Integrity: How the Blockchain May Lead to a More Egalitarian World
A macroscopic view of human history may swiftly bring the observer to conclude that wealth, power, and freedom have largely been beau monde ideals available only to a fortunate few. With the exception of small tribal communities, the agricultural revolution culminated with overarching consequences that greatly affected a majority of primitive social establishments, introducing sedentism and fracturing communities along occupational and, eventually, economic lines.
The agricultural revolution not only left in its wake a growing abundance of food at the disposal of burgeoning villages, cities, and states, but also the luxury of time for a subset of the population to shift its focus onto activities other than mere survival. Technological and material improvements followed, but as communities grew in size and complexity, social privilege did not often scale.
In the thousands of years that followed, kingdoms rose, shifted and collapsed, witnessing the rise of newer forms of governments, economic reforms, welfare states, mass education movements — all of which pushed humanity to hitherto unseen levels of technological prowess, global prosperity, and socio-economic mobility, but there still remained large swaths of our species that face constant and daily struggle in the form of material hardships, access to basic rights, healthcare, and education. In the 21st century, almost a billion people worldwide live on less than US$2 a day, while in drastically different polities such as India, Brazil, and America, the wealthiest 1 percent own more than the poorest 50 percent.
We may condemn these dismaying examples of unfairness, but we must remind ourselves that the eradication of poverty or even a tiny reduction of inequality cannot be regarded as an end in itself. Inequality is a systematic problem that has deep roots in the underlying structure of our civilization. With an unsteady foundation, the whole structure is prone to collapse. This is a frighteningly frequent occurrence in human history as far as uprisings, revolts and revolutions are concerned, which is why it should serve as a reminder for why these problems matter.
The 18th century Genevan philosopher Jean Jacques Rousseau pointed out that to be poor is to be powerless in society; to solely possess an inability to exercise control over one’s life. In the Social Contract, he argues against a system that encourages the powerful to amass the powers of tyrants, while the rest relinquish their souls to survive. But poverty is not limited solely to its economic or physical stresses. The state of destitution severely restricts one’s ability to organize, access information and education, and consequently stunts one’s mental development and overall potential as a human being.
However hard we try to ignore the existence of global poverty, its impacts are far reaching and ubiquitous. As a recent paper published by the IMF shows, economic inequality is detrimental to overall economic growth, further stating how the “narrowing of inequality helped support faster and more durable growth, apart from ethical, political, or broader social considerations.” In short, an unequal society is a stunted society and such a foundation creates only a weak civilization.
A Case for Integrity
To fight inequality we must understand the cause for inequality, and as seemingly complex as that endeavour may be, a prominent factor lies in the quality of our institutions. Corruption (loosely defined as the abuse of public funds for private gain) may be argued to be the most consequential crack in the foundation of any system. Corruption is not merely economic in nature; the most visible consequences of corruption are its effects on the economy. They typically lead from deficits in government revenue leading to misallocation of public funds, to inefficiency in the development of productivity-generating sectors, to losses in foreign direct investment, culminating in a lack of confidence in government policies and policy makers in general, which ultimately affects the public’s desire to pay taxes, leading to further loss of government revenue. It is a wicked downward spiral towards kleptocracy.
Corruption is anything but a new concept. In Greece, contemporary occurrences of corruption sometimes find themselves being compared with the ancient practice of exchanging gifts for divine guidance at the temple of Apollo at Delphi, a tradition which was openly criticized by Aristotle. The same practice was later adopted by the Byzantines and subsequently, the Ottomans who turned it into a tradition of requesting cooperation in exchange for baksheesh or ‘bribe’.
In Arthashastra, Kautilya’s 2000 year-old discourse on statecraft, the ancient prime minister advises his king to appoint officials that are “pure of character, of good health, kind and philanthropic, free from procrastination, free from fickle-mindedness, free from hate, free from enmity, free from anger, and dedicated to dharma.” In short, he advocates for a person with integrity. The reasons are implicit — where corruption goes unchecked, it has often lead to the formation of powers such as criminal syndicates, extremist groups, and local political interests that threaten the authority of central government, often forcing it to resort to armed warfare, plunging the country into civil war, causing mass political and economic instability in the region, and ultimately becoming a threat to global security.
