinate cellular nanorobots. Blockchains possess several key properties needed to realize cellular-level nanobotic DACs. Already, blockchains are being investigated in test deployments for the high-load communication coordination of very-large scale IoT sensor networks. The automation of massive fleets of medical nanorobots in the human body could be similarly orchestrated. Further, medical nanorobots suggest a high number of agents and “transactions” where blockchains are easily able to log, track, and monitor any amount of activity from diverse agents. The secure nature of blockchain tracking is also a crucial feature for record-keeping and potential liability assessment in the medical context. For example, bio-cryptographic nano DACs could be used to improve information-gathering and efficacy in clinical trials, and record and transmit information directly regarding safety, adverse events, and side effects. Finally, remuneration as a standard blockchain feature might be useful for personal bio DACs. This could be directly in the case of transactional and payment channel consumption-based pricing. This could also be indirectly in the case of employing economic mechanisms like “pricing” as a points-based system for indicating demand, preference, priority, affinity, and other values.

Community Payment Channel DACs
One benefit of blockchains and DACs is the vast reach of the technology in automating the coordination of arbitrarily many individual units and levels-of-detail roll-up. For example, in the case of a national treasury’s banknote tracking system, there is registration and tracking at the level of individual notes, series, print runs, location, time, and assignment to various entities at multiple levels. Blockchain ledgers allow on-demand drill-down to inspect the minutest transaction whilst simultaneously accommodating the potential automation of arbitrarily-many levels of activity, all though one Merkle tree validation, and packages of smart contract DACs. For example, the administrative aspects of a country’s entire home mortgage system might be managed in DACs that federate different levels of detail across the industry. Multi-tier automation and coordination in blockchain DACs makes the possibility of very-large scale automation projects more feasible. There is a growing capability to be able to marshal planetary-scale endeavors whether externally in economies, weather systems, and space settlement, or internally in neural activity in brains, preventive medicine, and crypto-nanorobots circulating in the body. A second-order functionality afforded by the automated multi-layer coordination of blockchains is being able to deploy actions to coordinated groups. Community actions as opposed to unitary actions can be the focus of activity.

Community Payment Channel DACs - Examples
A straightforward example of community payment channel DACs is that many houses on a smart city electrical grid might choose to join the community payment channel for lower-priced electricity and power grid load-balancing. Coordination can be thought at the level of groups or wholes, not just individual parts, even if unified. Community coordination could be a useful mechanism in many contexts such as the cells of the body, the neurons of the brain, IoT sensor networks, and smart city operations. One example could be the ability to view hospital equipment inventories on a state-level or even national-level per smart property tracking blockchains. One benefit of this functionality is the ability to use new methods such as complexity math to orchestrate patterns. The kind of automation currently at stake is not just the simple causality of point-to-point transactions, but rather the complexity of prediction gradients or ecologies of interrelated behavior. Blockchains and payment channels are an unobtrusive yet appropriately granular tool for orchestrating and remunerating these complexities. Nanorobot grids could participate in a community payment channel DAC for resource access and consumption, including micronutrients, small molecules, drugs, and electrical stimulus; and also for purpose-based activities such as cancer-fighting waste remediation.

Geoethical Bio-congruency of Cryptographic Nano DACs
Bio-cryptographic nano DACs are not just an innovation with high potential functional use, they are themselves an example of complexity and geoethical nanotechnology whose detail, granularity, and integration suggests a well-formedness that respectfully corresponds to their potential use in the world. Ubiquitous blockchain-based nano-crypto DACs in the body could track, monitor, assess, and intervene more congruently at the level, scale, and scope of local corporeal activity since they themselves are in a form and operational cadence that is similar to that of the human body. This is merely one example of a more general trend in science and technology to have the tool more congruently fit the territory. The focus is to model, understand, monitor, and engage with natural processes in the full bloom of their own complexity and interrelation rather than on simple human-consumable causal models between point-to-point connections, which was the primary scientific method available.

Advanced applications: Neuro-bio-cryptographic nano DAC apps
Just as humans and machines collaborate on many macro-scale tasks in the physical world now, it is imaginable that nanomachines might collaborate with the human body for many functions in the future. One example of a standard activity for a cell monitor DAC could be working with RNA transcripts; tracking, blocking, producing siRNAs, and RNAis for gene silencing and interference in an extended application of current pharmaceutical efforts. Clearly these cellular transactions would need to be tracked and monitored, including for safety, liability, and remuneration purposes. Neural operations are an obvious venue for bio-cryptographic nano DACs. This could include working with the brain’s 100 billion neurons for the purposes of memory assessment, improvement, and life-logging. Beyond that, it could also include making backup copies, uploading, coordinating brain-computer interface (BCI) cloudmind participations, and automating in-brain information retrieval (personal voice assistants not just externally like Alexa Echo and Google Home but on-board interactive applications; literally voices in one’s head (if so-permissioned)). Nanorobotic DAC applications could use microbiomics as a less-invasive target site from which to provide resourcing applications such as connectivity, secure automated backup, energy replenishment, and drug delivery.

