Blockchain technology - a modern threat to freedom or a road to a separate peer-to-peer based decentralised economy

The Sharing and Decentralised Economy: P2P - Our future?

Society should be changing from hierarchical and institutional based trust to a more peer-to-peer and heterarchical trust as weirdly since the dawn of the internet, over the last decades the world has become more hierarchical and institutional trust-based, perhaps due to excessive trust in algorithms and in the validity of information on the web even though it is algorithmically overly-dominated by powerful institutions . However, technology also offers ways to make the word more heterarchical and peer-to-peer trust based and to restore a more healthy equilibrium through a sharing economy.

Far from perfect - reviews, rating sites and blogs are now new sources of trust that the public relies on, which is great – in theory like having the opinion of fellow-colleagues and friends – though too easily corrupted; for instance it is far easier for a business to sue an individual for leaving a bad google review than it is is for an individual to sue google for removing a valid review. Equally it is relatively easy to hack rating systems and money buys algorithm power. On the other hand, the freedom of the internet and information age mean the media, government and powerful institutions, such as banks, are now by many widely and ever-increasingly mistrusted. The only issue is the internet is regulated by the tech industry and that’s becoming the new institutional power. But once more, there are some positives to that, some tech elite want to regulate it cleanly – and blockchain and peer-to-peer came out as a result of that.

What is Peer-to-Peer (P2P)?

Centralised systems are more institutional based, whilst decentralised systems are heterarchical. Thus, a sharing and decentralised economy seems to go hand in hand.

A peer-to-peer (P2P) service is a decentralized platform whereby two individuals interact directly with each other, without intermediation by a third party . Thus, P2P services require no middle-man, intermediaries or central server.

These services are the life-blood of the sharing economy (or decentralised systems based economy) and are becoming more and more visible in our times. Starting with transportation and accommodation, Airbnb and Uber are now competing with hotels and taxis, and providing customers with much more affordable options. They are only effective due to their peer-to-peer rating systems and are just the most famous examples. Other examples include BlaBlaCar, Couchsurfing and EatWith.

However, could peer-to-peer systems, so effective for the travel industry, be even more important in the future for other sectors, such as our financial and energy systems? And are these peer-to-peer systems already put in place, such as Uber and Airbnb, only the beginning companies in their fields, ready to be developed and fundamentally modernised themselves, and made less exploitive?

P2P Potential under Ethereum

The answer seems to be an inevitable yes to both these questions, but equally advancements have been so painfully slow it raises doubts. If inevitable, we can only hope the next level of companies and other industries advance all of a sudden faster, because otherwise everyone is just presently losing out based on a lack of innovation and unnecessary resistance. One such industry is blockchain technology. The 2007 financial crisis perfectly illustrated how vulnerable the economy is when powerful institutions make mistakes, and certainly led to a drastic fall in the public’s trust of banks. Bitcoin is a blockchain based service offering the alternative and gaining popularity amongst experts, especially following central banks dreadful overuse of QE and zero (or even negative) interest rates.

However, bitcoin is just one use of blockchain technology. It may be a matter of time before Blockchain technology revolutionises or at least has a significant impact on the sharing economy. Various crypto-companies in the mid-2010s popped up offering DAO alternatives to Airbnb, including companies such as Slock.it and CryptoCribs, and in this decade, in 2021 DTravel was launched. One of Slock.it’s blog posts explained it’s purpose well -’With Uber, Airbnb, and others leading the way, we have to ask ourselves, ‘Is this how we want to build the sharing economy?’ Monopolistic companies that take extraordinary fees and have full control of the market?’. The company´s goal was to make it possible for people to rent, sell, and share their property without having to use intermediaries such as Uber or Airbnb. Instead of having to go to platforms like Uber and Airbnb to get matched up and pay, the whole process would be done through a lock connected to the Ethereum blockchain placed on each item and all transactions would be automated with smart contracts. Unfortunately, Slock.it never lived up to its potential though and became best known for having created on the Ethereum platform the infamous Decentralized Autonomous Organization (or DAO for short) which was essentially the worlds first large decentralized venture fund, but also victim of the largest and first serious hacking of the Ethereum network (which Ethereum had to handle well to survive, repel and adapt to).

There are multitudes of ambitious projects on the horizon or ones that have attempted to gain ground and succeed. Iconomi wanted to be the ‘uber for fund management’, Chronobank aimed at ‘disrupting the HR/recruitment/finance industries [just like] Upwork represented an evolution in freelancing’ and other projects have tried to provide decentralised versions of netflix. Essentially, the peer-to-peer blockchain industry represents a consumer and worker fight-back against corporate powers.

