The dawn and delusions of the ‘Nerd Reich’

This text was first published in Open Democracy 30th of April, 2016

At this moment there is a technology under development that many forecast will have an equally fundamental impact on how we do things as the Internet itself.

But instead of facilitating the circulation of information, this technology changes the very way that information is agreed on and verified as true and how such a ‘truth’ might be enforced. The two areas that this technology is poised to have the largest transformative effects on are finance and government – the very way that money and democracy operate. The technology is called the blockchain.

After a short introduction to the blockchain for the new reader, the purpose of this piece is threefold: first, to emphasise that there is no inevitable way in which technology develops, but that it is shaped by conscious or unconscious decisions made between differing possibilities; secondly that such decision-making is an important moment in determining our social and political future; and finally, to introduce some tools for making sense of, understanding and acting within this whirling new field.

A (very brief) explanation of the blockchain
The blockchain rose to fame initially as part of the Bitcoin cryptocurrency and is the computational process that allows for a network of computers to come to an agreement about the state of transactions, without needing a central authority like a bank to guarantee security or prevent double-spending.

The blockchain is a linear chain of blocks of data – for example, information about transactions that have occurred – which is validated through a computational competition (in the case of Bitcoin this is called mining). Participation in the network is governed by a set of protocols implementing economic incentives to reward those acting in favour of the network and punish those trying to impede its function.

The blockchain has in the past couple of years seen new developments beyond digital currencies and is being applied to many other areas: from the Internet of Things (cf. Slockit) to domain name registries (cf. Namecoin), including systems for governance (cf. Backfeed). These efforts often have a stated intention of decentralising or disintermediating existing processes, by replacing institutional or industrial authority with networked computing, thereby translating existing legal, financial and political processes into technical code such as self-executing smart contracts.

Grounded in cryptography, the network is very unlikely to be controlled by any single entity or central authority, which enables a practically immutable and censorship-resistant public ledger and computing platform. While such new elements — machines, algorithms, fibre-optics, developers, engineers, investors with new forms of agency and control — are being introduced into or even replacing institutional processes, little is understood about where and how control and power shifts in the process.

Disintermediation
For many, the attraction of the blockchain is thus the promise of disintermediation: getting rid of middlemen who act as authoritative gatekeepers or increase cost without adding value. It is an attractive prospect, especially in our current context of endemic corruption amongst the political and financial elites and a generalised feeling of powerlessness and anger.

The blockchain represents a promise for you to be able to determine your own governance system, your own legal structure and create your own money, and to do so in a manner that is interoperable with others who are doing the same thing across the world. Does this not sound like freedom? Does this not mean autonomy and independence? Surely that can only be a good thing?

Unfortunately, it’s not necessarily so. If you download and start using, say, a Bitcoin wallet, it is likely that it will display the current value of Bitcoins in dollars. This is a first, and very simple example of the interdependencies of systems, demonstrating that the dollar, and currency exchange markets more generally, have a very real impact on the perceived value of your Bitcoin and thus what you can or cannot do with it. Even cryptocurrencies exist within geo-political contexts and do not necessarily guarantee liberation from these, so long as their value are dependent on and related to the same exchange markets.

Let’s take another slightly more complex example that most people familiar with the blockchain and Bitcoin will have come across: the ongoing dispute about block-sizes in the Bitcoin blockchain.

For the unfamiliar reader, here is a brief summary:

In the core code of Bitcoin there is a limitation on the data-size of each block of transactions in the blockchain. In 2015, a worry started to spread that this limitation was slowing down or even inhibiting the validation of transactions, in other words that the blocks were “filling up”. A suggestion was made to increase the block size, which was in turn refused by a significant part of the network and resulted in the exiting of one of the core developers [1]. The dispute could be represented as two very different notions of decentralisation: on the one hand, increasing the blocksize might allow for more rapid validation of transactions and therefore a spread in the usability of the currency. Yet on the other hand, it would radically increase the computational power needed to validate transactions, meaning the bar for participation within the network that validates transactions and runs full nodes would become prohibitively high, centralising the computing – and thus political power – in the network.

