The development of blockchain technology has brought more imagination to modern society. Bruno Maçães, a senior researcher at the Hudson Institute and former Minister of European Affairs of the Portuguese Ministry of Foreign Affairs, believes in this article that the ultimate hope of encryption is not in digital currency, but in replacing traditional national structures.
Author/Bruno Maçães
Compile/Wang Dashu, Echo
Throughout history, world powers (Spain, Holland, France, and the United Kingdom) have often been replaced by more dynamic competitors.
Today, many people speculate whether the United States will give way to China as a global superpower, but what if this assumption is wrong? What if we are going through a more thorough transition now? What if all contemporary countries are being replaced by a new type of "state" that is different from the existing government and different from ancient empires or primitive tribes?
Technological creation brings new sources of power and new growth logic.
First, at the information level, Google knows you better than the government; second, at the social level, Facebook gathers more people together on a public platform, which is unmatched by any society including China or India Third, at the monetary level, Bitcoin is a new type of currency that is decentralized and free from political control; fourth, at the legal level, smart contracts are computer programs that can run without manual intervention. So what kind of governance will be born by combining these new elements?
In an article in 2017, Mark Zuckerberg explained the rise of Facebook with the help of historical philosophy. In the course of history, mankind has developed from tribes to city-states and then to countries until now. He wrote: "Today, we are about to take the next step." Zuckerberg believes that the truly extraordinary thing is not that human beings are becoming a global community, but that he believes that his company plays the most important role in achieving this goal. Important role: "Let us unite more closely and build a global community." He said: "In this era, the most important thing we can do at Facebook is to develop social infrastructure to empower people Build a global community that serves everyone."
When Zuckerberg called Facebook the "social infrastructure" of the community, that term was the only name most people used to define a country. The state makes human communities possible. It builds, organizes, and unites its members. Or, as Zuckerberg said, it supports us, keeps us safe, and informs us.
Of course, Facebook has no territory and no territorial requirements. It is committed to building a global community not in physical space but in virtual space. By getting rid of geographic restrictions, this new community will be open to everyone on the planet.
In the past few years, stories about Facebook’s political misery have shown that the desire to create a new type of "state" is much more difficult than Zuckerberg envisioned. The problem is that Facebook lives a double life. On the one hand, it hopes to establish a virtual community composed of global citizens. On the other hand, it is a company established in accordance with existing national laws and is subject to both market competition rules and public regulations. Obviously, these two points are not in line with the so-called global political role that Facebook is pursuing.
The existence of cryptocurrency and a broader encryption platform provides an answer to this problem. With Bitcoin, we have seen the arrival of a new global infrastructure. In this country, people can realize that data and transactions are recorded on a trusted blockchain distributed ledger without interruption without going through an intermediary: no large multinational companies capture data, no banks are involved, and no national institutions are involved. The record can be tampered with. Disputes in the community are automatically resolved by the existing distributed ledger, and the distributed ledger plays the most important role.
As the media critic Steven Johnson argued, the inventors who shaped the Internet’s open protocols failed to understand that they were building a community, not just a machine. Unfortunately, the way of identity authentication has been defined in the real world, and online communities will only copy these standards. In the offline state, we rely on public authorities to confirm to others that we are what we call ourselves, such as marital status, property , Age, taxation, contact information, etc., the national authorities will go all out to keep all these records.
Generally speaking, if citizens can trust these authorities to complete their tasks, society will work better. But on the Internet, the amount of information has surged. Now, the massive amount of data collected online cannot be compared with the original records in the real world. Human information is transformed into a data stream that can be recorded, analyzed and evaluated in real time. Technology companies collect thousands of data points about each of us, and the profiles they create are like virtual avatars, twice as much as our true selves.
Since there is no Internet protocol for personal identities, and because of the limited use of protocols available in the real world, the private sector quickly flooded in to fill the vacuum and established many proprietary standards to determine user identities.
With Facebook becoming more central, I think it’s fair to say that the situation in this area is not ideal. The global community Zuckerberg wants to build is driven by things like targeted advertising, and the community must be for Facebook and its advertisers to maximize profits. As the author Shoshana Zuboff put it, the threat of "surveillance capitalism" is that it brings the threat of a dramatic expansion of social control mechanisms based on making human behavior completely predictable.
At the same time, the power of the new technology platform has awakened the interest of government regulators and reduced the possibility of realizing the dream of a new global community independent of traditional national structures.
