Journalist and economic anthropologist Brett Scott loves cash and is suspicious of digital currencies. In his opinion, Bitcoin and its analogues in themselves do not pose a threat to society, but states are waging a real war against traditional forms of money. He outlined his concerns in a book Cloudmoney. Cash, Cards, Crypto and the War for our Wallets, a translation of which is being prepared for publication by Corpus. We invite you to read an excerpt dedicated to how the author sees the basic principles of the ecosystem. Ethereum.
Imagine children looking at a box of colored plastic tokens. The variety of colors keeps them interested for a while, but eventually children begin to assign imaginary properties to the tokens, such as “These are tanks on the battlefield!” The first steps in token sophistication looked similar when innovators began to wonder if crypto tokens could be linked to real-world objects. In an effort to move away from number-nouns to number-adjectives, tokens were created that promised access to something more. A generic token can be made special, turning it into, for example, a voucher for physical goods or a share certificate promising future earnings.
While children can establish an imaginary connection between a token and a tank simply by declaring its existence, in the adult world something more reliable is needed to establish a lasting connection. A simple statement, “This token represents a ton of platinum,” doesn’t make much sense if it can’t be proven in court. In the absence of such evidence, a hard-coded connection is needed. For example, imagine key to a locked warehouse full of platinum. The key itself does not store anything, but it is tied to the platinum by the fact that without it the metal cannot be accessed. Transferring a key means transferring access, so we can say that this key is backed by platinum. That’s why crypto engineers have set themselves a new challenge: turning tokens into a kind of electronic access key to things in the real world.
However, in order for crypto to become a decentralized alternative to conventional banking, its capabilities need to be expanded beyond simply transferring tokens. There are always two parties involved in a transaction, each of which must fulfill its part of the obligations – this is the key to the prosperity of our traditional leviathans. If I grabbed the goods and ran away without paying, the store owner would send the police after me, and even in the old city of Kowloon you could be shot by gangsters if you harmed one of their charges. Likewise, internet leviathans like Amazon There are also means to ensure the reliability of transactions. But in the crypto world, there are no crypto cops (and gangsters) to turn to if someone doesn’t hold up their end of the deal when you transfer tokens. Cryptosystems need a way to perform multi-step processes like “send tokens and receive goods”, “send tokens if job is done” or “give out platinum tokens to whoever sends cash tokens”.
So far, the most tempting option has been offered by yet another contender for the Bitcoin crown. For the first time I met the team behind Ethereum (Ethereum), in 2014 in a luxurious London apartment, six months before the launch of this network. Two of her engineers pondered mathematical equations scribbled on chalkboards in the cafeteria, one of them casually referring to governments as “outdated operating systems.” Blockchain technology can captivate both the engineer with a mind set on solving practical problems and those who strive to achieve certain political goals. Crypto engineers like the creators of Ethereum were beginning to see the world as a big social machine stalled by the wrong political parts and the wrong economic incentives. With the right choice of programmable contracts, fine-tuned with the right rewards, they believe a sophisticated “cyber Kowloon” could emerge. These specialists do not need a dirty shadow enclave on the network. They strive for a streamlined ideal system governed by a “crypto-economy.” The latter tries, using game theory – the economic study of individual incentives – to build systems whose destruction and violation of the rules would be unprofitable.
Ethereum places its main hopes on electronic vending machines. No one has ever seen a vending machine run away screaming “lucky you, you sucker!” after you put coins in it. The machines are mechanically programmed to activate and act in accordance with the market contract after you have fulfilled your end of the trade. In a world where there are no laws, a store may be robbed, but the armored vending machine will continue to operate. Key new product from Ethereum – the ability to program and operate in networks the equivalent of an electronic armored vending machine (which will first be assigned its own address), so that it can function as an agent, conducting business with network participants.
In the Ethereum system they are called by the confusing name of “smart contracts,” a term coined in 1994 by cryptographer Nick Szabo, who also used a vending machine analogy to explain the concept. While a regular vending machine is made of mechanical parts, an electronic vending machine is a sequence of software codes. Ethereum system tokens are called ethers; they can activate such electronic machines. To understand how this works, imagine an amusement park where you can only pay with tokens issued by the park administration. Ethereum network similar to an electronic park with attractions designed to receive only broadcasts. In the same way that you can program a soft drink machine with instructions like “If a £1 coin is inserted into the machine slot, dispense a Coca-Cola,” you can program these electronic machines with commands like: “If Ether is sent to your crypto address, send 5 share tokens to the address from which the broadcast was sent.”
In the Ethereum system, as in the Bitcoin system, there is a network of techno-clerks that receive requests from address owners (including vending machines) and fulfill them. The execution process here is more complex than in Bitcoin because, once activated, many of these electronic machines must perform calculations. They are like little programs waiting to be activated on the network.
The Ethereum team, which was led from the very beginning by the quirky Russian-Canadian programmer Vitalik Buterin, initially raised a significant amount of money through the “pre-sale” of these ethers (similar to selling tokens for an amusement park that had not yet been built) and with this money hired specialists to create the basic infrastructure, launched in 2015. The new system was like a blank slate onto which people could project their visions of a future alternative cyber economy. Enthusiasts envisioned amalgamations of smart contracts designed to create more complex decentralized autonomous organizations (DAOs). These DAOs, in turn, could become alternatives to Silicon Valley platforms, launched using ethers sent by the citizens of cyberspace. A lot of scary ideas from Silicon Valley have infiltrated these circles. Some imagined cars that wouldn’t start unless you bought a smart key from an electronic vending machine, and that could possibly be stopped remotely by a signal from cyberspace (just like the old pay phones that cut out when you ran out of paid time). ). Others imagined autonomous cars zipping along highways and offering themselves for rent through a DAO, paid for in cyber tokens.
But there were also more down-to-earth ideas about the future. It is commonly said about blockchain platforms that they are “trustless” in the sense that you do not need to trust people for the system to work. For a techie, this is a practical, not an ideological question: even if you believe that 99% of people are decent, in an impersonal Internet network of 10 million members there is enough one attacker to destroy the system. Techies are drawn to creating systems that remain resilient despite dishonest or incompetent participants. The same applies to employees of organizations helping developing countries that operate in difficult conditions, where a decentralized structure may be more resilient than a centralized one. Therefore, blockchain began to be studied in humanitarian organizations. I have provided information for research conducted by the UN Office for the Coordination of Humanitarian Affairs, the UN Research Institute for Social Development, Amnesty International and the UN Environment Programme.
Soon almost all major non-governmental organizations showed interest. Meanwhile, groups concerned about climate change have held blockchain hackathons, and humanitarian aid groups have explored the possibility of using the technology to distribute food stamps. A range of possible applications for blockchain included monitoring the movement of goods through supply chains, tracking blood diamonds, and recording carbon credits. These types of groups did not share the extremist views popular in mainstream crypto circles. These were practical political centrists, looking for new ways to accomplish their tasks. The political horseshoe was closing in a circle.
Translation from English by Natalia Shakhova. Published by: Brett Scott. cloud money. Cash, cards, cryptocurrency and the fight for our wallets. Moscow: Corpus, 2023.
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