Most such companies rely on the Etherium network, ‘a nonprofit and open source project’ created by Vitalik Buterin, most famous for its digital coin called ether, launched in 2015. However the most important part of Etherium is that it serves as a base layer for developers to build any decentralised application and any smart-contract they want, including issuing their own coins (ICOs). Unfortunately the ICO movement somewhat broke down shortly after it started, as a result of initial over-excitement when Etherium remained in its infancy and not ready for such scale infrastructure-wise, and from public distrust, after some developers became greedy and fundraising thefts occurred and meme coins became ridiculously overly hyped, explaining why progress in this field has been somewhat slow despite being in theory fantastic.

Technicality-wise, Etherium is designed to eliminate the middle-man and built for applications that can operate purely from peer-to-peer networks. There are two accounts; ‘externally owned accounts, controlled by people’s private keys and containing no code, and contract accounts, controlled by their code. Every time a contract account receives a message, its code activates, allowing it to read and write to its internal storage, send other messages, or create new contracts. This leads to another key difference with Bitcoin in what Vitalik called the “first-class citizen” property of Ethereum—the idea that contracts have equivalent powers to external (or people’s) accounts. This makes running applications with self-executing code easier, as there’s no need for someone to pull the trigger.’

It’s creator Vitalik Buterik believed Ethereum allowed applications ranging from ‘digital currencies, hedging contracts, a domain-name system, a reputation system, a shareholder-run corporation where decisions on where to move funds can be made by a quorum of investors’ and recently he expanded the key uses of Ehereum to work seamlessly with zero-knowledge technology, decentralised social networks, prediction markets, peer-to-peer cross-border payment systems, and enterprise applications (zk validiums) and governance (zk-powered censorship-resistant voting).

This all sounds technical but these are actually simple concepts to understand. Zero-knowledge technology is based upon zero-knowledge proof, which enables more secure and private transactions and should help counter-balance overly aggressive corporation tracking of financial human behaviour. ‘Zero-knowledge proofs allow for the verification of information without revealing the underlying data.’ Likewise, decentralised social networks is an exciting concept that would remove the control of monopolistic centralized entities like facebook and instagram, ‘addressing many of the privacy and censorship concerns associated with traditional social media platforms’.

Peer-to-peer cross-border payments reduces the complexity and cost of international transactions and offers ‘a more efficient and accessible alternative to traditional banking systems, particularly in regions with limited financial infrastructure. decentralized social networks’. Zk- powered voting systems likewise will help in regions where rigged elections are rife, such as Venezueal, as it ‘can offer secure and transparent voting mechanisms, which could transform governance and democratic processes by ensuring that votes are counted accurately and without interference.’

It is vital to remember, as Camila Russo , author of ‘The infinite machine’ (a book on Ethereum), points out 'people are handing over all the minute details of their lives, including second-to-second GPS location, private chats, and surreptitious recordings of conversations, and these companies are profiting from that data. Blockchain technology offers an alternative to that dark future, where people would take back control of not just their money, but their personal information, too.'

Ethereum is above all inclusive, as Camila Russo also highlights well - ‘before, anyone who wanted to buy stock in big tech firms like Facebook or Google would need a US bank account; things got even more complicated for those who wanted to invest in startups that hadn’t gone to the public markets to raise funds. Now anyone could be an investor in one of the most cutting-edge technology companies out there. All they needed was an internet connection and at least 0.01 bitcoin.’

Monero, the privacy block-chain coin - a total contrast to Bitcoin

Bitcoin is a currency that records forever in one chain every transaction that is made, hence it was promoted as a perfect coin to crack frauds and provide transparency - sort of the opposite of tax havens. However, the existence of other blockchain coins equally threaten such financial transparency, but instead provide financial privacy. Monero is the most famous privacy coin, meaning users can still manage to potentially be anonymous in the bitcoin network, if they have converted their bitcoin in a circular way with Monero, an effective privacy coin.

Furthermore, many powerful people within the Bitcoin Community carry beliefs similar to (or stronger than) Milton Friedman and are lobbying to anonymise/ privatise Bitcoin. These individuals are unlikely to fade away from the Bitcoin scene any time soon but as they so contradict its founder Satoshi, are unlikely to ever get their way.

Blockchain's threat to liberty - wild surveillance projects

Bear in mind, in some sort of sick satanic joke Mirosoft patented a cryptocurrency system, that uses body activity data to enable individuals to mine cryptocurrency, as WO2020060606. The idea is insane, to make humans working miners and enters dangerous territory where body activity would be recorded, therefore open to surveillance and used for financial profits. The paper detailed'''for example, a brain wave or body heat emitted from the user when the user performs the task provided by an information or service provider, such as viewing advertisement or using certain internet services, can be used in the mining process.”

Cointelegraph writer Ana Alexandre explains - 'To implement the process, a server provides a task to a user’s device, which is communicatively coupled to the server. A special sensor then indicates body activity of the individual, while a cryptocurrency system verifies whether or not the body activity data satisfies the conditions set by the cryptocurrency system. Ultimately, the system awards cryptocurrency to the user whose body activity data is verified.' In other words, you are financial awarded for letting your body activity data be monitored and surveilled.

