Evolution of the Blockchain | Part-2

evolution-of-blockchain-part2

After part-1: The “autonomy” feature of the blockchain helps the government abandon the traditional “management-regulation” model and follow the “governance-service” concept. The so-called “autonomy” means that all nodes participating in the blockchain system follow the same consensus mechanism, without any intervention, freely exchange, record, and update data, and spontaneously jointly maintain the reliability of the entire blockchain system. And security, therefore, “autonomy” can also be called “co-governance”, that is, each participant is not a completely dispersed atomic type, but an organic part of the consensus mechanism.

British scholar Melanie Swan believes that blockchain technology can incorporate multiple stakeholders into the dialogue platform of public governance, enabling them to reach decisions and solve problems openly and democratically through a consensus mechanism. Will replace the complicated structure of the centralized management model. There are also scholars in China who advocate that blockchain technology can create an efficient administrative system for government departments. Different stakeholders will achieve equivalence in this system.

The role of government will change from manager to coordinator. The organization of government departments The structure will be flat, and social governance and public services will be transparent and intelligent. In addition, some scholars take “e-government” as the starting point, emphasizing that technological innovation and governance models can be combined to jointly improve the problems of the government in the past governance.  In this sense, blockchain technology is a reasonable extension of “Internet + government affairs”, and it can be developed into the infrastructure of a big data society in the future.

The application of the blockchain to e-government affairs coincides with the “autonomy” feature of the blockchain. Although the platform system was commissioned by the government, the government retreated behind the scenes after the various functions were set. During this period, only a few necessary coordination and guidance were provided, and the rest will be mainly completed by the public using the system to help themselves, as in the previous public service process.

A large number of manual verification, approval, and other operations involved will be provided automatically, and the public can manage and serve themselves. Form a good order of cooperation, effectively communicate and conduct in-depth dialogue on the basis of mutual trust and assistance, form a state of co-governance, and improve the effectiveness of social governance. 

Risk challenges in the development of blockchain technology

The characteristics of “decentralization”, “detrusting” and “autonomy” of the blockchain are essentially the same source and one, they are interpreted and related to each other, which is essentially an innovation of the traditional “centralization” model. As a new technology, blockchain has a very broad application prospect and will have a major impact on the original social order and pattern; but at the same time, it should also be noted that this innovation will also create new problems and have an impact on the original society. Both order and the blockchain itself place new demands.

“Decentralization” is essentially contradictory to the traditional regulatory model. At present, the supervision of blockchain is mainly reflected in the monetary system and the financial field, because it is related to a country’s economic order and the stability of the financial system. In fact, the current status of the development of digital currency has a great effect on the hype of capital and public opinion.

It has not yet been generally recognized by the mainstream international community, and its acceptance among ordinary people is not high. Therefore, in addition to the circulation in a small-scale investment field, the most important application scenarios of Bitcoin today are criminal activities such as money laundering, blackmail, and black market transactions. For example, in the global WannaCry ransomware incident in May 2017, hackers demanded victimization Those who pay for bitcoin to obtain a ransom naturally benefit from the blockchain ’s anonymous encryption of data encryption technology and the global integrated real-time clearing system.

Although a few countries and regions that recognize digital currency have basically introduced corresponding regulatory policies and measures, such as the anti-money laundering directive just passed by the European Union requires trading platforms and custodial wallet providers to conduct due diligence on customers to eliminate their anonymity,

That is, to fulfill the “KYC” rules that financial institutions should undertake, but the specific regulatory effect is uncertain. In view of the aforementioned ransomware incident, it is still difficult to lock down real payees in the prior art, not to mention the criminal elements to determine their illegal behavior.  In addition, in addition to the supervision of obvious violations, it is also necessary to regulate the technical rules themselves.

The “detrusting” function of the blockchain cannot overcome the “distrust” of the technical setup itself. The imbalance of rules based on technology packaging makes it more difficult to supervise because of its secrecy. Earlier, the US Securities and Exchange Commission rejected the application for listing of cryptocurrency trading funds, which was the reason why it was difficult to protect the legitimate interests of investors and the public because it could not effectively regulate such transactions, prevent fraud and manipulation. 

It is foreseeable that as long as a government cannot effectively supervise digital currencies, and cannot control and prevent the risks that may be caused to the existing currency system due to the widespread application of digital currencies, the legal status and development prospects of digital currencies will be There has been a mystery, and the imagination about its wider promotion and application, and even the replacement of fiat credit currency, can only be a fantasy. At present, the frequent price fluctuations of Bitcoin are due to the lack of supervision or the lack of supervision, which leads to its scope of use and actual impact not being large enough to be easily manipulated by individual speculators.

