There are two complementary views of the Distributed Ledger Technology [Blockchain]:
DLTs are the next step in the post WWII cyber-technological evolution – transistors, computers, Internet, wireless and mobile devices – and now…AI-enabled Blockchain.
This is obviously a valid view, since the Blockchain has already lead to productivity improvements and more importantly, novel products such as crypto-currencies and especially and significantly, new business models such as ICOs.
The complementary view is that DLTs are a once in human history kind of innovation, that will transform human society through a new type of economic and governance institution.
Markets, Governments, Limited liability joint-stock owned Firms, Commons based community governance – and now…..AI-enabled DLT. This view implies a multi-stage evolutionary process ending in a long-term transformative impact on society.
Governance – a stylised history
One way to interpret world politico-economic history over the last few centuries is to see it a record of governance innovations. And the governance innovations we’re focusing in on for the sake of this analysis is: the ‘promotion of Trust between interacting strangers’ so as to solve coordination problems and the challenges of collective action.
1. Religious traditions evolved from the Mythologies of the pre-Stone Age and Neolithic era. Recognising their potential to solve coordination problems, societies, local governments and eventually empires had appropriated these religious traditions as a binding glue for promoting coordination solutions to collective action problems.
2. In the post-Middle Ages modern era, well-functioning nation-states with strong state capacity emerged – as a serious alternative to religion-based empires – to provide this coordination with a large number of strangers and across vast spaces. And of course, starting with the Peace of Westphalia the age of the nation-state began its ascent and eventually, with the First World War, the age of empires completely ended.
3. The last 100 years have seen the dominance of the nation-state – both internally with the rule of law as well as internationally with the agreements between the sovereign states – as the main governance structure to solve mankind’s coordination problems.
4. It is in this context that we need to visualise the Crytpo – revolution as a Governance innovation for ‘promoting Trust between widely dispersed strangers’.