This is why Facebook's digital currency project Diem is doomed to fail. As soon as the news was announced, congressional hearings began, and the chairman of the Financial Services Commission called on Facebook to stop its development. Unlike Bitcoin, Diem is centrally controlled by a specific company, so it can easily become a regulatory target.
An alternative is conceivable: everyone will have their own digital identity, and different services can use that digital identity according to their current interests and choices, instead of recording and updating the identity through a large Internet platform and then selling it to Advertisers do not need to ask the owner of the digital identity.
After Bitcoin first introduced a distributed database, something truly extraordinary became possible for the first time: a community gathered together without any authority other than the database that records the collective lives of its members. The ultimate hope of encryption lies not in digital currency, but in replacing other national structures.
Bitcoin was born on January 3, 2009, the most severe period of the global financial crisis. It was designed to deal with the downturn of the global financial system. The system somehow managed to allow private companies to operate and profit independently, and ultimately to be managed by the public. The authorities are responsible. In other words, this is a response to the excessive financial market and the unlimited power of the state.
Satoshi Nakamoto made a basic proposition: The financial system that exists today depends on trusted third parties (mainly banks and other financial institutions) to function. The need for such mediation increases transaction costs and limits the minimum actual transaction size, thereby reducing the possibility of small temporary transactions.
In addition, the current system does not stipulate that assets and transaction records are inviolable, and legal tender is still under the ultimate control of the government. The financial crisis has shown that this is not an indifferent consideration, but even in more conventional circumstances, every government tends to use monetary and fiscal tools to tamper with historical records, that is, records that Bitcoin enthusiasts consider irreversible. People still want to do many things with money, and politicians, bureaucrats and political activists want to prevent them from doing so.
Cryptocurrencies are derived from the efforts of "cypherpunks". They use real computer science instead of fantasy physics to establish a liberal utopia in cyberspace. To a large extent, the goal is to deprive the currency of dependence on the government.
Once a decentralized accounting and governance system is established, currency is only one area where public control may change hands. According to Buterin, the system can be used not only to transfer wealth, but also to take over certain roles of the court and, more broadly, to take over the law. In short, the decentralized accounting process can accept anything that a computer can currently represent. At this point, the logic behind the new technology becomes clearer, even for beginners.
Whether Satoshi Nakamoto considered these possibilities when creating Bitcoin is still open for discussion. His thesis is limited to the special case of electronic money, but this is not surprising in itself. People always have to start with money, because everyone who builds, maintains, and improves any thoroughly decentralized system needs to be rewarded for their efforts. Satoshi Nakamoto paid considerable attention to the classic problem of "motivation".
Buterin abandoned the idea of Bitcoin and built an Ethereum blockchain with a programming language, so that everyone can write smart contracts and decentralized applications, so that they can create their own rules for ownership, transaction format, and state transition functions. . It is worth noting that money is no longer just an output, but an input. All programmable calculations in Ethereum need to be paid. The charge is specified in gas and can be purchased with the system currency ETH.
Smart contracts automatically process social and economic exchange activities according to predetermined algorithms. For example, as Buterin said, someone may have a contract in the following format: "A can withdraw up to X currency units per day, B can withdraw up to Y currency units per day, A and B can withdraw anything together, and A can prohibit B from it. drop out."
Or think of a vending machine. Without a store clerk or other trusted intermediary, it will execute a contract to sell drinks to a customer at an advertised price, and the customer puts enough money into the cash drawer. The logical conclusion of this concept is a decentralized autonomous organization, smart contract, or a set of contracts that contain assets and encode the rules of the entire company or organization.
Just as computers without an Internet connection have limited functions, so do smart contract platforms that cannot connect to external functions. However, with more and more encryption functions, people are getting closer and closer to a singularity: the moment it is no longer composed of man-made systems, it is separated from reality, but becomes a control room that controls events in the real world. From then on, it will acquire at least certain properties of the country.
Many issues related to the interface between Ethereum and the real world have been actively discussed and studied. In some cases, clever solutions have been proposed. Most solve the way to make the system accept real world input.
Ethereum assures its users that it is a universal system, where they can do more than just trade internal currencies. For example, they can develop hybrid protocols that connect encrypted assets with traditional financial instruments. Stablecoins are encrypted assets backed by collateral related to gold or the U.S. dollar. Synthetix allows the creation of synthetic assets whose prices can track currencies, cryptocurrencies and commodities.
All of these options require obtaining the market price of the tracked asset. Insurance smart contracts will require data feedback related to related insurance events. For example, did your insured flight arrive on time? The trade finance smart contract will require data about the shipment, supply chain, and customs of the shipped goods to confirm the performance of the smart contract. The source of information from the outside world of the system is called the "oracle".
