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The Internet and Blockchain are changing power structures globally. What will replace them?
It’s 2050.
Governments around the world cannot pay their debts.
They don’t pay retirement. They don’t pay unemployment. They don’t pay subsidies.
Hospitals freeze their operations. Lines of elderly people form at the doors of the clinics. Nobody takes care of them. The doctors have gone private so they can eat. Those who are luckier have gone abroad.
There are banking panics in multiple countries. The banks that bought the most debt in dollars or euros go bankrupt. Citizens with their savings in those currencies see how the fruit of their life’s work disappears before their eyes. They contemplate their final years with terror.
What happened? Internet and Blockchain.
These scenarios—which have already been seen in so many countries like Argentina, poor and developing—are going to be increasingly common, because every time a new information technology is invented, our power structures also change:
· Speech allowed the appearance of leaderships.
· Writing allowed the emergence of kingdoms, empires and churches.
· The printing press was essential to replace the Catholic Church and feudalism with the nation-state.
· The press and broadcasts—radio, television—made totalitarianism more viable by allowing the efficient transmission of propaganda.
This time we have not one, but two new information technologies: Internet and Blockchain. How are they going to weaken the nation-state?
The Nation-State becomes irrelevant
In the 19th and 20th centuries, nation-states became the definitive powers. As? The custodians , organizations that the government controls, and which in turn control their respective industries. The best example is broadcasting.
The governments decided what they were going to talk about. They controlled the limits of what the press could say. Information flowed from the government to the press—written, radio, television—and from there to the citizens. Citizens could barely influence the conversation in democracies, forget it in autocracies.
And the Internet arrived.
The Sovereign Individual
When I wrote Why We Must Act Now , I couldn’t imagine 40 million people reading it. When I wrote The Hammer and the Dance , I couldn’t imagine that it would inspire governments around the world.
A normal person, surrounded by children in his San Francisco apartment, reading scientific articles from his couch, published articles that surprised governments around the world on the most important issue of his political career.
This would have been inconceivable 20 years ago. Back then, information flowed from the custodians of the press to citizens, not in the other direction. The ruling classes decided what people would think that day, and you couldn’t change it.
You couldn’t search for the scientific articles you needed because they weren’t available on the Internet. Even if you got that data, you couldn’t spread it because there were no social networks. The Internet gives you both the inputs and outputs necessary to short-circuit the nation-state and the minions of its custodians .
This is how the QAnon madness (the conspiracy theory that ended with the invasion of the US Congress) spread like wildfire, convincing 15% of Americans that it is true (only 40% reject it), propelled by one person pseudonymous with deep knowledge of game design.
Another pseudonymous person, Satoshi Nakamoto, created a new type of financial value with Blockchain, solving a math problem, writing about it, posting on the Internet, and applying it to programming Bitcoin.
Now people form their opinions online and spread them online. They interact online and carry out online transactions. Most of the time, governments don’t even know this is happening. Traditional custodians are omitted . Your approval is no longer needed.
Given the number of authors who die because of their creations, it is no coincidence that both QAnon and Satoshi Nakamoto were pseudonyms: fake names allow for more subversive changes without retaliation. Who is going to cancel QAnon? Who is going to arrest Satoshi to destroy Bitcoin?
What is new is not the value of pseudonymity or anonymity: historically, more than half of books were pseudonyms or anonymous. What’s new is how easy it is to stay hidden. While the crypto-Jews feared for their lives under the Inquisition, Satoshi could be walking past you and you’d never know it.
If a nation-state cannot retaliate against creators, how can it prevent them from subverting the nation-state?
The book The Sovereign Individual predicted most of this rise in individual power almost 25 years ago. However, he focused more on the decentralization of power, which would flow from nation-states to individuals. But the Internet also has a force of centralization.
The Rise of Multinational Organizations
Who makes the search for scientific articles possible? Google.
Who allows the dissemination of information? Youtube, Twitter, Facebook, LinkedIn, TikTok….
QAnon, the founding Bitcoin article, my COVID articles, or anyone else’s posts would have been nearly impossible without the tech giants. But the change goes beyond social networks. Look at this:
Who replaces your taxi? Uber, Cabify. Maybe another couple of international actors.
Who replaces your travel agencies? Booking.com , Google Flights, Expedia… Not thousands of companies. A few.
[TP1] Will a widget like here be created in the article, or will this remain a link?
If it remains as a link, an image with a link would have to be created. And if that is not possible either, the link will have to be put in the text.
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Many of the industries that had millions of companies around the world now concentrate the majority of their influence in a few.
How much power do you think they have? Where do you think that power is going, more or less?
