Hamish Cunningham, January 2022
Hello! I want to say many things, but the one closest to my heart is that we need a revolution to save us from climate change! Revolutions come in many shapes and sizes, and the blockchain revolution until now has mostly been about fixing the financial system. That’s part of the promise of Cardano, and I honour that mission. But I also believe that there’s a bigger prize within our grasp, which is to revolutionise the democracy of my country, and others like it. We are lucky enough to have a fragment of political democracy, still much better than nothing, but really not what it claims to be. When we look at Catalyst, and the energy and engagement that it has generated amongst tens of thousands of people, we start to see how real democracy can work. And if you believe in people, then that’s a prize bigger than any other 🙂
Anyhow, whether we agree on that or not, we can probably all agree about one thing: we’re in a mess. Forest fires, floods, zoonotic diseases: if you’re not worried, you haven’t been paying attention 😦 We might even start to feel that we’re up a pretty smelly small stream and have neglected to pack the full complement of propulsion devices.
It may be harder to agree how we got into this mess (“I thought you were bringing the paddle!”), and what to do about it (“I’m not swimming in that!”), but one thing we might agree on is that we’re going to need a different way to organise money, and wealth, and finance. I believe that the Cardano blockchain is probably our best bet to replace our broken financial system; this post tries to explain why.
Austerity, Assets and Printing Money
I went for a ride around Blackburn Meadows nature reserve yesterday, which was created on part of an old sewage processing plant in the Don Valley between Sheffield and Rotherham some twenty years ago. There was a little money available for this type of project around the turn of the millennium, and Sheffield City Council spent around £25k on fencing, a bit of landscaping and a few benches. Now the site is of national significance for nesting birds, and contributes a much needed green space in what is otherwise a very industrial (and often polluted) landscape. For a metropolitan area of around 1.5 million people, that sort of spending is miniscule — but riding around the reserve it was clear that the money to maintain it has not been available for years (probably since 2008 and the subsequent “austerity” programme that justified the latest round of cuts in public services [Varoufakis 2021]).
We have money to spend on banks. We don’t have money for the health service, or social care, or education. The various “quantitative easing” (QE) programmes, where central banks buy securities from Big Finance at above their market price, work to pour money into the pockets of wealthy organisations. This ran to some £1 trillion in the immediate aftermath of 2008, and over the 18 months since covid started the big four central banks spent nearly $10 trillion more [Atlantic Council 2021] by buying bonds. That’s around £10 million per minute being paid to the hedge funds and investment banks and billionaires (counting only four countries). The result was massive asset inflation:
What QE did do was fuel a new speculative bubble in financial assets, with stock and bond markets hitting ever new heights. As a result, the very rich who own most of these assets became much richer (and inequality of income and wealth has risen even further). And the very large companies, the FANG (Facebook, Amazon, Netflix and Google) in the US, became flush with cash and doubled-up on borrowing even more at near zero rates so that they could buy up their own shares and drive up the stock price, hand out big dividends to shareholders and use funds to buy up even more companies. [Michael Roberts, 2017]
By 2021 this meant that, for example:
The richest 1% of US households now own 53% of all equities and mutual funds held by American households. The richest 10% own 87%! Indeed, as another study shows, the super-rich 1% in the globe have increased their wealth hugely during the pandemic, particularly in places where households have suffered most from the impact of the pandemic, like Russia, Sweden, Brazil, India and the US. [Michael Roberts, 2021, reporting the annual Credit Suisse Global Wealth Report]
So: on the one hand we’ve had austerity, “we can’t spend anything!”, and on the other quantitative easing has been the biggest cash giveaway in human history. Perhaps not all is quite what it seems? Perhaps austerity was really about opening up health and education to private companies? Perhaps QE is about keeping the asset bubble that blew up in 2008 from popping again? Is this what humanity needs from a finance system, or is this how the 1% (or the 0.1%) keep things rolling along in the way that suits them?!
Business as usual is destroying our climate, and action for change is often met with insincerity and political corruption:
“Build back better. Blah, blah, blah. Green economy. Blah blah blah. Net zero by 2050. Blah, blah, blah,” [Greta Thunberg] said in a speech to the Youth4Climate summit in Milan, Italy, on Tuesday. “This is all we hear from our so-called leaders. Words that sound great but so far have not led to action. Our hopes and ambitions drown in their empty promises.” [Greta Thunberg, 2021]
What to do?
Build the Road as we Travel
There are two pieces of good news: first, the way that digital fabrication, or “maker tech”, is spreading, and second the possibility of building new social structures using the decentralised consensus mechanisms that are starting to emerge from the blockchain. If we bring these two together I think they have the potential to show us a way forward.