This dispute represents two very different visions for how and for whom Bitcoin should develop – as a digital money service provider competing with Visa, Mastercard and Paypal, or as an entirely new and emergent way of understanding and governing value, with priority given to widespread participation in the governance and evolution of the network. Does the limit of block sizes constitute a problem or does it safeguard against infrastructural centralisation?

The dispute remains unresolved and has resulted in a hardfork[2] in the Bitcoin network, with nodes running different versions of the core code. Thus a technical decision about modifying one aspect of the core code has in one sweep demonstrated that politics (the political understood as the negotiation over mutually incompatible interests) is not eradicated by replacing institutions with a technical system. It has merely shifted the decision-making process from a parliament or central bank to git[3] and the bedrooms, incubators or offices of developers.

In other words, rather than disintermediation, it might be more accurate to say that there is a radical process of reintermediation, the introduction of, literally, new media in which for example voting is replaced by nodes forking bits of code and the legal system replaced by self-executing smart contracts.

Admittedly, reintermediation is a clunky concept and does not allow us to understand what exactly changes when, for example, a bureaucratic, legal or political process is replaced by code and algorithms. So let’s explore some concepts that might be more helpful…

“Delegation”

Despite their ubiquitous presence in our everyday lives, technology development and devices are still understood as things that operate under objective laws of physics and engineering, rather than being manifestations of interests, drives and desires of humans. Delegation can be a helpful concept in helping us think about how technology relates to politics and power dynamics as a whole.

The concept of ‘delegation’ is introduced in Bruno Latour’s 1992 text on “mundane artifacts” where he discusses the automatic door closer in an office. In this simple example, a decision is made in an office that it is good and desirable for the door to remain closed. This position, which might or might not be disputed by others in the office, is encoded in and delegated to the door closer, which henceforth proactively enforces this decision. Repeated negotiations, reminders or arguments amongst office workers are thus eliminated by this simple device, shifting the question of whether the door should be open or closed out of the realm of contestation.

While the decision of a door needing to remain closed might seem an insignificant and mundane example, it serves as a way of understanding what happens when more complex questions are encoded in technology.

The political, understood as continuous negotiation between potentially incompatible positions, is resolved once and then encoded in and delegated to the technology, after which a given process is rendered apolitical. Contestation in the process of innovation is therefore not simply the imposition of limits, but is an important aspect of the shaping of a given technology, which might be enacting a function for the benefit of one social group or another.

The concept of delegation allows us to ask the right questions when developing new forms of blockchain-based decentralised (self)governance on a potentially global scale. What processes, actions and decisions should be delegated to and encoded in blockchain technology? Which functions should instead be delegated to institutional processes or social situations that keep the possibility for contestation open?

“Transmutation” and the collapse of time, space and ambiguity into binary execution  

The concept of delegation might be helpful for understanding how political and ethical positions are encoded in and enforced by technological devices, but it does not describe the qualitative shift that also happens when such new technology, mediums and mediators are introduced.

Literary theorist Kathrine Hayles writes about the shifts and intermediations that take place in the relationship between code, writing and speech, elaborating on a central point made by Alexander Galloway, that code can be understood as the first language which is executive. In other words, code enacts and executes continuously and proactively rather than retroactively. For Lessig this meant that code is law.

However, technical and legal regulation operate very differently so we cannot simply say law has been rewritten as code. Code also entails enforcement, the police, or even more accurately, code might be understood as architecture: a space where your options are prebuilt and continuously, yet subtly, entice or inhibit specific actions and movements. While law is enforced after the fact and has spatial, temporal and interpretive grey scales in its implementation and enforcement, technical code on the other hand allows and disallows continuously and in a binary fashion, representing an immense transmutation.

The new fields of innovation that the blockchain has inspired such as FinTech and RegTech (GovTech or DemTech will probably be next to appear) are not simply the solving of technical problems, complying with metrics of efficiency only, but also entail fundamental changes to the implementation, enforcement and execution of law and governance as a whole.