Self-instantiating Bio-crypto nano DACs
In the farther future, if bio-crypto nanorobots were to be truly autonomous DACs, they would sense a need for their genesis in the “tradenets” of bio-demand within a body, initiate a crowdfunding, begin operation upon its successful completion, and self-retire when there was no longer demand for its operations. The idea here is similar to concept of the self-owned Uber-type car that creates itself per sensing demand on a smart city tradenet grid, self-funds, self-operates, self-maintains, and self-retires. In a body, at the advent of a cancer or pre-cancer, for example per cellular threshold levels for mutational DNA copies being exceeded, there could be a trigger for a self-initiated nano-DAC crowdfunding to support in-cell cancer-extermination. This raises several questions such as the denomination currency of bio-DACs and also how the accountancy validation operation of mining is to occur. There could be different bio-crypto currencies such as micronutrients, small molecules, energy (ATP), electrical charge, and ideas. The obvious bio-currencies would be those already denominated by the body and used in the applications which the nano-DACs would be facilitating. In the smart contract programming, cryptocurrency principles like blocktime temporality (blockchain-based timing specifications) and demurrage (encouragement towards certain kinds of action-taking like full consumption) could be specified to optimize the management and operation of bio-currencies. For example, demurrage principles could be used for the periodic redistribution of brain bio-currencies such as ideas with its precursor neurotransmitters serotonin and dopamine (in the enhancement case), and memories with its precursor neurotransmitter acetylcholine (in the dementia repair case).

Advanced applications: Bio-currencies and Reciprocal bio-mining ecologies
Regarding mining, there would be different classes of security required by bio-nano DACs. Heart and brain operations would seem to be more sensitive, requiring a higher class of crypto-protection, and therefore a more robust mining effort. In general, the bio-mining operation could be architected similar to that of the smarthome IoT network. Interdependent blockchain ecologies could mine for each other, in a congruent participatory decentralized manner, where each ecology has the incentive to both maintain the network by accurately recording the transactions of other parties as their own survival is also at stake, and also to have their own bonafide valid transactions recorded for the same reason. In the smarthome IoT network example, one ecology of nodes can mine, or be the accountant for, another ecology, providing independent yet interdependent secure transaction-logging. The kitchen IoT sensors could log-mine for the bathroom sensors, and vice versa or round robin. Similarly, in the body, one cell ecology could provide the mining operation for another. The neural DACs could log-mine for the cardiac DACs (because they require the same high-grade security, validation, and anti-hacking measures), and the digestive system DACs could mine for the immune system DACs, and so on. Mining would presumably be a mix of internal logging uploaded periodically to external secure storage (storj) as there would be optimized energy-processing constraints governing the on-board processing capabilities of nanorobot DACs.

Conclusion: broader context of Bio-cyrpto Nano DACs
Beyond Bitcoin and the single-ledger implementations of blockchain technology underway in banking and finance, there is a whole new tier of applications that might be unlocked. The bigger message of blockchain technology’s distributed ledger system and smart contract DACs is that it is a software innovation that might enable a much larger scale of human endeavor in as many domains as applications can be envisioned and implemented. The bio-cryptoeconomy is a new mode of economic life. One speculative example was developed here, in the form of crypto-tracking DACs that could coordinate medical nanorobotic cell operations in the human body. Blockchain functionality is well-suited to very-large scale automation operations with the properties of secure transaction-tracking and flexible payment models that could help to facilitate a far-future deployment of bio-cryptographic nano DACs for both repair and enhancement.

Presentation slides: 11th Annual Terasem Workshop on Geoethical Nanotechnology:
Bio-cryptoeconomy: Smart Contract Blockchain-based Bio-Nano Repair DACs

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.

A New Theory of Time: X-tention is Simultaneously Discrete and Continuous

Time has been conceived mainly as either discrete or continuous, but not widely as a simultaneity of the two. I would like to articulate a new theory of time in which time is reconceived as a ‘raw material’ whose natural state is both discrete and continuous. This is a “middle third” position that extends Husserl’s theory of internal time consciousness by being a new form of time in the middle between and connecting retention-protention (which are continuous) and recollection-expectation (which are discrete). What I am naming X-tention is this middle kind of time, existing in a primordial state that is simultaneously discrete and continuous, with the capacity to solidify into either in the case of a specific situation. Time could be analogous to another fundamental physical element, light, which exists in a superposition state of both particle and wave before collapsing into one or the other per observation.