A few years after I started learning about computing, development of the transfer protocol that lead to the world wide web started, and by the time I’d reached my first decade in the field there was such a thing as a web browser, and the transformation of information sharing from an activity involving dead trees to one requiring only the merest caress of a touchscreen was underway. Fast forward a couple of decades and a parallel transformation began, but this time in the world of atoms instead of bits. Digital fabrication has given us the ability to share, modify and rebuild almost anything, in the same way we can publish anything.
What if we can democratise the creation and recreation of the physical world? What if we can devolve manufacturing to individuals and communities?
If the last 20 years were about the web, then the next 20 will be about making. Why? Ubiquitous connectivity and decentralised production in the virtual world have made revolutions in creating, sharing and consuming on-line. Now the same changes are starting in the world of manufacturing, and the consequences are likely to be massive.
Remember how hard it used to be to publish? Photocopiers spawned a whole generation of fliers and fanzines, but the big-time of global distribution used to be a very closed world. When we publish we share, and the web has let us share as never before — but, until recently, we’ve mostly used the web to share information (in the form of bit streams of one sort or another). The next revolutionary wave of technology brings the ability to share into the physical world — it brings the information revolution from bits to atoms. And as Chris Anderson writes in his Makers, the physical world dwarfs the virtual. (The title and the theme echo Cory Doctorow‘s Makers; read them both!) There’s perhaps an 80-20 ratio between economic activity devoted to atoms in comparison to bits.
Capitalism drives innovation, which brings with it continual waves of technological revolution. (The unfortunate thing, of course, is that it doesn’t do this in service of human need, but as part of the competition for corporate profit — hence our inability to stop the degradation of our environment, or the banker-oriented response to the economic crisis, or the continual wars over oil in the Middle east. This isn’t about bad people, or even bad ideas — it is the central logic of the system that revolves around competition between vast corporations, and everything else is secondary. See Joel Bakan‘s The Coporation for a good description of how this works.) Anderson’s book quotes Cory Doctorow saying that increasingly “the money on the table is like krill” — many many tiny chunks of nutrition that suit a new type of sieve, smaller and more distributed (a “long tail”). Both authors imagine the changes that will take place when the means of production become minituarised, localised, and — in a sense — democratised. At least under some circumstances the small and the open and the fast moving can sneak beneath the corporate radar long enough to become viable alternatives — like my friends at Pimoroni in Sheffield, for example, who sold tens of thousands of locally-made boxes for the Raspberry Pi.
The new methods of manufacturing (CAD-CAM designs driving CNC routers, 3D printing, laser cutting and the like), and the new culture of open source and dynamic virtual organisations can start to challenge corporate dominance, at least around the edges. China’s explosive growth and its willingness to ignore the west’s definition of “intellectual property” helps too (though often bringing with it the labour relations of the sweatshop).
Anderson talks of a “future where the Maker Movement is more about self-sufficiency… than it is about building businesses…”. This, he says, is “closer to the original ideas of the Homebrew Computing Club or the Whole Earth Catalogue. The idea, then, was not to create big companies, but rather to free ourselves from big companies” (pp. 225-226).
We can also make a link into the argument for localist economics made by organisations like the Transition Network (e.g. in Rob Hopkins‘ books) — peak oil, social instability and environmental crisis all point to the local and the small scale as a key source of sustainability and resilience. The more stuff we can manufacture within short distances of where we live, the safer we are (not to mention the saved carbon in long-distance transport).
Welcome to the future — perhaps it will be of our own making 🙂
There’s an organisation in the North of Spain called Mondragon, which used innovative cooperation models to build a company with €10 billion revenue, and became an “outstanding example of building a cooperative social system within the context of a now global market economy”. We can use Mondragon and other coops to show how “freedom and community are fundamentally interdependent and indivisible” [We Build the Road as We Travel, Roy Morrison 1997], and, some 70 years on from when it was founded, find a model for combining blockchain with democratic and community control. Which is where Cardano comes in…
Cardano is a 3rd generation blockchain that hosts one of the biggest cryptocurrencies (ADA, or ₳). It doesn’t waste lots of power (like Bitcoin) as it uses staking (instead of mining), so it isn’t driving carbon emissions like the previous generations of the technology. Even better, Cardano has an explicitly social mission, and it is building infrastructure around the blockchain that can form the bones of an entire financial (and cooperative) system.