And to add another facet to this transformation, we might want to consider the spatial and temporal transmutations that such shifts also entail, in which a process that normally took place between, say, parliament where regulation is shaped, the streets where a crime might take place, the police cell, the court room etc. each stage including multiple forms of negotiation of power, relationships, norms and plenty of other variables, are all collapsed into a binary moment.

Thinking about how such changes alter the role of time and space in these processes helps to illustrate the profound shift that is under way. Attention to this shift begs a further question: what types of decisions and regulations are suitable to be encoded in a binary manner and proactively enforced? Especially given that the particular architecture in question is bulwarked with cryptography and therefore extremely hard, nearly impossible to retrospectively alter.

“Complexity” and the dawn of the Nerd Reich 
Let’s now go back to the door closer: in terms of power dynamics, there is an important difference between the door closer and the blockchain – the level of complexity. The office worker can always block the door with a heavy object to keep it open, or even pick apart the not very sophisticated device with a simple screwdriver.

The blockchain on the other hand is designed to be irreversible, using cryptography to be tamper-proof and is extremely complex, making it very difficult for the vast majority of people to understand what is at stake in its design and implementation stages, let alone to intervene or modify the system once it is in place. The extreme level of complexity of the blockchain, not to mention the many layers of infrastructure, power and supply chains on which it is dependent, contributes to creating new forms of elites, evangelising while also constituting the very small group of people who fully understand and can modify the system.

In other words, the supposed “trustless” systems of blockchain innovations might be better understood as a shift of trust from one realm and set of processes to another, requiring an immense trust in cryptography, hardware, the ongoing availability of electricity and raw materials and, or course, in the decisions made by the evangelists of the nerd Reich themselves. While Bitcoin existed as a project amongst a community of people who participated and tinkered with the system themselves, trustless and disintermediation might have had some validity, but as a technology for widespread implementation in finance and government, questions of complexity, control, oversight and participation become urgent.

The Nerd Reich delusion 
It is tempting, after all of the above, to assume that the Nerds are in the process of ascending to spiralling heights of power, that they’re becoming responsible for our collective political and economic futures. And while indeed, developers and engineers should be (and indeed many are) attentive to the social and political assumptions they are building into these systems, their development does not exist and thrive in a vacuum, but is supported and encouraged through funding, marketing and regulation.

This is why some projects that seek to go against the grain and propose alternatives come across as overtly political, while others are understood as neutral: because the latter bear within them implicit assumptions, assumptions about human behaviour or values that are widespread and continuously re-enforced, such as market-based incentives to encourage or punish behaviour in the system. On the other hand, one of the most interesting aspects of blockchain development is exactly that other values can be encoded into these systems.

Blockchain technology is not being developed in a vacuum or on a tabula rasa in which a Nerd Reich can finally create sci-fi utopias for us all – unfortunately (or fortunately) existing contexts, power dynamics and inequalities affect what is made possible or not, and in whose interest.

 

The text is #1 in a series called BlockBusters, edited in collaboration with Elias Haase of B9Lab, introducing helpful concepts for navigating the politics of the emerging blockchain landscape. Catch Jaya and Elias at Re:Publica in Berlin this week, at the session The blockchain: a crash course and challenging consensus.

Thanks to Vinay Gupta for the term “Nerd Reich”.

 

Some further reading: 

Chantal Mouffe 2005. On the Political. Routledge

N. Kathrine Hayles 2005. My Mother Was A Computer. University of Chicago Press

Alexander Galloway 2004. Protocol, how control exists after decentralisation. MIT Press

Bruno Latour 1992. Where are the missing masses? The sociology of a few mundane artifacts. Chapter 10 in Bijker, W. and Law, J. Shaping Technology/Building Society: Studies in Sociotechnical Change.

Brett Scott, Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain

Aaron Van Wirdum 2016. On Consensus, or why bitcoins blocksize presents a political trade-off.

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[1] See the response to the contentious developer from other parts of the community here: https://medium.com/@BitFuryGroup/keep-calm-and-bitcoin-on-4f29d581276

[2] A hardfork refers to when a change is implemented in the code that diverges from and is incompatible with the previous version, entailing a fork and thus two (or more) different versions in operation.

[3] Version control system widely used in software development