Bitcoin is the most famous cryptocurrency with the highest capitalization. As you can see from this screenshot from the "block reader" blockr, the capitalization at the time of writing is over eight billion dollars. According to citations of an IMF report on Wikipedia, that places it just above Moldova's GDP.
This post isn't about bitcoin but the cryptographic foundation of Bitcoin. (The community prefers to capitalize the word when referring to the system, and lower case when referring to the currency.) This post doesn't explain Bitcoin or the blockchain in detail – I recommend this series of presentations courtesy of the Khan Academy for those who want to learn more – but rather it's about the technology's wider application and its emergence and growth beyond the early adopters.
Get this into your block
So why am I interested in Bitcoin specifically, and its blockchain foundation more broadly? What does this have to do with social business?
We are contemplating blockchain platforms to enable decentralized consensus in the not too distant future, allowing us to codify, decentralize, secure and trade many things that historically have demanded some centralized facility. This is akin to the bitcoin currency functioning without the need for a central bank, and the vista includes voting, domain names, financial exchanges, crowd funding, organizational governance, intellectual property, contracts and agreements of most kinds. The landscape even extends to so-called smart property with appropriate hardware integration.
Sometimes I wish I was more of a wordsmith, but this word will have to suffice – wowzers!
Something in the ether
Not wishing to delineate necessarily between social business and the wider societal impacts I just listed there, but you'll have noted reference to organizational governance. In my presentation The Future of Organization in May this year, I included a blockchain-powered vision I call Bread incorporated. The accompanying Slideshare has accrued over 5000 views since I'm delighted to say.
My claims for Bread include:
This middleware company provides the bridge from today’s corporate, commercial and legal environment to a new organizational ecosystem.
... This approach aims to do for organizing what social media has achieved for communications – eliminate friction and encourage heterarchy.
... a distributed, self-regulating, incorruptible, frictionless market for organization.
On the back of the presentation I was delighted to be contacted by the Ethereum team – building "a revolutionary new platform for decentralized applications" – to join its conversation about how best to govern its own non-profit organization and subsequently extend similar facility to future customers. It's incredibly exciting, although I can't help think the platform must migrate away from proof-of-work to proof-of-stake, but that's too technical for this post. Rather, I want to contrast Bread's relative pragmatism with the purists that might pepper the Ethereum community.
First up, relative is definitely the right word here. Anyone reviewing the broad scope of Bread incorporated might think I've been breathing too much of the ether, but reading between the lines it's apparent that the purists might question my pragmatic desire to connect the future blockchain-powered platform to today's societal infrastructure with this middleware called Bread. "Why should we?" they might ask. "We're building a new reality, not an augmentation of today's. We don't need to drag ourselves down by anchoring it to the reality we're seeking to replace."
So why the pragmatism? Well, I know there will be good sociological reason, but you'll have to forgive me while I continue my continuous professional development on that front. I'm diving into my Giddens but haven't yet got beyond doggie paddle. Until then, all I have is my reasonably well-developed systems understanding. But no, hang on, it looks like real life has just come to my rescue.
License to operate
Just last week, New York State issued proposed bitcoin regulations, a so-called BitLicense.
Now back in the day when I ran a company called Nochex (then the UK equivalent of PayPal prior to PayPal trading in anything but US dollars) I was called upon by HM Treasury to advise on anti-money laundering legislation prompted by 9/11. The current form of these deliberations is the European e-Money Directive and the requirement to 'know-your-customer' is at the heart of the matter. It's also at the heart of the proposed BitLicense, and one might conclude carries significantly more importance in terms of money laundering and associated criminal activity than the State's concurrent antipathy towards the sharing economy. The latter may be described as Ludditic. The former pragmatic.
I consider this intervention the first of many.
I can only conclude, as before, that projects such as Ethereum will be shaped by idealists but executed by realists. It's still wowzers though!
Coming to a market near you
In the sharing economy, AirBnB "will soon surpass the InterContinental Hotels Group and Hilton Worldwide as the world's largest hotel chain". Incorruptible decentralization upsets many more market dynamics. Do get in touch if you'd like to explore the ramifications for yours sooner than later.