Tuesday, October 27, 2015

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.

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: 
What can Blockchain do for you?
The real value of bitcoin and crypto currency technology - The Blockchain explained

Monday, October 05, 2015

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.

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.

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.