However, the paradox is that the supervision of digital currency and the application of digital currency are themselves a contradiction. The traditional supervision model is centralized and anti-anonymous, which is undoubtedly the essence of the “decentralization” of blockchain technology. The characteristics are contradictory; the deeper paradox lies in the different pursuit of value between the science and technology behind the digital currency and the regulatory system.

The former pursues a “deregulation” philosophy and advocates free and open-source, while the latter emphasizes risk prevention and resolution, Pursue the dynamic balance of efficiency, safety and fairness. Obviously, to reconcile the contradiction between the two is not just through the development of technology and strengthening supervision. If in fact, it is possible to effectively supervise the digital currency, then such digital currency is still its original “anarchy currency”? How is it revolutionary and innovative? If it is not supervised, the digital currency will not be recognized by national sovereignty, which means that the relevant public will not dare to express confidence in it. The lack of publicly recognized digital currency is just like the lack of nationally compulsory guaranteed credit currency.

The circular paradox of “decentralization” and “recentralization”. “Decentralization” is the main characteristic of the blockchain that distinguishes it from other traditional systems. In a sense, all of its innovative meanings also originate from this. “Detrusting” “autonomy” is just “going.” The significance of “centralization” under the empowerment of technical rules. However, just as there is no absolute truth in the world, the “decentralization” of blockchain is not so absolute. Although it is indeed possible to achieve absolute “decentralization” in technology and theory, the flow of resources and information in reality will promote the formation of new centers, thereby reducing the meaning and function of “decentralization”.

Digital currency mining pools and trading platforms are typical representatives in this regard. Although both of them have solved the practical demand that everyone can participate in mining and trading digital currencies, they have become a new centralized platform, leading to the result of centralization. Crisis and risk. There is a “51% law” regarding the security of the blockchain, that is, if you want to delete a transaction record in the blockchain system, you need to control more than 50% of the nodes or accounts of the entire system, which is in fact It is almost impossible to complete, but it is very easy to achieve for a mining pool with a large amount of access; once the computing power of the mining pool exceeds 50%, it can easily attack other mining pools, thus monopolizing the entire system.

The decentralization and detrusting of digital currency mining rights, accounting rights and distribution rights are impossible to talk about. In fact, this kind of crisis has happened more than once. Although it was eventually resolved by the mining pool actively taking diverting measures, and the mining pool also promised not to launch a 51% attack,  but such a crisis is like a constant hang. Like the sword of Damocles on the head of digital currency investors, it may cause panic in the market at any time. In addition, the shortcomings of the trading platform have appeared very early, it may be hacked, limited security guarantees , or because the operator rolls money, the trust mechanism is worrying , algorithm security is used for credit endorsement Digital currency is not absolutely safe.

Due to its scalability, the blockchain platform may promote the generation of new virtual power, which in turn leads to “re-centralization of real politics” . A small number of technical elites monopolize or dominate public affairs without obtaining any legal authorization or Subject to any supervision. As mentioned above, it is more difficult to supervise the technical rules themselves than to use technology to engage in illegal activities, because compared with the traditional model, the technical decision-making dominated by information centralization is less transparent and deceptive.

The connection problem between “smart contract” and the current legal system. In addition to facing the challenges of lack of regulatory system and blank regulatory rules, blockchain applications also need to overcome the problems of docking and coordination with existing legal systems in order to obtain formal legal status, which is mainly reflected in the application of smart contracts. Strictly speaking, the smart contract is not a specific application of the blockchain, nor a specific technology, but an application support function built on the basis of the underlying technology of the blockchain , which can be used in multiple scenarios Use in order to achieve the demand of “detrusting” in real life. At present, most of the discussions on smart contracts focus on how to implement programmable finance and how to replace intermediaries, while ignoring the coordination and compatibility of smart contracts with existing legal systems, especially with contract law.

First, it is about semantic interpretation and the effectiveness of expression. In real life, limited by semantic expressions and variability of objective situations, there are often situations that are not stipulated by law or not agreed by both parties, and legal regulations or contract terms need to be interpreted, and such interpretation often involves complex interest trade-offs And value judgment should be decided by a credible third party; but smart contracts rely entirely on programs written in a computer language to achieve verification and execution between parties, which will inevitably lead to a fundamental question whether the program code can Precisely express the semantics of contract terms and whether the contract terms can accurately express the meaning of the parties. If not, then how to interpret the semantics of the code, by whom, and the most critical point-whether it belongs to the contract law Recognized valid contract form?

Secondly, in the process of smart contract execution, everything needs to be ordered by the code set in advance, regardless of the real wishes of the parties. If a party makes a mistake or wants other options, the code program does not provide The modified alternative is that the so-called “intelligence” is not intelligent, so that the contract change, revocation and cancellation of the contract law can not be applied at all, and this is completely consistent with the basic civil law concept of “autonomy of will” established by the modern private rights society. Contrary to this, people cannot help worrying that smart contracts may also sacrifice certain fairness and freedom while improving efficiency.

