The Blockchain and the Rise of Networked Trust
From big cities to small villages – all around the world we are seeing a common current that weaves together the diverse actions of ordinary people.
“We are free to plant our own seeds; we don’t buy the brand nor the patent from a multinational. In order to plant, we don’t need permission. Also, we don’t ask anyone’s permission for what to do with our money!”
Santiago Zaz is an organic farmer from Argentina. Back in 2013, Zaz’s business became the first of its kind to accept bitcoin payments in the country.
Like Zaz, many in his community don’t have the possibility of owning a credit card. Instead, it was the adoption of cryptocurrency and its decentralized ethos that made the expansion of his business possible.
A similar sentiment is echoed in Shannon County, South Dakota – the second poorest county in the US. Payu Harris, a resident of the Pine Ridge Indian reservation who traces his ancestry to the Northern Cheyene, recently told Forbes “I want the native people to embrace bitcoin.”
Furthermore, he spoke about his passion to free his people from the American government through cryptocurrency. Calling it “the nerd’s revenge”, the 38-year-old digital currency trader and activist said that “bitcoin is a way of getting involved in big finance without being a Harvard grad or part of the Wall Street elite” and that it “opens the door for the common man to get involved”.
From big cities to villages and Indian reservations – all around the world we are seeing a common current that weaves the diverse actions of ordinary people. They are finding an avenue in cryptocurrencies for economic self-determination.
However, it is the invention of blockchain technology that makes cryptocurrencies like bitcoin possible.
First introduced in 2008 in a white paper published under the pseudonym Satoshi Nakamoto, the core of this invention is 'distributed trust' that can achieve consensus amongst strangers on a large scale.
But just what is the decentralized trust that forms the foundation of this technology?
In the current centralized financial systems, trust is mediated by a hierarchical outer authority. This intermediary discourages the two parties (financial providers and consumers) from developing personal relations of trust as a fundamental element in their transaction.
Bitcoin offers a new trust model. Silicon Valley tech entrepreneur and author Andreas Antonopoulos describes bitcoin’s security model as "trust by computation":
Bitcoin's decentralized trust eliminates the need for any centralized authority and brings the source of legitimacy in the realm of finance back to individuals.
Anyone can download an application on their computer or smart phone and start their own money system or bank. Trust that is generated horizontally becomes an essential undercurrent of exchange.
By choosing to abide with algorithmic consensus, we participate in creating a society based on our trust in ourselves and our fellows.
This emerging 'networked trust' unleashes something that has been stagnated by hierarchical institutions. With bitcoin, currency regains its true meaning – flow.
Antonopoulos has described how currency comes from the word for ‘flow’ in Latin, adding that "there never was a currency that had flow like bitcoin, which has no borders, no checkpoints, no intermediaries."
Until now, economic activities have been geared to bend toward the rich, while bitcoin’s neutrality works to rebalance power toward economic justice. The blockchain-based approach to economic interaction works toward empowering the masses whenever the scales of power are out of balance.
The effect of this unmediated flow is especially powerful in the remittance market, which has become a massive global financial instrument for exploitation through currency exchange and international transfer.
A recent article highlighted the potential impact bitcoin could have in the remittance industry, through which monopolies have made profits somewhere between $400bn and $530bn in 2012 and which is expected to grow to over $680bn in the coming years according to a World Bank report.
Payment networks like PayPal are blocked in many developing countries. When bitcoin is used appropriately and responsibly it can help people avoid the usurious behavior of money transfer companies like Western Union. Author Richard Boase argued this innovation has the potential to “help spur growth and development in the world’s poorest economies”.
In addition to bitcoin’s potential for transforming the remittance industry, it could alter the bureaucratically-controlled avenues of foreign aid. Much of the money that is currently being captured by institutionalized hierarchies could instead be freed to improve the lives of the poorest people around the globe.
Currency of the oppressed
For many in the West, bitcoin may seem like just another speculative bubble.
While it may be more of an investment tool for some, it offers a fundamental avenue for liberation and survival for others. Bitcoin’s autonomous flow is quickly becoming the bank-less and government-less currency of the oppressed.
Adoption is happening in places where governments tightly control the currency and hyper-inflate hard-earned work and value through harsh austerity and money printing.
In March 2013, a crisis of forced austerity hit the small Mediterranean island nation of Cyprus, when the government closed the country’s second largest bank in return for an international bailout by Eurogroup, the European Commission and European Central Bank. People rushed to protect their savings.
While Cypriots took to the streets to protest, some turned to bitcoin as a safe haven from the government stealing their savings.
A similar trend is occurring in Argentina. Early this year the national currency, the Peso fell in its steepest loss since the country’s 2002 economic collapse. Many Argentinians are moving to bitcoin as a safe haven.
Tess Bennett reported on how the growing popularity of cryptocurrency-freedom in Argentina is creating the largest community of bitcoin users in Latin America. At the first Latin American Bitcoin Conference in Buenos Aires in 2012, Belgium investment advisor Tuur Demeester passionately expressed the true meaning of the ‘Bitcoin Revolution’, saying “bitcoin marks the end of monetary apartheid” and “the end of financial discrimination and segregation based on nationality and political privilege”.
The other six billion
These disruptive flows represent emerging power from the margins.
The blockchain distributed trust network is open to everyone and responds to all people indiscriminately, regardless of their economic status, nationality or credit history. It brings people who are generally excluded into the circle of consensus.
Antonopoulos speaks of how bitcoin is all about the other six billion and points out how they need this, not for speculation, but for liberation.
A new World Bank research paper indicates that under the current financial arrangement, 2.5 billion people across the planet are unbanked. Antonopoulos expands this number, portraying this essentially unbanked population as the six billion that includes those underbanked who have limited ability to interact with the rest of the world due to radical currency debasement as well as a lack of small business investment capital and high transfer fees.
The invention of blockchain distributed trust has the potential to empower those in the peripheries who have been exploited by the systems of Western financial hegemony and to generate bottom up consensus power.
This can collectively redirect the flow of currency that has until now been channeled toward the top to instead support grassroots economic activities and social interaction that benefit more people.
The rise of the blockchain network is poised to disrupt the world as we know it. The time has come for us to reclaim the power of self-determination and build our common future through this flow of networked trust.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
Trust image via Shutterstock
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