Designing blockchains for a frictionless world

Every enthusiast in the crypto and blockchain space that has “seen the light” believes in a future that is collaborative, transparent and frictionless. Peer-to-peer and trustless technology will lead us to a decentralized utopia of equality and inclusion.

While the ideals are noble, the decentralized world has some problems that still need solving — problems rooted in the very algorithms and design of blockchain, down to the very cryptography and consensus mechanisms used. No less than Vitalik Buterin, the inventor of Ethereum, asked recently (as the total cryptocurrency market crossed $500 billion) if we had really “earned it” as far as achieving blockchain’s promise.

Exporting cryptocracy?

The cardinal values of the cryptocurrency and blockchain world center around consensus and transparency. In bitcoin and Ethereum, users “vote” on the single source of truth at regular intervals, and everything is verified as true on a peer-to-peer basis. These mechanics have, in turn, created a culture around the technology that is rooted in libertarianism and independence from traditional institutions.

These latter goals — freeing humanity from “centralized” institutions, which all are seemingly painted with the same brush of tyranny — are presumed to be universal goals, when they really are primarily North American. In a sense, the crypto-anarchy world many enthusiasts evangelize about taking to the rest of the world is really not too different from the American project for “exporting democracy” to other countries.

This tunnel vision could be a very limiting factor for adoption of the tech in the long term. Just as the way libertarian parties do not have the kind of sway in most of the rest of the world as they do in the U.S. and Canada, forcing the blockchain system to rest on anarchist or anti-establishment principles will be very limiting over the long term.

Collective values

Conversely, if we truly are designing a global vision using blockchain, this means building systems and processes that take into account everyone’s values. That means thinking about the needs of the majority of the 7 billion people on the planet. Stealing from design thinking, the most common “user profiles” are people who hold very few assets and have difficulty accessing basic needs.

Thinking about these “users” — it seems obvious that their real primary values will be different from the typical blockchain “ideals” like consensus, transparency and so forth. Instead, they are looking for stability in their daily life, and avoiding risks or conflicts — sectarian, religious, environmental and so on.

Maslow’s hierarchy of needs is a fantastic reference point. The ideals of crypto are great, but really fall into the upper layers of psychological needs and self-fulfillment. We have to design differently for the bottom of the pyramid.

If we really want to bank the unbanked and identify the forgotten, we may have to rethink blockchain systems to make them user-appropriate. Do we really need elliptic curve levels of encryption to secure what might be $200 in assets? What good is cold storage for protecting private keys for refugees living in camps who can likely barely secure their homes?

Letting go of some of the cryptographic Holy Grails, for example, might ease the difficulty of making decentralized systems that work for users with limited technological capabilities by giving simpler options for key recovery or storage. Ultimately, adoption by these users will only come by providing the security and trust that the system works, without regard to whether it looks like a bank account or an Ether wallet.

In the societal stack, values are the bottom layer. That means we have to create systems bottom-up, starting with those values, rather than trying to work backward from what we might have inherited from some cypherpunks from the 1990s.

Unseen risks

Another area that the cryptocurrency and blockchain communities seem to have missed is the hidden downsides of turning everything into a group vote. Studying places that have seen the failures of democratic governments — disregarding whether democracy was functioning properly — is enough to convince one that consensus and transparency might not always be the answer. Democracy, without well-run controls, often can be subverted into the means for oppressing minorities and outright brainwashing people. Groupthink is easy to force, and a cryptocurrency space dominated by a few figures puts power in the hands of a few who can wield out-size influence on the collective.

A simple thought experiment can be helpful to see these risks. If the refugee camps so widely touted as ripe for blockchains were governed in a decentralized way, what risks might emerge? It is a common trope in sociology that democratizing a diverse society (ethnically, religiously and perhaps soon technologically) leads to a rapid increase in sectarianism and communalism. For a case in point, look at Myanmar — a military junta that oppressed the collective has been transformed into a killing machine for eradicating unpopular minorities.

The failures of Web 2.0 are also incredibly instructive: Facebook and YouTube are the premier platforms for brainwashing and recruiting extremists. We live in an era when democracy itself has become hackable, and so secure e-voting mechanisms on blockchain are not the total solution.

Centralized institutions are critical to preventing such “social hacking,” by enforcing encoded norms. Norms and values like respect for freedom of conscience are what make democracies function, as much as any vote-based process. Without centralization, blockchains have to work doubly hard to encourage “good” user behavior.

In practice, this means creating systems where not everything is put to a vote. That means emphasizing rule-making and norms from the outset, rather than hoping decentralization alone is the answer. Security and trust have to be obvious and intuitive, not just implicit through “owning your private keys” and “math.”  Byzantine systems will take too long to get us anywhere closer to our goals.

If the future is truly decentralized — and I believe it is — that means ensuring it is safe and cooperative, without censorship and control. Power and money corrupt all, and if we plan to add much of both into decentralized systems, as we do, we must install safeguards and social incentives to prevent their subversion, packaging norms and processes that prevent abuse, whether through good token design or integrating legacy systems where needed. This will require different schema from the thinking and analysis that been used until now, to ultimately start building a frictionless world that appeals to all.