Although the smart contract has achieved a certain degree of synergy between technology and law, it still needs further confirmation of the current legal system. A report on blockchain issued by Morgan Stanley in April 2016 shows that the financial banking industry adopts Blockchain technology will face ten potential obstacles, half of which require the support of the government or the existing legal system to be effectively overcome. However, the legal system’s feedback on social life is often lagging, and technological development is often ahead of schedule. Therefore, after the technology has changed the legal form, it still needs to confirm this change through the law. It must be said that this is also a paradox in the development of blockchain.

For example, when the blockchain is applied to social governance, there is a radical view that the traditional centralized politics and hierarchy will be replaced by new governance models and cognitive methods. As a new “power”, information technology will “liberate” the tradition “that power”.  This proposition obviously bears the color of technical utopia, ignoring the obvious gap between technical functions and actual reality, just as the decentralization of technology does not mean that the decentralization in reality can be eliminated. A node’s ability to reach a unique consensus on a certain transaction record does not mean that users can reach a unique consensus on the development of the entire system.

In reality, individual behaviors are often highly volatile and blind. Several forks of Ethereum This problem is fully explained. Due to differences in interests and values, the opinions of users in the community cannot be completely consistent. If it is applied to the entire society, the difficulty of consensus can be imagined. Although the Bitcoin network has not yet seen a fork, it is only a temporary result of many compromises and does not mean that it will not appear in the future. Judging from experience and laws, as long as resources are limited and interests are different, there will inevitably be differences.

Towards “Beneficial Mutual Construction” of Blockchain Technology and Society

Although Bitcoin was born as early as ten years ago, the blockchain has not really been in the public eye for a long time. As a new technology, its impact on existing social development, possible changes in social order and the future The multiple visions of the application have received extensive attention and discussion from the scientific, technological, financial, policy, and academic circles.

From the point of view of the topic heat and the innovative ideas it may bring, blockchain is undoubtedly of great significance. It provides a technical basis for redefining transaction and distribution rules, becomes an important carrier for the transmission of information value, and triggers a social governance structure. And model transformation. At the same time, we should also see that there are still many problems in the blockchain technology itself, which requires more time to explore and improve.

At present, some people have obviously placed too high expectations. In addition to being suspected of speculation, it is also likely to cause the public Or some practitioners have unrealistic fantasies about it, which is not conducive to the normal development of the blockchain. The three stages of the development of blockchain are not parallel evolutions as people generally think, but they are parallel at the same time.

Among them, the application of digital currency is the first to start, but it is far from mature, and various contract applications in the financial field and pan-blockchain applications in social governance and the Internet of Things are also gradually expanding. The development of blockchain technology should adhere to the “beneficial mutual construction” of technology and society, and technology research and development in related fields should move towards “responsible innovation”.

Digital currency cannot replace the existing currency system. Digital currency is the product of economic globalization and information technology. The control of the money supply through algorithms is very innovative; but for a long period of time that can be expected in the future, sovereign countries will not die, digital currency as a Non-governmental currency, the relationship with the central bank and the impact on the existing monetary system all need to be further explored. In a short time, for digital currency, the most ideal situation is more likely to be a supplement to credit currency, and cooperate with it to play a role, so that the currency system can better meet the needs of society for liquidity, so as to enter A new stage in the development of currency patterns.

The social device system suitable for the comprehensive application and embedding of smart contracts needs to be further improved. Due to the extreme complexity of society and the widespread uncertainty, the application scenarios of smart contracts are also relatively limited. It also only enriches the traditional contract system rather than its substitutes. Therefore, improving the rules and mechanism design of smart contracts, and actively promoting the evolution of smart contracts from “automation” to “intelligence” to promote their acceptance and recognition by the current legal system are the main tasks of smart contracts in the future.

Blockchain technology is only a tool to promote social development and cannot become the fundamental goal of social development. The emerging technologies or industries represented by the blockchain are actually means and tools for adapting to and achieving certain future goals, not the development trend of the future society.

Identifying whether it is a technological tool or a social goal and trend is of great significance, because if the technology is equal to the trend itself, then they are “unique” and have a “convergence effect”, and we may fall into “technology autonomy” and “technology determinism” You can only follow these paths and think about “how to realize and evolve these technologies to the extreme.” In terms of government governance and public services, the blockchain should be applied as a technical means rather than political theory in combination with current reality, and be vigilant into the trap of technical determinism.

In short, although blockchain technology has a major impact on the existing social order and pattern, and even has innovated and reshaped many aspects, it is only an improvement of the original system or model rather than a revolution. It still needs to rely on the existing system. Only by confirming and cooperating can it truly realize its potential value and release its due energy. Talking about ideas without considering the reality will lead to the development of the blockchain into a misunderstanding. On this point, both the practical and theoretical circles should be vigilant.

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