Network effects represent 70% of the value created by technology companies. The more these network effects grow, the larger these companies become and the more part of the economy they represent.
As these companies grow, they begin to treat nation-states not as their masters, but as their peers:
The public affairs director of one of these companies noted that when he was in charge of relations with public authorities within a large traditional American company, he obeyed the instructions of regulators without negotiating: “so, we complied.” Today, on the contrary, he affirms: “we do not give up without first negotiating hard.” Gilles Babinet, Institut Montaigne
When Spain wanted to tax Google News, Google simply stopped offering the service in the country. When nation-states wanted to preserve their taxi monopolies, Uber crushed them until they relented. Airbnb alters housing supply and demand at the local level. Tesla challenges US dealership laws. Cryptocurrency supporters successfully oppose laws that threaten them. Apple does not give the FBI special access to its customers’ iPhones.
Social media is particularly powerful as it filters what is acceptable to believe or not believe, pushing people’s beliefs in specific directions with its algorithms and sometimes even taking the megaphone away from nation-state leaders.
And SpaceX is going to give free Internet access to the entire world. How are nation-states going to be able to react against that?
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How will Venezuela censor the free exchange of information when it falls from the sky?
Just look at the embarrassing spectacle of the US Congress questioning American executives without understanding how their companies work, or the shameful case of the American Trade Agency against Facebook. Nation-states see the rise of alternative powers as the Church saw with the rise of the Protestant Reformation. The two resist, but they are fighting against the unstoppable progress of technology. And technology determines the economy, so it will win.
The result is that companies reduce the power of nation-states in two ways: first, by making information transmitted without barriers, eliminating the power of the custodians of nation-states and local companies. Second, accumulating part of that power in themselves.
Blockchain
This centralizing force of companies is counteracted by the decentralizing force of Blockchain. But Blockchain means many things to many people. What impact does it have?
Of course, there is Bitcoin as an alternative to gold as a store of value. And stablecoins and flatcoins as alternatives to fiat money. Both make it much more difficult for governments to print currency without raising inflation.
There is Ethereum, DeFi, NFT, and the rest of the crypto economy, which is building an alternative to the existing financial economy—one that reinforces nation-states.
But the mathematical solution to the Byzantine Generals Problem devised by Satoshi Nakamoto’s Bitcoin paper goes further. Because? Because it makes decentralized management possible:
Historically,
How did you know your taxi was legitimate?
Because he had a license. Of the government.
How did you know it was wise to eat in a restaurant?
Because it was certified healthy by the government.
How do you know that your house is yours?
Because it is registered. In the government registry.
How do you know someone is Spanish?
Because he has a passport. Of the government.
You constantly need government custodians to facilitate your interactions with others.
And with the money?
How did you prove you had enough? Either you showed the money, or you needed the bank to show it for you.
How did you prove you knew something? With a piece of paper from an academic institution.
How did you prove something was true? With a notary seal. You’ve always needed a government-approved custodian .
Nation-states were the ultimate custodians , because they not only controlled their own services, but also controlled the rest of the custodians through regulation. They have been drawing their power from this control for centuries.
Since the Bitcoin article was published, that power is gone. We no longer need custodians to certify most of these things. We don’t need the corruption, absurd regulations and abuse of power that come with it. We can create better solutions with more crowdsourcing , with faster feedback , with verification of crypto-oracles. The only reason we don’t see these solutions yet is because we haven’t built them yet.
«The future is here. It’s just not evenly distributed.” —William Gibson, on distributing the future.
The future is already in the brains of 200 million cryptocurrency owners. A better way to think of them is as a country, an alternative community to nation-states.
The citizens of nation-states do not question the sovereignty of the government, they do not question the validity of their currency, they do not imagine a world without television or radio or notaries or certification bodies that make the nation-state what it is. is. They wrap themselves in the flags of 20th century countries and dry their tears on their soccer team’s jersey. They cannot conceive the end of the nation-state, in the same way that the Europeans of the 1500s could not conceive the end of the omnipotent Catholic Church.
None of this is true for Blockchain citizens. They catch him . They have cryptocurrencies because they don’t trust fiat money. They build DAOs (Distributed Autonomous Organizations) because they understand that corporations are on their way to the grave. They insist on using smart contracts because how else are we going to trust each other?
Who do you think these Blockchain citizens have most in common with: their patriotic neighbors, or their crypto brothers? Can you already see the alternatives emerging to nation-states?
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Supranational Entities
“The question is never whether you can maintain all your sovereignty. History says you can’t. “Throughout all of history, humans have always increasingly shared their destiny.” —Robert Wright, Nonzero.