Writing in The Register about the disadvantages of the new centralisation of the internet that has arisen from Big Tech in recent years, Bruce Davie contrasts the baked in decentralisation of the original design with the increasingly brittle outgrowth of social media and search monopolies [Davie 2021]. He refers to Chris Dixon, who contends that
there is a growing movement — emerging from the blockchain and cryptocurrency world — to build new internet services that combine the power of modern, centralized services with the community-led ethos of the original internet [Dixon, 2021]
Dixon also provides a nice definition of blockchains that, unusually, incorporates their (necessarily) active computational dimension:
Blockchains are networks of physical computers that work together in concert to form a single virtual computer. The benefit is that, unlike a traditional computer, a blockchain computer can offer strong trust guarantees, rooted in the mathematical and game-theoretic properties of the system… This means that the control of a blockchain computer can be placed in the hands of a community. [Dixon, 2021]
(Our SHiFT stake pool provides several of the few thousand servers that currently run Cardano. Our community doesn’t need to trust a single organisation like IOG, or a small set of independents running massive mining operations like Bitcoin: the infrastructure is spread worldwide and guaranteed by the mechanics of the chain.)
Further, if we reach a stage where cloud services are guaranteed by community consensus audited via the blockchain then
blockchain and cryptocurrencies can do for cloud-based services what open source did for software. It took twenty years for open source software to supplant proprietary software, and it could take just as long for open services to supplant proprietary services. But the benefits of such a shift will be immense. Instead of placing our trust in corporations, we can place our trust in community-owned and -operated software, transforming the internet’s governing principle from “don’t be evil” back to “can’t be evil”. [Dixon, 2021]
The mechanism that Nakamoto made famous in Bitcoin rests upon the concept of decentralised consensus: a form of truth grounding that can work reliably in adversarial environments. This mechanism allows cryptocurrencies to deal with the double spending problem, for example, but its applications range far beyond those currencies, including:
- Digital identity. The success of TCP/IP, the foundational Internet protocols, has been largely due to their decentralised operation. The advent of a much more centralised net that relies on the FAANG crew is not proving to be a step forward. For example, yesterday an accidental (or over-automated) configuration change at Facebook caused their Border Gateway Protocol routes to disappear, and for the next 5 or 6 hours there was no Facebook, Whatsapp or Instagram. (Here’s a nice visualisation of the routes disappearing.) Cardano’s Atala PRISM digital identity solution can perform the same type of simplified identity management that has started to be a feature of many websites, while vesting control and ownership in individual hands (via the blockchain). And if we imagine this combined with Tim Berners-Lee’s Solid project then we start to see the solution to the privacy and data piracy madness that currently surrounds the Facebooks and Googles and etceteras.
- Sustainable governance. Cardano has a built-in treasury, where a proportion of minted (or staked) ADA is kept aside and allocated via a voting mechanism (modelled on liquid democracy). The treasury provides a key part of the sustainability profile of the chain, whilst also supplying the foundations of a cooperative community governance mechanism.
- Catalysed development. As a first step in this type of democratic governance, the Cardano Catalyst community is now in its 6th round of funds distribution to projects that propose additions to the Cardano ecosystem. Participation is high, with 10s of 000s of users contributing to community discussion and ranking of proposals (using the Ideascale platform). Where Cardano needs new peripherals or ecosystem services or just a better documented API the Catalyst community can generate projects to fill the hole, in the same way that open source has driven computing innovation via cooperating communities.
If we put this together, what do we have? All the makings of a decentralised, democratic, sustainable financial system that doesn’t rely on Big Tech (or nation states, for that matter). Add that to decentralised and democaratised manufacturing and doesn’t that start to give us a chance of independence, of the power to turn away from destroying our world?
Maybe there’s some hope up this creek after all 🙂
You can call our current social system capitalism, or neoliberalism, or globalisation, or, if you really want to, Ermintrude. The essence of it in any case is a set of parameters for ownership, wealth, and the continual recreation of the preconditions of our existence — food, shelter, warmth, etc. Generally speaking, the dominant voices in our media-mediated world (and also sometimes even in our funding-driven academic discourse) contend that any adjustment of our current set of parameters will inevitably lead us to disaster. This has more to do with the fact that although only a tiny number of people are well served by the current status quo, unfortunately they are also very powerful (especially now that anyone with large amounts of money can buy social media posts at approximately $0.01 per million!). So the road to a better future is hard to find on the currently available maps. No satnav will deliver you to sustainability, no what3words will point you to a safe future for yourself and your family. What we have to do is build that road to safety ourselves: to build the road as we travel along it. Luckily we have a lot of giants’ shoulders to stand on — and Cardano is becoming one of those foundations.