The question immediately arises, that is, how to design an oracle that will not forge the logic of the system. For example, in 2019, Synthetix oracles transmitted false data to the platform, which was then used by trading robots. Although no users were affected, Synthetix had to pay a substantial fee to the robot owner to fix inadvertent hacking attacks.
Another illuminating example is the prediction market. For example, predicting the name of the next US president is a smart smart contract that will automatically execute the remittance once the election occurs.
The advantages of smart contracts are obvious: we don't need to trust the other party or intermediary, and there is no way to cancel or change the invested principal. Of course, the problem is how to provide the correct information of the election results to the smart contract. Many different solutions are being tried, one option is to create a decentralized oracle network.
According to the founder of Chainlink, both blockchain and Oracle can produce a "certain truth." In other words, the Bitcoin blockchain establishes clear facts about Bitcoin ownership. Chainlink uses the same method to provide deterministic truth about the outside world: multiple independent nodes confirm data from different, independent oracles. Similarly, in the decentralized forecasting platform Augur, the consensus established by the "reporter" group is considered the "truth" to determine the forecast result.
We have now reached the crux of the problem. Because the personal assets in the aforementioned system are protected by encryption keys, and the system itself is protected by a fully decentralized protocol, the existing nation-states increasingly find it difficult to track or control economic activities and transactions that occur on the blockchain.
If the state and banking system cannot see transactions in the new encrypted economy, the ability to collect taxes will disappear. The tax rates of the remaining economies will have to increase to make up for lost revenue, but tax increases may drive more people into the crypto economy. Not surprisingly, for the first time, crypto transactions have become part of the 2019 IRS tax return form. The first part of the basic personal information reads: "At any time in 2020, do you receive, sell, send, exchange or otherwise obtain financial rights in any virtual currency?"
At first glance, this does not seem to be a sustainable development motivation for encryption technology. After all, the nation-state still monopolizes violence. But in reality, the blockchain cannot obtain violence. As Buterin once told me, if the outside world exerts violence by controlling the user's body, the blockchain itself does have more and more technical toolboxes, including complex and obscure smart contract wallets, which makes it difficult for attackers to use Use force to obtain cryptocurrency assets. However, if violence occurs, things will become more complicated. In this sense, there is no obvious way for the encryption system to control the use of violence, which is a decisive feature of modern countries.
However, this is my preliminary suggestion for the development of things. The key issue is of course taxation. It is here that cryptocurrency poses a more decisive challenge to the core power of the modern nation-state. Some people in the cryptocurrency field believe that the slow erosion of the state's tax power will ultimately determine its ultimate collapse.
Many people told me that they expect all nation-states to disappear in the next few decades, except for China. They believe that only China has the political and social resources to penetrate or disable the fundamental bottlenecks in the encryption system. China accounts for half to two-thirds of global bitcoin mining, but the government has made it clear that they are suspicious of the cryptocurrency sector. In 2017, China banned raising funds through initial token issuance, and all digital currency exchanges were closed. If the government decides to cut off China's Bitcoin network, this may make it difficult for mining pools to synchronize their data on the blockchain with the rest of the world.
The Chinese case does provide a possible template for the continued power competition between cryptocurrency and nation-states. In this case, the encryption system will double its technical advantages, and countries will inevitably resort to its secret weapon, that is, a monopoly on the legal use of force. But the second scenario seems more reasonable, at least outside of China. Public institutions and encryption systems can reach major agreements or collaborations, according to which the country will be able to tax encrypted assets in exchange for encryption security.
The old systems and structures in the political world will not disappear soon, so for blockchain projects, being able to interact with them is crucial. I believe that the old system can also benefit from it. The Swiss canton of Zug has taken the first step in this direction. It recently announced that starting from 2021, BTC and ETH can be used to pay taxes.
People can even develop a form of smart contract or smart contract chain, through which the agreement can be automated, and the payment messages sent to the centralized taxation infrastructure will depend on the normal functions of encrypted transactions and mining nodes. If the latter is turned off, the output will be suspended or frozen.
The solution is similar to the "slashing" algorithm. If the node operates the network in a malicious or harmful way or breaks the agreement guarantee, the node will be punished, including destroying part or all of the locked funds or removing it from the network Remove temporarily or permanently.
What if "confiscation" means "confiscation" implemented by the state? Some people will conclude that the coercive methods of the nation-state have been effectively absorbed by the new "state" system.
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