Further this was just the tip of the ice-berg over how messed up the technology could be, for the authors of the application say: 'These embodiments are described in sufficient detail to enable those skilled in the art to practice the invention, and it is understood that other embodiments may be utilized and that structural, logical, and electrical changes may be made without departing from the spirit and scope of the invention. The following detailed description is therefore not to be taken in a limiting sense, and the scope for the invention is defined only by the appended claims and equivalents thereof.'

Fortunately, it can only be assumed such technology is a joke - hence its patent number being literally as close to reading 2020 666 as possible. Unfortunately, that the same year Bill Gates got so involved in the great Covid fiasco and economic disaster.

The Central Bank Digital Currency (CBDC) invention - trap or improvement?

Before 1971, almost all the world's currencies were backed by gold supplies. Thus, the amount of money available to governments grew just as slowly and moderately as the energy required to mine, extract and process gold, since it wasn’t possible to print more currency than that that could be backed by the available gold. The dollar as the world reserve currency was the only currency backed directly by gold in accordance with the global Bretton Woods Agreement signed after WW2 in 1944, but the external values of foreign currencies were all fixed in relation to the U.S. dollar and so indirectly were gold standard currencies.

When Nixon repealed the Act in 1971, in what was known as the ‘Nixon shock’, and subsequently Ronald Reagan let loose the financial sector in every-way that Bretton Woods Agreement (along with he Glass Steagall Act) had limited the financial sector. Naturally, this greater flexibility came at a cost as the financial world became far less mindful, throwaway and greedy, as shown by how debts became colossal in contrast to before, the stock market thrived on risks and repeatedly crashed, whilst for the largely asset-bereft global working class – goods did become more expensive for their qualities no matter the size - from food to petrol and gas to houses.

Now governments believe they can back currencies once more to a fixed resource like Bitcoin to prevent banking excessivity and add security, in the form of CBDCs and are extensively doing so – particularly in China. As nobody controls Bitcoin, any CBDC measured in Bitcoin will be essentially like the currencies of old, when the the Bretton Woods agreement mandated all currencies to be measured in USD and therefore, indirectly gold. CBDCs have already been created or investigated in a hundred countries or so – they were first tested in China, Sweden and Australia, but now have been adopted in Europe (by the ECB), England (BofE) and America (FED). China particularly are envisioning a post-dollar world.

Central banks could issue a digital currency in the form of wholesale reserves, which would only be accessible to banks, and therefore won’t impact how society interacts with money, but dangerously are more interested in CBDCs serving the public like retail cash. The advantage of such a CBDC is that it may allow a far more effective alternative policy to Quantitative Easing called ‘Helicopter Money’ (termed by Milton Friedman in 1969) as CBDC are ideals vehicles to transmit direct central bank payments to citizens. It is a possibility retail CBDCs may even replace bank deposits if they spread. Take China, pilot-scale testing of a digiyuan (e-CNY), fully controlled by the People's Bank of China, commenced in four large cities at the end of 2019 but has now expended to literally dozens and its focus is to be a domestic retail and inter-bank wholesale CBDC, with an extra purpose to aid cross-border payments. The fact is CBDCs potentially will become part a big part of our day to day lives, serving as no-interest currency like cash.

The issue is will CBDCs become an instrument of total totalitarian control if implemented, giving central banks power over all civilians who use it. My fear is yes. It is worth remembering bitcoin was created by Satoshi Nakamoto precisely because he believed central banks could not be trusted anymore, that they had ulterior motives and harmed society. If a CBDC provides an institution, not even democratically elected, with such power as to 'at the mere push of a button....ruthlessly exclude anyone from the monetary system, ostracizing and potentially wrecking them', then we have given monetary policy makers far too much power and run the risk of living in a 1984 surveillance state. I feel if CBDCs are introduced by central-banks they should stick only to whole-sale ones, unfortunately central banks have shown themselves intent on something bigger.

References

(1) Slock.it — Decentralizing the Emerging Sharing Economy, 2015 https://medium.com/slock-it-blog/slock-it-decentralizing-the-emerging-sharing-economy-cf19ce09b957}

(2) How does Ethereum work, anyway?, Preethi Kasireddy, 2017 https://www.preethikasireddy.com/post/how-does-ethereum-work-anyway

(3) Microsoft Files Patent For Crypto Mining System Using Body Activity Data, Ana Alexandre, 2020 https://cointelegraph.com/news/microsoft-files-patent-for-crypto-mining-system-using-body-activity-data

(4) Cryptocurrency system using body activity data, WO2020060606A1, https://patents.google.com/patent/WO2020060606A1/en

(5) The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet with Ethereum, Camila Russo, 2020

(6) Decentralized finance research and developments around the world, Peterson K. Ozili, 2024

(7) CBDC The New Frontier in the Battle for Privacy and Freedom 'Forward', Roman Reher, August 2023