Blockchain's Moral Core

How can transparency and sharing of data lead to a better world?

Posted Dec 05, 2018

Blockchain, i.e., distributed ledger technologies (DLT), is the first tool ever invented by humans that has a core of morality that can separate good actors from bad ones. Developers and users of this technology are committed to making the world operate more efficiently, safely, and rationally. Of course, that is an idealistic goal, but the unique characteristics of DLT suggest compelling reasons to use it:

  1. The DLT structure provides a proxy for trust among parties who may not know each other (because of immutability and accountability).
  2. It provides a mechanism for participants to share (and create) data that is not currently available (transparency).
  3. It is decentralized, i.e., not under the control of a single entity or organization.
  4. It is (virtually) immutable because multiple copies of the ledger (database) are maintained and constantly synchronized to be identical.

Think of the DLT as a way of using software code (instructions) to automate processes that represent interactions between participants. Those processes are agreements that must be carefully and thoroughly negotiated before they can be documented in the DLT (database). Fundamentally, there must be a flow of logic, an assumption of rational behavior and a commitment by the participants to achieve the shared and agreed-upon objectives. If you are a skeptic, perhaps you wonder if this process sounds theoretically elegant but may prove to be impractical in the real world. How can a system based on a DLT operate effectively with human beings (and real business or government organizations) who can and do behave irrationally or unreliably, from time to time?

Embedded in these features of the blockchain technology is a moral principle that forces us to define our relationships in greater detail than ever before. If we want to engage with others in a process that will be recorded on a DLT, we are choosing to be open in terms of what we share, because we believe more benefit can be gained for everyone, while the actual potential downside risk is minimal. In this relationship, we are willing to operate in a transparent fashion and to be accountable for every one of our actions. This is a statement of integrity. All of our interactions will be permanently memorialized, so that even in the case of errors that are later corrected, the original incorrect record is maintained on the ledger. This will help keep us honest, if not humble.

Why would anyone want to participate in a process that is so demanding ethically?

Use of a blockchain will result in an environment that will discourage participation by bad actors, who typically crave control, love secrets, and hate being held accountable for anything. How many of us would like to feel safer in terms of cybersecurity, privacy, and ownership of our personal data, when operating on the Internet? How many of us would like to be able to distinguish “fake news” from true facts, as presented on the Internet? Why is there so much junk and worse, so much criminal activity, in our digital world? These are very serious problems, growing more dangerous all the time. Some technologists believe that DLT can provide safe localized environments because bad actors will not participate, since they don’t want to be easily traced.

Sharing of data means sharing something of value, and also means sharing control over that data, and indirectly, over people. In what circumstances might authoritarian governments who currently have the power to control others, to offer rewards and punishments, to control resources, be willing to participate in a DLT? Giving up control will be difficult for such entities, as they would have to shift from valuing power and move to a focus on getting the desired results, i.e., serving the people, by operating more effectively and efficiently.

On the other hand, what about corruption and fraud in such authoritarian environments? Aren’t those equally significant threats to stability? Leadership that relies on fear and military power to maintain control is actually operating from a position of insecurity and mistrust. In this environment, how can anyone tell what is real and true? Both fear and mistrust are extremely powerful feelings that can be transmitted virally and are manipulated by bad actors, especially. Wouldn’t control be more effectively applied if more data would be reliable and comprehensive? Greater transparency and sharing of data does present a dilemma to authoritarian governments, though, as seen in China today.

The core of the blockchain philosophy is a positive sum approach to life because it is based on sharing knowledge and a hope that transparency breeds respect. Knowledge is an intangible asset, which means it has very different properties from a physical asset such as gold. A physical asset can be in only one place and can be owned solely by one individual at any given time. Knowledge, on the other hand, is and can be shared widely among many individuals, and all of them can benefit from its value, all at the same time, sometimes in different ways.

The value of knowledge that is not shared, such as proprietary intellectual property (i.e., patents), typically decreases over time. Individual patents can be bought and sold, in what could be considered “zero-sum games," when considered in isolation. However, the intention of the patent disclosure is exactly to make the knowledge broadly available for everyone to learn from and build on. In the broader global context of knowledge, the intent is sharing for the good of all.

In a narrowly defined commercial context, such as the sharing of data among participants in a value chain or supply chain, this is now becoming a high priority because global competition is increasingly fierce. Businesses now realize that the complexity of global business requires interdependent interactions with large numbers of entities and people who they may not know how to trust, at least initially.  In this challenging environment where unilateral control is most probably only an illusion, and a very risky one, perhaps the blockchain approach to keeping everyone honest and accountable may be the only way for all of us to survive.