Husserl's theory of internal time structure 
In The Phenomenology of Internal Time Consciousness (1893-1917), Husserl expounds his theory of the structure of time. His core claim is that any present-now moment is comprised of three elements. There is a primal impression, the pure perception of the present now, plus a link to what this perception retains of just-recently past-now moments (retention) and what it anticipates of quickly-upcoming future-now moments (protention). Husserl distinguishes between two kinds of memory, primary memory as retention and secondary memory as recollection. Retention does not break continuity with the present-now moment; it is the part of a temporal object that contemplates its pastness and allows the present to emerge from the temporal background. Recollection does break continuity with the present; the current moment is interrupted to recall and re-represent past memory. Husserl’s theory is depicted in Figure 1.

Figure 1.

A new middle third form of time: X-tention
Retention-protention is continuous; recollection-expectation is discrete. Recollection and expectation are piled-up snapshots of discrete past moments and imagined future events. When brought to mind, they are reproduced in a new present-now flow, but exist prior to recall or replay as un-presented discrete elements. The structure of the present-now moment, on the other hand, is a continuous flow of the intentional unity of primal impression and retention-protention. How far the retention-protention horizon extends is unclear. It might only encompass the most immediate recent-pasts and near-futures surrounding the primal impression of the present-now moment, or it might extend to include all previous and future experiences in the realms of recollection and expectation. I posit the conception of a middle third form of time, X-tention, to sit respectively between recollection and retention, and protention and expectation. My addition to Husserl’s theory is illustrated in Figure 2. Whereas protention and retention are continuous, and recollection and expectation are discrete, X-tention as the middle form of time is simultaneously discrete and continuous.

Figure 2.

X-tention: a superposition of raw time collapsible into discreteness or continuousness
X-tention as the middle third conception of time is conceptually similar to light’s wave-particle duality. Like light, the idea is not that time is an either/or kind of a thing. Light is not the kind of thing that is a particle or a wave, light is the kind of a thing that is more fundamentally not either, and may behave like a wave or particle depending on the situation. Likewise, the nature of time could be that it is fundamentally a kind of a thing that is more malleable in its core state, and that may behave as discrete or continuous based on the situation. X-tentive time thus exists as a possibility space where time is simultaneously discrete and continuous, a superposition of the possibility of both until collapsed into a reality situation of one or the other. The metaphor is that of Schrödinger’s cat, which exists in a quantum superposition state of being simultaneously both dead and alive until an observer looks into the box and the state collapses into one or the other. With X-tention too, it is possible to “look into the box,” i.e.; force the superposition state of dual time possibility to collapse into a reality instance of either discreteness (recollection-expectation) or continuousness (retention-protention). The possibility state collapses into one determination or the other. Since time is a function of the intentional act of meaning, for Husserl, in the case of time, “observing” would be applying an intentional act of meaning. Applying an act of meaning, in the sense of directing intentionality toward an object or objective, would collapse the potential time instance into either retention-impression-protention (continuous) or recollection-expectation (discrete).

Why is a middle third position of time needed? 
It may well be queried why a middle third position of time might be needed. How is it that Husserl did not more explicitly connect the two time regimes? Likewise, while other subsequent thinkers of time such as Heidegger and Derrida have critiqued many aspects of Husserl's theory, they essentially adopted wholesale the time structure of continuous retention-impression-protention and discrete recollection-expectation. However, I think that the discrete and the continuous are too disjoint, and do not seem to connect closely ontologically, methodologically, or practically to each other. Even just the posited structure of time as a binary “either-or” state is an indication that these might not be the only states, or that like light, the more foundational nature of the phenomenon is such that discreteness and continuousness are merely proximate behavioral dimensions of a more profound underlying phenomenon. Conceiving of time as simultaneously both discrete and continuous might also more closely correspond to the real-life phenomenological experience of time, which can seem to be both simultaneously snapshot and flow in the course of lived experience. Moreover, this is congruent with the Husserlian project of phenomenology, describing “how” things are experienced, not “what” is experienced. In summary, the concept of the middle third term of time, X-tention, is simultaneous time duality, where one of time’s properties is discreteness versus continuousness. "Raw time" or "pure time" exists simultaneously in a superposition of both states before an intentional act of meaning collapses it into one or the other state. X-tention can be seen as a perdurant (e.g.; temporal object-based) temporality of complexity because indeterminacy (as non-determinacy) is a key property. A temporality of complexity is important as we are now starting to have the understanding and technological tools to approach reality in the more nuanced manner of complex systems (non-linear, dynamic, emergent, open, unknowable at the outset, interdependent, self-organizing) as opposed to situations of simple linear causality.

