Blockchain Can’t Be Evil! Or Can It Be?
Blockchain technology seems to be the key for a better future when it comes to privacy and freedom. Surely, pure technology itself promises the potential but the question is “Are we really comfortable with it?” In short span of time privacy based financial applications has shown some potential which engaged the attention of BigTechs and governments a.k.a. new players of the ecosystem. And now, a new chapter begins…
From the beginning of the human race, our ability to analyze has been dramatically improved thanks to the developments in communication technologies. In retrospect, the way humans learn from their experiences has shaped the way of valuing the data itself. In early ages, human beings must find a safe place to live, hunt to survive. Every attempt they’ve made has transformed to data that thought them new ways to improve their survival abilities which passed down from generations to another. With the invention of writing, data has transformed into an asset that can be stored and shared with limited capacity.
In medieval ages, data have seen in many different forms. Sometimes it was just the writing on the book, sometimes it was the money or a war strategy or even a manipulated information that led big empires to fall. After the inventions of telegraph, radio and telephone, in the near future a new player, computers, who offered a new digital way to store and share the data.
Computers has been used as a digital data storage with high computational power in the first days. Then we met the internet, a network created by computers with high data storing and sharing skills. From that moment people started to collect more data. Thanks to computational power, data analysis exercises has started. It was the beginning of a new era, data become an asset that worth more than we can imagine. Web 1.0 was mostly full of static internet pages that stores information. With Web 2.0 people started to interact with the web pages and started to share information to the computers and algorithms. Smartphones has became an indispensable communication tool between a human being and the world. Also it was the perfect gadget for the data collection. Analytics become more crucial while people creating such enormous loads of data.
With the development of technology, people’s ability to measure data and interpret it through analytics has increased.
- Devices → With the concepts like internet of things (IoT) more data is collected than ever before.
- Networks → More data aggregated in networks more than ever before.
- Systems → More data is being processed, analysed than ever before.
As the data processed, mass behavior control was paved.
More data means more measurement, and data analytics systems create the opportunity to exercise control.
- Data→ With the concepts like internet of things (IoT) more data is collected.
- Measurement → With more measurement activity, analytics and control mechanisms are evolved.
- Mass Behavior Control → With the personal data processing, control of mass behavior is paved.
What does Blockchain have to do with all of these?
Before we begin let’s refresh our memories with the definition of blockchain.
Blockchain: A digital distributed ledger, comprised of unchangeable, digitally recorded data in packages called blocks. Each block is then “chained” to the next block using a cryptographic signature. This allows blockchains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permissions or consensus.
Although the blockchain technology is at it’s early stages, it is very clear that blockchain is the perfect infrastructure for data collection and storing. A distributed immutable ledger backed by mathematics and cryptography that only permissioned parties can access data.
Cryptography is about eliminating trusted third parties. Blockchain technology applies cryptography to transactions.
- Decentralization → no single point of trust, no single point of control (no central authority).
- Security → non-repudiation and irreversibility of records.
- Reliability →resistance to outages and manipulation.
- Auditability → participants can verify the veracity of records directly, without external querying.
Future of Money… Who will be in charge?
Bitcoin: A Peer-to-Peer Electronic Cash System, is the first ever privacy-driven implementation of blockchain technology which aimed to solve double spending problem and give control to peers by eliminating trusted third parties. As a public permissionless blockchain, every transaction took place in bitcoin network can be tracked. Since bitcoin and other cryptocurrencies are still not adopted and approved by most of the regulators, Central Bank Digital Currency (CBDC) have become a popular approach for the future of money.
Even bitcoin has it’s own anonymity maneuvers, it is possible to expose one’s personal data with joining the parts together. In October 2013, Forbes reported that the FBI owned 1.5 percent of all the world’s bitcoin. This amount of bitcoin gave them the ability of expose the id of criminals and bring them to justice.
What if this power is used for malicious intentions?
Money will be transforming yet again in the upcoming years. Central banks all around the world are creating a concept called Central Bank Digital Currency (CBDC). To put CDBC in simple terms, it is a stable digital value that lies on blockchain technology, with less cryptographic elements established by central authorities. Before examining the CBDC infrastructure let’s check the similarities between cryptocurrencies and cash.
Similarities Between Cryptocurrency & Cash :
- Accountless, bearer instruments, with cash-like payments. Everyone is obliged to protect their own value. Currency is held locally.
- No permanent record of transaction counter-parties (maybe). The value is exchanged directly between transacting parties. There is no intermediary and there are many currency options.
- Everyone’s money is as good as everyone else’s. It can be used anywhere it is accepted.
Apart from apart from cash and cryptocurrencies, it is possible to track money transactions in other payment methods in practical terms, which could pave control of mass behavior. That’s why blockchain platforms, central banks and BigTechs are in a race when it comes to payment solutions. As far as we know, CBDC architectures are mostly in favor of monitoring whole system. For the sake of privacy, an approach from Geoff Goodell and Tomaso Aste suggests the architecture below.
This approach suggests a schema that transactions between banks and users are visible and traceable but in contrast, transactions between users are staying anonymous. Meanwhile, European Central Bank (ECB) has published In Focus Report Issue No:4 about a proof on concept which shows it is possible to construct a simplified CBDC payment system that allows users some degree of privacy with a digital gizmo called “Anonymity Vouchers”. But still user’s data will be exposed if he/she runs out of anonymity vouchers which allow users to anonymously transfer a limited amount of CBDC over a defined period of time. Facebook has came up with the idea of Libra, a blockchain-ish global currency and financial infrastructure which is said to empower(!) billions of people.
To find the best solution for pursuing our sovereignty, we need to educate ourselves first.
Education is the Key
In the world of data, our digital footprints defines who we are and it is crucial to be aware of . Regulations such as General Data Protection Regulation (EU) 2016/679 (GDPR) are belong to Web 2.0 and it is not encapsulating the concept of Web 3.0 wholly such that there are very few regulations which can be applied on incompetent blockchain applications.
Blockchain technology is still on it’s early days and there are lot more to come in the near future. That’s why it is the best time for creating a communal knowledge base. For instance, in China, one of the leading blockchain technology country, an Introduction to Blockchain app has been rolled out which encourages the public from civil servants, to stay-at-home moms about the study of blockchain. What a great way to catalyze a national blockchain movement.
Last Words
No matter how you related to blockchain technology, it’s our duty to create content to enlighten the ecosystem from some point. Creating awareness about the blockchain technology will give us a chance to deal with the problem from many aspects such as privacy, performance, functionality, regulations etc. Thus we can cooperate to create better solutions for our future.
This article is highly inspired by Geoff Goodell’s presentation which had taken place at Blockchain Turkey Platform (BCTR) first anniversary on 24th October 2019 in Istanbul, Turkey.