[Corrupt governments] are incubators of terrorism, the narcotics trade, money laundering, human trafficking, and other global crime — raising issues far beyond corruption itself. — Ben W. Heineman, Jr., and Fritz Heimann, The Long War Against Corruption
Is There a Way Out?
There is hope that newer technologies such as the blockchain, a transparent yet secure method of storing data over a vast network of computers, might help mitigate and bring reform to systems where integrity is vital to success. Brought into the limelight by Bitcoin and other cryptocurrencies, the blockchain involves a distributed or ‘shared’ ledger that holds a record of transactions. The chain of blocks, each consisting of a hash of the data in the previous block, grows as more transactions are recorded chronologically and validated according to a set protocol by a peer-to-peer network of miners. The key characteristic of the blockchain pertains to its inability to be retroactively modified as that would necessitate further modification of all subsequent blocks in the chain. This key here is integrity, and that’s exactly why the concept of the blockchain begins to shine.
The immutability of data on the blockchain is further secured by keeping it decentralized, meaning exact copies of it are to be found on multiple nodes (computers) that form a global network. This also ensures that the blockchain is not controlled by any single entity. Since the blockchain is a public ledger, transactions are always searchable and can be easily tracked. Newer iterations of the blockchain allow for more complex and goal-specific tasks such as building decentralized applications, securing data, creating self-fulfilling (smart) contracts, and more. With these concepts in mind, it is easy to imagine the implications of this new technology upon mass-adoption by populations, corporations and governments.
Could the Blockchain Improve Bureaucracy?
Unlike fiat currency, the blockchain enables transparency in transactions. It may be further customized to eliminate anonymity, and hold additional data relevant to each transaction such as the original intent and recipient of the funds. Integrating these features with smart-contracts would enable the funds to be verified only as per the contract, ensuring they reach their rightful destination. Where developing countries are concerned, software wallets on smartphones may remove the necessity of bank accounts, further increasing the accessibility to cryptocurrencies in regions plagued with low confidence in corporate and government entities.
The thought that mass adoption of blockchain technologies might alleviate incentives for corruption is derived from the effect the Internet and subsequently, mobile phones, have had in mitigating corruption by positively impacting economic growth, encouraging investment in human capital, and acting as a source of information that lowers the incentives for illicit behaviour by public officials.
National governments have already acknowledged and anticipated the benefits blockchain technology could bring. The government of Estonia has been a pioneer in the implementation of the blockchain with its current collaboration with KSI. The United States, Brazil, Japan, and India, among a dozen other countries, are slowly following suit. While there is little doubt that adoption of the blockchain may impede corruption, it is important to note that the technology is still in a state of infancy. The Internet was only regarded as a general-purpose technology sometime in 2006. In many places around the world, such as rural Indian villages, the concept of uninterrupted power-supply is considered brand new technology, while access to the Internet is limited to smartphones loaded with a singular app — Facebook. However, witnessing the rapid pace of Internet adoption, it won’t be too unusual to subscribe to the feeling that blockchain technology and some of its most popular derivatives such as decentralized applications may soon become as accessible and commonplace as Facebook is today.
Naturally, where the Internet goes, the blockchain will soon follow, and with it, our dreams of a world just slightly more egalitarian will not be too far behind.
Disclosure: the following are affiliate links. Meaning, at no additional cost to you, I will earn a small commission on your purchase. This greatly helps support my writing.
- Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class by Jacob S. Hacker and Paul Pierson — Amazon
- Guns, Germs, and Steel: The Fates of Human Societies by Jared Diamond — Amazon
- Revolutions and Revolutionary Waves by Mark N. Katz — Amazon
- Institutional Corruption: A Study in Applied Philosophy by Seumas Miller — Amazon
- King, Governance, and Law in Ancient India: Kautilya’s Arthasastra by Patrick Olivelle — Amazon