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The Truth Machine in the Age of Cryptocurrency

Article · March 2018

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The Truth Machine in the Age of Cryptocurrency

“It might surprise you to read this, but the most subversive,
controversial, anti-authoritarian idea in the world of finance, an idea
so powerful every government on the planet is trying to figure out
whether to co-opt it or outlaw it, the dream of the most fervent
libertarian, dark-Web denizens, is a ledger.”

The Truth Machine (p.17)

Blockchain. Ledger. Truth Machine...

...the technology that has the potential to restore citizens’ faith and trust in
financial institutions, in media, in government; the technology that can spin
“distributed justice” from a glib phrase into a societal norm.

As in their previous book, “The Age of Cryptocurrency,” Michael Casey and

Paul Vigna weave compelling stories and examples of what is, to some, a dry
mathematical curiosity shrouded in cryptography, mysterious code, and
terminology – hash, block, miners, nodes.

Casey and Vigna do not assume the reader is a cryptocurrency geek, a

Fintech banker, mathematician or collector of academic articles on all things
cryptocurrency and blockchain. The history of civilization’s tinkering with
ledgers, exchange of goods and services spans millennia, and they are quick
to remind the reader the technology reflects the past:

“The advent of the first ledger technology can be traced back to roughly
3000 BCE, in ancient Mesopotamia (modern-day Iraq). Of the tens of
thousands of clay tablets the Mesopotamians left behind, most are, well,
ledgers: records of taxes, payments, private wealth, worker pay.”
(p.18)

If we have used ledgers for millennia, what makes this ‘ledger’ particularly
unique?
In 2008, a decade ago, this planet experienced one of the worst moments of
financial reckoning. While some may believe this affected only Wall Street,
the repercussions were felt beyond ‘the markets.’ It left financial ruin and
economic detritus that hurt many – from mid-America to Iceland to Asia.
‘Satoshi Nakamoto’ – but you know this creation story about bitcoin.

Unique as this ‘cryptocurrency’ is, the decentralized structure and the

framework, the incentive system that guides consensus, the distributed nature
of the blockchain ledger, cryptography, and immutability set it apart from
other forms of ‘currency.’

“The result is something remarkable: a record-keeping method that

brings us to a commonly accepted version of the truth that’s more
reliable than any truth we’ve ever seen. We’re calling the blockchain a
Truth Machine, and its applications go far beyond just money.” (p. 20)

Bitcoin, ethereum, and other cryptocurrencies have littered the pages and
screens of news media since bitcoin’s public appearance in 2009. It is a
running tale of discovery, dark web, non-dark web, hype – from missteps to
ICO frenzy in 2017.

Chapters One through Three are a review of some of the history, the technical
aspects of bitcoin and blockchain, and the politics around them. Casey and
Vigna make certain that a generic definition of blockchain is provided:

“…a distributed, append-only ledger of provably signed, sequentially-

linked, and cryptographically secured transactions that’s replicated
across a network of computer nodes, with ongoing updates determined
by a software-driven consensus.” (p. 64)

Referring to blockchain as ‘a database’ is not only inaccurate, but it

diminishes the elegance and complexity of blockchain.

Having clearly defined and illustrated the construct of a blockchain, the stage
is set for “The Token Economy” (Chapter Four), bringing the reader to 2017.
“The Token Economy” perhaps could have been titled “Here, there be
Dragons”.
While regulators had been quibbling since 2015 whether bitcoin was a
commodity or currency, whether it should be banned or heavily regulated,
whether it would ever come out from under the deep of the dark web, a new
spin-off, unsecured, unregulated method of raising capital for ‘projects’ was
born: the ICO – Initial Coin Offering. 2016 to the end of 2017 was the year
of the ICO mania.

We arrive at the “Fourth Industrial Revolution”, (Chapter Five) cyber-

physical systems, Internet of Things, the Internet of Systems. Here
Blockchain meets the energy grid -- efforts to a create decentralized
microgrids, nanogrids – a better way of managing energy consumption.
Provenance, supply chains, tracking products, providing assurance of origin –
ideas for a global economy at scale.

Blockchain without a cryptocurrency – a permissioned blockchain, that

would run and operate on a system of known nodes, on an ecosystem
designed for the exchange of data (with constraints), is suitable for a
company with multiple offices, or a group of companies, or government
departments. All the security requirements and caveats would be built into
the system, saving taxpayer dollars, preserving privacy and confidentiality,
and encouraging lean, transparent, auditable and effective governance.

Chapters Seven through Ten are the heartbeat of blockchain – from

applications that enable billions of humans without access to rights, property,
legal standing, being able to prove “who am I, what I do, and what I
own” – a given in the developed world, an aspiration in the developing world
– this is “Blockchain for Good.” For the instruments/proofs of one’s identity
we take for granted - a birth certificate, a passport, a driver’s license - either
do not exist or are lost in conflict zones. Without formal documentation,
millions of human beings risk being exploited, especially children.

Casey and Vigna put forward the case directly: “Regardless of what tools are
used to get there, we think society must move toward a more decentralized,
digital, and ultimately self-sovereign model of identity.” (p. 204)

In this reviewer’s view, without Identity (whether for humans or things),

Blockchain may remain on the periphery as a shiny object. Identity or
identification is the quintessential piece that will make Blockchain perhaps
 the most important compound technology to date. The elements of
Blockchain were not imagined in 2008 by Satoshi Nakamoto. They existed in
concepts, papers, theories – computation and the Internet provided the fertile
soil.

One would have expected that Blockchain, by now, would have at least
garnered greater understanding and acceptance. It is difficult to understand
and to deploy without thinking about the problem, imagining the solution,
and consciously designing the approach.

Blockchain is not COTS (commercial-off-the-shelf). Not every problem

needs a blockchain solution. Blockchain applied to simple problems is like
driving a very fast car in a traffic jam.

Michael Casey and Paul Vigna put it rather pointedly:

“We seem to be stuck with bankers who don’t really understand

technology, technologists who don’t understand economics, and
politicians who understand only politics.” (p. 245)

In that definition is a melange of “make me rich quick”. That is not the

purpose of THIS technology.

In Chapter One, “The God Protocol” the genesis of the Truth Machine is
revealed:

“The ledger came to be viewed as a kind of moral compass, whose use

conferred moral rectitude on all involved with it.” (p.28)

Society needs to calibrate its moral compass.

We have a method.

__________________________________________________

“The Truth Machine: The Blockchain and the Future of Everything” –

Michael J. Casey and Paul Vigna. St. Martin’s Press, New York. (2018)

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