Matter, energy, and light vs. space and time
I am positing the case of light wave-particle duality as a metaphor, not necessarily as justificatory grounds for my conjecture of a middle third designation for time. Just because duality is true for light does not mean that duality would be true for time. For one thing, matter, energy, and light are one class of physical phenomena, while space and time are another. Matter, energy, and light are ‘what is there,’ while space and time are the composition of the background. It is not that light is grounds for time, but it could be that many or even all physical phenomena ultimately turn out to have a property of duality or multiplicity. At small enough scales, many phenomena in physics might have a duality or multiplicity of states and behaviors, or more broadly indeterminacy as a general property that collapses from possibility to actuality per certain conditions. The presence of an observer is also a dynamic that is not yet fully understood. Matter, energy, and light are inter-translatable per Einstein’s equivalency of E=mc², and thus perhaps all subject to wave-particle duality in some sense.

Physics: Scientific formulations of time as simultaneously discrete and continuous 
The conceptualization of time as simultaneously discrete and continuous is an under-explored notion in the philosophy of time, but is enjoying some degree of investigation in physics. One interesting paper notes that information is a quantity which is both discrete and continuous, where time and other physical phenomena might be reconceived as simultaneously discrete and continuous with an information theoretic formulation. The specific calculation involves Shannon’s sampling theory, which is essentially scaling any ‘analog’ phenomenon down to a digital’ formulation, and translating between the two. Another theory, loop quantum gravity, also holds that time might be simultaneously discrete and continuous at small enough scales, like the smallest scale, the Planck length (1×10⁻³⁵ m). Nanotechnology, the precise placement of atoms in positional nanoassembly as a comparison for example, takes place at the (1×10⁻⁹ m) scale. At the Planck scale, fundamental building blocks of spacetime might be composable like Legos into different spacetime fabrics, such as those of “regular” baryonic matter, dark matter, and dark energy.

More information: Temporality of the Future

Blockchain Travel Apps

Cryptocurrencies such as Bitcoin and blockchain technology could have many useful and novel applications in the travel industry, for both individuals and business travelers, and also host destinations that are interested in attracting visitors.

1. Money - The first and most obvious blockchain travel application is money, taking advantage of Bitcoin or other cryptocurrencies for digital payments. Foreign currency exchange is an expensive hassle, and it could be much easier to pay with Bitcoin directly from a smartphone, when possible. If it is not possible to pay with Bitcoin, another crypto money application is obtaining local currency through worldwide Bitcoin ATMs or converting money from Bitcoin to local currency through a crypto exchange. Loyalty programs could be another crypto application, where blockchains could track point-garnering activity as it occurs, possibly denominated in crypto token that could be easily fungible and readily convertible to awards.

2. Passport - Another crypto travel application is storing important documents on the blockchain such as passports, visas, permits, identification cards, and driver’s licenses. One benefit is that documents presented in person could be confirmed with an Internet look-up of their blockchain-registered version. Another benefit is having easily-accessible back-up copies in the event of loss. Other new ideas expand the traditional notion of identity, for example beyond nation state citizenship, world citizenship (projects proposed by Bitnation and Chris Ellis) and Estonia’s e-Residency program. Beyond identity documents, it could also be helpful to have immunization records and EMRs (electronic medical records) accessible by blockchain.  

3. Reservations - Managing all of the many details of travel - flight, accommodation, transportation, and tour reservations – can require a lot of coordination that might be managed seamlessly by a Travel DAC (distributed autonomous corporation). This blockchain-based package of smart contracts could track, orchestrate, and update changes in travel details and keep travelers on top of their schedules. This would be like having a more extensive version of TripIt (multiple travel reservations in one application including automated status-updating) with blockchain-based AI functionality. A Travel DAC for business travelers could feature expense-tracking and reimbursement. Other Travel DAC applications could include monitoring airline prices for optimal dates or routes, and suggesting vendors per user preferences, such as those that accept cryptocurrency (for example LaZooz as opposed to Uber, or decentralized alternatives to Airbnb).  

4. Insurance and Provenance - Travel insurance could be selected through decentralized peer-to-peer based alternatives to traditional insurance that might be cheaper and offer more certainty in the case of claims payout dates and amounts. Blockchain-based peer-to-peer dispute resolution mechanisms also might be employed to adjudicate travel claims. Another application when purchasing an item for example, could be validating the item’s provenance (origin) through a quick blockchain look-up using item-tracking functionality from Provenance (or in industrial use cases, SKU Chain).

5. Disaster - In special cases such as natural disasters, blockchain-based applications could be indispensable in coordinating and tracking aid donations and supplies to their end recipients. ‘Disaster chains’ could also be used to help in managing volunteers, facilitating rescue-tracking, and even possibly getting around the scalability issues of overly-taxed communications networks in the case of disasters (with lighter-weight communications messaging).