If you are alone, you don’t need a political system. The government’s objective is to agree on how to coordinate. The more people there are, the more coordination problems arise and the more we need to regulate our interactions. The size of governments has always grown with the size of the problems to be solved.
It is no coincidence that the League of Nations appeared just after the First World War and the UN after the Second World War. The size of governance follows the size of the problems. Since then, a globalized financial system has given birth to the International Monetary Fund and the World Bank to help countries that need money in exchange for… a bit of their sovereignty. Or a lot, as Argentina knows well. The World Trade Organization coordinates countries so that they can trade better with each other, at the expense of some of their sovereignty. They can’t do whatever they want in commerce.
The only reason the World Health Organization’s failures have been so glaring during the pandemic was because the WHO was so necessary. Who cares about the failure of a useless organization? We care about the WHO because we realize that pandemics are not a national problem. They are global. The Delta variant did not care about the Indian soil where it was born. As long as countries let people in, I was going to travel with them.
In fact, the main reason the WHO failed is because of nation-states. They were China’s manipulation and its censorship of Taiwan; the US funding cut; all WHO governance that depends on dysfunctional nation-states.
But, eventually, alternative governance systems will emerge to fill the global pandemic coordination gap. Because this problem is not going away, and now we know it.
Something similar can be said about climate change. Why, despite enormous popular support, are most countries not taking enough action? Because that support has not translated into the political action that nation-states monopolize today. No wonder: nation-states were never built for global action. They are obsolete for the problems we need to solve.
But why can’t a community emerge in which citizens around the world can pledge their support to politicians who do want climate change policies? Why can’t they make that promise an automatic, public commitment on the blockchain? It hasn’t happened yet because no one has gotten to work. But it will be done. When that community emerges, will it be more or less powerful than nation-states? Or will it be simply another group that eats away at the sovereignty of nation-states?
:quality(85)/cloudfront-us-east-1.images.arcpublishing.com/infobae/RDATK4QUHVBXJLU2LEZY325GXY.jpg%20420w)
Supranational Entities
“The question is never whether you can maintain all your sovereignty. History says you can’t. “Throughout all of history, humans have always increasingly shared their destiny.” —Robert Wright, Nonzero.
If you are alone, you don’t need a political system. The government’s objective is to agree on how to coordinate. The more people there are, the more coordination problems arise and the more we need to regulate our interactions. The size of governments has always grown with the size of the problems to be solved.
It is no coincidence that the League of Nations appeared just after the First World War and the UN after the Second World War. The size of governance follows the size of the problems. Since then, a globalized financial system has given birth to the International Monetary Fund and the World Bank to help countries that need money in exchange for… a bit of their sovereignty. Or a lot, as Argentina knows well. The World Trade Organization coordinates countries so that they can trade better with each other, at the expense of some of their sovereignty. They can’t do whatever they want in commerce.
The only reason the World Health Organization’s failures have been so glaring during the pandemic was because the WHO was so necessary. Who cares about the failure of a useless organization? We care about the WHO because we realize that pandemics are not a national problem. They are global. The Delta variant did not care about the Indian soil where it was born. As long as countries let people in, I was going to travel with them.
In fact, the main reason the WHO failed is because of nation-states. They were China’s manipulation and its censorship of Taiwan; the US funding cut; all WHO governance that depends on dysfunctional nation-states.
But, eventually, alternative governance systems will emerge to fill the global pandemic coordination gap. Because this problem is not going away, and now we know it.
Something similar can be said about climate change. Why, despite enormous popular support, are most countries not taking enough action? Because that support has not translated into the political action that nation-states monopolize today. No wonder: nation-states were never built for global action. They are obsolete for the problems we need to solve.
But why can’t a community emerge in which citizens around the world can pledge their support to politicians who do want climate change policies? Why can’t they make that promise an automatic, public commitment on the blockchain? It hasn’t happened yet because no one has gotten to work. But it will be done. When that community emerges, will it be more or less powerful than nation-states? Or will it be simply another group that eats away at the sovereignty of nation-states?
:quality(85)/cloudfront-us-east-1.images.arcpublishing.com/infobae/GDNRY6J645AYZAMHLM6E5J2SPA.jpg%20420w)
We know that all this is going to happen because it already happened.
Before the printing press, Europeans spoke primarily to their neighbors in their local vernacular, while the Catholic Church spoke a universal Latin that gave them power. As the printing press began to publish in the most widely spoken local vernacular, that is, that of the largest cities, it accelerated the demise of Latin, while the local vernaculars of the most important printing centers slowly grew in popularity until become national languages that shared ideas and identity. This is what ultimately led to the emergence of nation-states.
Now that people can talk to anyone in the world, exchange ideas, and find like-minded people, their common identity will surpass that of nation-states.
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