23
Jul

You do know blockchain – but what if I say cypherpunk?

Written on July 23, 2018 by Campus Life in Professional

Today we discuss the bigger picture, given Internet culture and its evolution, on why decentralization matters.

As far as mid-2018 goes, nominating Bitcoin makes some people’s eyes roll over, simply because of the media heat wave that we all have observed in the last year, especially. What this post is meant to focus on is to focus on the historical perspective that led to the technological revolution that resulted in the birth of cryptocurrencies, and more specifically how this entire narrative is located within the broader open source context. Open source makes up for a vast majority of the data that is available on the Internet – a few examples that come to mind include Android and AWS.

Open source really traces back to the three decades ago, the MIT and the anti-copyright movement, which then evolved onto liberal political discourse that concentrated mainly on the extent to which there should have existed a higher degree of freedom of movement of information in code, counteracting more traditional views tied to seeing code as a personal asset. The crypto movement, in several ways, is similar to this, probably in a more libertarian fashion. It essentially morphed into a technological movement, advocating for new kinds of shared digital services that are possessed and made possible by a community, as opposed to software owned and operated by a company.

Several of those principles stated in the late 80’s and early 90s are, astonishingly, just as applicable today. The cypherpunk movement essentially advocated for cryptography and its power to be leveraged so that people may dispose of more justice, privacy and individual freedom. A counter movement, aka the US government, blocked exporting cryptography. Once the movement won this legal battle, the stage was set for someone to understand this latent power in technology and develop upon it. Come Halloween 2008, and Satoshi Nakamoto released Bitcoin’s white paper; unsurprisingly, nobody seemed to care, except for a few wisely pointing out to scalability issues.

What’s interesting to observe here is that the Internet united groups of people who are scattered across the globe, and yet sharing similar political, even ideological views that span across the immanent realms of technology and philosophy. Cryptocurrencies seemed to be the missing link that pieced their interests and their beliefs together: Internet is already ruled by decentralized protocols, and yet we see the issue connected with the power concentrated among those that control the algorithms that govern those networks where information is shared daily in massive quantities. This highlights an evident oxymoron in the industry: while open source is so big and spread out, few companies managed to concentrate power among themselves; lots of the crypto movement members, hence the open decentralized protocols they created, share a reactionary nature to what’s happened.

While much of the press coverage focuses extensively on the anecdotal features surrounding “get rich now” news, price movements and their relative percentage changes, and it is indeed true that some people did get rich from trading on crypto, fewer concentrate on the story behind the anarcho-libertarian reasons underneath the very existence of blockchain. Because of this, large shares of capital entered the industry as a whole only years after, when it was clear and people understood that this system could be fueled, would have turned a profit and had the potential to create completely new ways of doing business. Open development can now enjoy the same type of funding, and hence mass scale applicability, like regular tech companies do. One of the reasons why some of them became such giants lies in the fact that they could enforce a positive circle in which they could create massive margins, feed them into additional product development that could create and refine more cash points, and start over again.

A key feature that makes these networks possible is the rather profound notion of a structure that provides for full alignment of incentives, the underlying mechanism that keeps the networks healthy, getting each peer to participate in the activities that keep the system as a whole running. Much of the latest research on the field is mainly concerned with the game theory behind the design of certain systems: in order to make each peer’s payout higher in the event in which it cooperates, as opposed to acting in an individualistic manner, each node is made both a consumer and a producer.

Today many new standards are being adopted and, as most insiders will tell you, we are just getting started. To expand more on the incentives’ side, as well as how transactions are being validated, I invite you to research on Proof of Work and Proof of Stake. Although these are the main ones that you’ll find in a vast majority of cases, you’ll soon find that newer protocols and smart contracts are being developed as we write (or read), such as Proof of Retrievability or Proof of Replication and Space-time.

The industry appears to be in the same position where the Internet was in the mid-1990s: everything is still up for grabs, and there is a major section that’s still left unexplored!

Lorenzo M. Zorzi Chiarioni – Master in Management
IE Blockchain Club

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