By William J. Furney
Blockchain seems to be everywhere. Almost every time you read a news article, the peculiar term is right there, staring you in the eyes and imploring you to understand what this digitally changing technology is and what it promises to do. You’d be forgiven for throwing your hands up in the air and giving right up, such is the apparent complexity that blockchain immediately presents.
When you want to understand something perplexing, it’s best to go to an expert, and a straight-talking one at that — a person of knowledge in their field who won’t bamboozle you with all manner of foreign terms and bizarre jargon, but will tell you as simply as possible what it’s all about.
That’s why I asked Berlin-based blockchain expert, TED talker and entrepreneur Frank Sonder (main image) to explain what blockchain is, and also to talk about other tech and societal developments, including controversial cybercurrencies that one American bank has now created for itself, the proposed universal social wage and more. (Like me, Frank is an avid runner and this year hopes to complete his 10th marathon; we ran the Berlin wall (10K) on a brutally cold morning last November.)
For those who are trying to get their heads around blockchain, how to simply explain what it is?
One of the main problems with explaining blockchain is that you need to stop at a certain point. And this is before you get into cryptography, game theory and mathematical genality. That’s where you usually lose your audience. I have three ways to explain it.
- The definition one: Think about a large spreadsheet that holds all transactions of a certain kind. Transactions that relate to any kind of value exchange. We basically know value equals money, but there is much more.
This spreadsheet is immutable and transparent to everyone. Every single entry is true by definition — actually by cryptography — and allows anybody who comes later to the party to trust this information and therefore to participate. Until today the trust comes from banks, governments and other authorities. Now it’s a spreadsheet with no intention to make profit, censor or shut down. It is potentially replacing all middle men.
- The historical one: It is just some 500 years ago that people lived largely without money. They lived in small groups where everybody knew everybody. Yuval Noah Harrari says this would be some 120 people. These humans lived along an ongoing exchange of favors and obligations. To stay within and being accepted by the community, people were motivated to meet the consensus of the group. Imagine that would be possible again. But not limited to some 120 people in a certain territory, but with millions of people around the world you don’t know and don’t need to know. That’s the potential of the blockchain.
- The personal one: Think about me giving a talk. A bearded man standing on stage in front of hundreds of people. I make a true statement like “Frank has a long beard”. Everybody in the audience can prove this information to be correct. They save this information in their brain blockchain. But there are some issues with that. First, people forget and might not remember this a year later. Second, people may not remember precisely what was said. Just “beard” instead of “long beard”. But the main problem is that any person who was not in the room is unable to trust this information later on. When we use a non-human blockchain, this wouldn’t happen. It doesn’t forget; it cannot be altered; and everybody can trust this information, no matter when and where.
In what sorts of ways is blockchain in use now, and for what?
Although, blockchain has huge potential the real usage, today it’s still quite limited. Limited to cryptocurrencies like the famous infamous Bitcoin or to quite specific cases within the nerd community or large corporations and financial institutions. There are surely lots of interesting projects within the nerd community from energy friendly blockchains, other cryptocurrencies, smart contracts, identification and building future nations. However, it’s not in widespread use.
The old industry is using blockchain basically to drive efficiency even further, the main goal of today’s capitalism — like in the banking, insurance and energy sectors. The true potential of blockchain, especially as a powerful tool for us, the people, is not as much unfolded as I would wish.
What do you think some of the best possible future applications of blockchain might turn out to be?
Cryptocurrencies, if we succeed to snatch it from the speculators and gain a new understanding of values and exchange of values. But also in smart contracts that will, however, make many lawyers and clerks jobless.
Do you think blockchain is going to change the world, and why?
There is the potential, yes. But only if we wake up and act. Right now the technology is mainly taken over by the established industry. An industry that is vastly profiting from their middle-man position. Of course they won’t disrupt their own position in a market-driven economy.
Governments as well are in a middle-man position. And if you watch how democracy is developing, even just within the last four years, you know about the risks. Look at Brexit, Trump, Turkey, Hungary, Venezuela.
What about the cryptocurrencies that are made possible by blockchain? Why are they so volatile, and do you think they will ever become mainstream and maybe even overtake traditional currencies?
Again, the potential is there. The volatility comes from speculation. From an old economic mindset that is using innovation in the same old way they did before with other values.
Do these digital currencies have the potential to cause damage to the global economy, the way the existing financial system has done in recent years and before?
Sure, if you see blockchain as a new way to provide infrastructure, the risks are the same by manipulating, censoring or shutting down this ecosystem. Take inflation. We almost forgot about that, but if you look at Venezuela, where money is losing value by the second, caused by decisions or incompetency of the government. If blockchain technology is in the hands of large corporations, and not us, we are facing the same threats. But faster, and with greater destructive force.
How do you see the internet developing? And is net neutrality a good or bad thing?
There was great hope that the internet would give everybody a voice and would lead to more democracy and a more just world. The opposite is the case. Why? Because we are lazy and feel quite comfortable in our consumerist world. We are so busy with buying more and more that we fail to recognize how much we get reduced to a product, a marionette in the game of capitalism.
In today’s economy and society, there are exactly two roles people have to fulfill: to be a voter, to authorise the government to take action; and to consume, to help corporations to keep the promise of an ever-growing economy and wealth.
So we left the internet to the market. Shitty input brings the same output. That is what happened to an internet full of shopping, fake news and hate speech. I gave a talk recently at an international marketing conference. My tirade was exactly about this.
Other innovations may be on the horizon, such as the proposed Universal Basic Income that several European countries have been thinking about introducing. What’s your view on this — is it a major step forward in basic human rights or just free money that will only end up making people lazy and not want to work at all?
Yes, I think it’s too much, even if it’s a new proposal.
What ideas do you think might change the world in 2019?
The year started with some hope in a pretty awkward situation. First, with the Dutch historian who was brave enough to confront the elite at the World Economic Forum in Davos with the truth of misunderstood philanthropy and unfair tax avoidance of the rich. Secondly, it is Greta Thunberg, the voice of a coming generation who speaks the truth and isn’t afraid of being very clear. “I want you to act as you would in a crisis. I want you to act as if our house is on fire. Because it is.” With school strikes, she even found a way to put a lot of pressure on it. I hope it continues.