Blockchain: Blueprint for a New Economy

consider the potential economic models

for M2M/IoT payments, we must work

out general coordination protocols for

how large swarms of devices can

communicate, perhaps deploying control

system and scheduling software for these

machine social networks, adding new

layers of communication protocols like a

“chirp” for simple microcommunications

such as on, off, start, and stop. 161

In the farther future, different classes of

blockchains for different kinds of

applications could be optimized. Maybe

there could be daily purchase

blockchains for the grocery store and

coffee shop purchases, and others for

large-ticket items like real estate and

automobiles. More stridently different

functionality is needed for noneconomic-

market blockchains, for government

services, intellectual property

registration, notary services, science

activities, and health-record keeping.

The key question is distinguishing the

economic principles needed for the

different range of functions with which

blockchain technology could be helpful.

However, not every operation is one of

value registration and exchange.

Not all of the ideas described need a

blockchain; they do not require

sequential, public, and distributed data

storage. They could instead be

implemented through other technology

such as cloud storage or distributed

computing models more generally.

However, blockchain technology could

be included to provide additional

functionality, and further, it is not

possible at present to see all of the

potential future benefits and uses of

blockchain technology that might

emerge.

Another reason that the blockchain is not

for every situation is because we do not

want to “economify” everything. We do

not want to reduce the qualitative

aspects of life to a purely and nakedly

economic situation. The idea of a

remunerative coin accompanying many

more situations and making the

economics of situations more explicit is

welcome in some ways but repugnant in

others. However, the broader

conceptualization of economy evoked by

blockchain technology invites a new

consideration of the notions of transfer,

exchange, and acknowledgment that is

deeply qualitative and could persist

even as blockchain-enabled features do

not (and should not) become

omnipresent.

Centralization-

Decentralization Tension and

Equilibrium

There is a mix of forces both toward

centralization and decentralization

operating in the blockchain industry. In

fact, it is the blockchain that has defined

the landscape of models to comprise

those that are both centralized and

decentralized. Aside from the Internet,

there have not been many large-scale

standardized decentralization models

that have been readily conceptualized

and used in different contexts to organize

activity. Even though decentralization is

the core enabling functionality of

blockchain technology (the decentralized

trustless cryptographic transaction

recording system and public ledger),

there are also many centralization

pressures. One is the centralization

forces toward developing the standard

plumbing layers of the blockchain

economy. The Bitcoin blockchain has 90

percent cryptocurrency market

capitalization, and some projects

consider it safest and easiest to build

protocol 3.0 ideas on this installed base

without having to mount a mining

operation on a new altcoin blockchain.

Mining is another area upon which there

are many centralization pressures. The

fierce competition has driven mining

from individuals with mining rigs to

mining pools and custom ASICs such

that a few large mining pools register

most of the new Bitcoin blocks and have

started to reach the 51 percent threshold

of controlled hash power, which could

result in a mining takeover. It remains to

be seen how forces toward economic

efficiency through centralization and

trustless exchange through

decentralization will come to

equilibrium.

Chapter 5. Advanced Concepts

Terminology and Concepts

The blockchain economy is triggering

the invention of many new ideas and the

reappropriation of existing concepts and

terminology in innovative ways. It

prompts investigating the definition of

terms that have been taken for granted

and passed unquestioned for years, such

as money, currency, property,

government, sovereignty, and

intellectual property. The questioning of

underlying definitions and the

reappropriation of terms position these

concepts more openly and accessibly for

application to current situations.

Blockchain-related concepts are more

actively in people’s minds and ready to

apply at the generalized level. For

example, consider a library. At the more

generalized conceptual level, a library is

a system of value exchange; there are

product and service offerings, like books

and research, being taken up by those

with whom the value proposition

resonates. New models like blockchain

technology force us to consider reality at

the more generalized level of the

concepts behind a specific instantiation.

This leads us to imagine other specific

situations that could be realized with

those concepts. For example, a

blockchain is a technology for