Summary

  • When we play the game of civilization, very interesting patterns merge: today’s cooperative institutions are such a pattern. We’ve looked at a few of the cooperative arrangements and how they can be ported into the digital world in our previous sessions.
  • Today we talk about how to get there from our world of paper contracts. How can the current legal systems and future systems coevolve and constrain each other? How can this be done peacefully? What is a “Genetic Takeover” and what can we learn from biology?
  • We’ll touch on experiments in selective immutability, assassination markets, and a what a future might look like with a multiplicity of blockchains.

This meeting is part of the Intelligent Cooperation Group and accompanying book draft.

Jim Epstein: Reason Talk

  • There are two major theories of how we can move to a more free world that have been debated since the 80s and the age of the cypherpunks and are still being debated.
  • The first is the idea that the world changes by building new protected spheres outside the reach of governments, like Ayn Rand’s famous “Galt’s Gulch”.
  • This kind of approach is rooted in technologies like encryption that can be used indiscriminately by bad and good actors alike.
  • Black market sites like the Silk Road and anonymous information sharing like Wikileaks are examples of such technology.
  • The second is the idea that the world changes by exploiting gray areas in regulations and law, like much of the internet was built. Most startups didn’t know if what they were doing was legal, but they did it and it led to lots of change.
  • In regard to cryptocurrency and cryptocommerce, there’s a case for theory 1: Bitcoin and cryptocurrencies serve as technologies of resisitance with built in real life demand from those looking to get around governments.
  • To quote Nassim Taleb: “Bitcoin is an insurance polocy against an Orwellian future.”
  • Bitcoin may also provide the best escape route from hyperinflation due to government monetary policy and anonymous transactions will be the only way to avoid digital currency surveillance.
  • An example of a peaceful project: OpenBazaar.
  • OpenBazaar was a decentralized marketplace that used Bitcoin, but very few people used it. It had much better software infrastructure than Silk Road but shut down recently for lack of customers.
  • The problem with the law-abiding projects is that they have to court customers like any other app. The projects that route around law and regulations have their demand created for them by the politicians and bureaucrats that create those laws and regulations.
  • The industry is focused on building systems built around privacy and decentralization without paying enough attention to how to win over customers and the extent to which customers want these things.
  • Rory Sutherland (Mises is his hero) is quoted: “Asking an economist to explain the workings of human society is like trying to understand human sexuality by consulting an expert on hydraulics.”
  • He argues that the mistake we make is thinking that what’s great about capitalism is that it’s efficenent, when actually what’s great is that it’s innovative.
  • Why does the automatic door not replace the doorman? Because he does other stuff! Directions, luggage assistance, keeping out unwanted guests, raising the status of the hotel, etc.
  • The cryptocommerce space is focused on building better automatic doors, and the best tools don’t always win out. Surveillance, centalized and inefficency may win.
  • When thinking about how to transition to a world of cryptocommerce, what we need more of is magic of winning over customers.

Lex Cryptographia

  • You can’t really escape from regulatory capture, but there is a notion of unregulatability.
  • This may have been true when the internet was decentralized in its early days, but now we have highly centralized, easy to regulate systems.
  • We’re already seeing centralized choke points develop in cryptocommerce in the form of mining pools and custodial wallets.
  • There was a discussion at some point to change the Bitcoin protocol to identify “tainted” transactions that had been used for illegal activity so that miners wouldn’t process them.
  • The argument against this at the time was that you didn’t have the coercive power of a centralized platform that can make changes and force them on the users. If changes were made to the protocol that folks didn’t like they would simply not update to that version.
  • Today, the argument is different: you can regulate cryptocurrency protocol changes because so many people rely on custodial wallets and centralized exchanges.
  • A government can say “exchanges can’t interact with any wallet that’s not KYC compliant” and that can have a huge effect.
  • We’re going to same way as the internet, the application layer is becoming increasing centralized and creating these chokepoints.
  • Lex Informatica was the idea that code becomes this new mechanism for regulation of information, operationalized by the creators and operators of that code.
  • Lex Cryptographica takes this further: rule OF code, instead of rule BY code, managed in a decentralized manner so as to reduce the power of the creators and operators.
  • We get predictability, transparency and accountability, but we also get this unregulatability: what if we make a mistake? Something is missed? We need to adapt the protocol to changes in the world?
  • We need to recreate a layer of subjectivity, human intervention on top of the immutable and predictable systems by finding the sweet spot. Decentralized and immutable systems while injecting at some specific levels a layer of governance, the ability to change things.
  • When and how exactly to intervene is the question, where is the sweet spot where we benefit from the best of both worlds?
  • It requires new types of constitutional guarantees that allow us to maintain the automation and autonomy of the system while having the ability to govern and change things.

A Decentralized Web as Basis for an Emerging Cryptocommerce

  • We want to “lock the web open.” We want a game with many winners. The people on this call are kind of game masters trying to set up a game with lots of winners.
  • Lessig is awesome and “code is law” is a good idea, but the code we have for the web is simple and doesn’t protect a lot of the activities and behavior we’d like it to.
  • We started out with lots of small websites but now we have a few websites that use the web for more or less a remote terminal into their mainframes. This is not great for having low switching costs or alternatives for users.
  • The Wayback Machine is a kludge built on top of the web because the web didn’t have content addressibilty and the ability to have things stored multiple places.
  • It’s hard to fix rules after the fact: be careful of the rules you think of first because they can stick around longer than they deserve.
  • The goal is a peer-to-peer backend for the web. Can we upgrade the web smoothly without needing to introduce new browser tech and such to replace the backend?
  • We have encryption, we have javascript that can run everywhere, we have WebRTC. We have the tools to build something better.
  • We should also make it really easy for people to sell things on this new web. Can you post a file to the decentralized web, have someone drop a coin into a virtual box, and decrypt that file? You can’t right now with smart contracts.
  • The decentralized web should be reliable, secure, private, and with the native commerce and file sharing tools we need.
  • “The great thing about the web is knowledge as an address” – Peter Lyman
  • If we end up in app world with many walled gardens, you lose this linkability and connection.
  • The Internet Archive tries to play a role in hosting meetups and fostering community around these goals.

 

 

Seminar summary by James Risberg.