Digital Currency From an Algorithm? A Peek Into Decentralization Within the Open Source Movement

decentralization

Decentralization. You think you know about it. Well, I’m here to tell you that if you have not heard of blockchain governance, bitcoin, etc., then you are in for a good read. I’d like to call attention to a new movement I’m learning about and hear your thoughts on what you read in this blog. The open source movement. (The Political Agnosticism of Free and Open Source Software and the Inadvertent Politics of Contrast).

Why are people focused on decentralization?

The public’s trust in government is at an all-time low. With exception to the years following the terrorist attacks on 9/11 in 2001, the public’s trust in the government has been continuously declining for over 50 years. A strong 73% of the public trusted the government in 1958 while today we face a disheartening 19%. Only about 3 in 10 Americans trust their own government. (Beyond Distrust: How Americans View the Government). The failure of existing government agencies to build trust with their citizenry has generated a movement among the masses.

Does anyone remember the WikiLeaks scandal years ago, or even weeks ago involving the DNC? Does the group “Anonymous” ring any bells?

WikiLeaks is a multi-national media organization and associated library. It was founded by its publisher Julian Assange in 2006.WikiLeaks specializes in the analysis and publication of large datasets of censored or otherwise restricted official materials involving war, spying and corruption. It has so far published more than 10 million documents and associated analyses.“WikiLeaks is a giant library of the world’s most persecuted documents. We give asylum to these documents, we analyze them, we promote them and we obtain more.” – Julian Assange

Since the inception of WikiLeaks, groups like Anonymous, and the creation of blockchain governance, the government has faced challenges that could be detrimental to the entire system. “The relative ease of hacking and online information sharing has made these groups ever more powerful” (Professor D Harris. University of California, Berkeley). The open source movement, intended to spread the concept of open source [denoting software for which the original source code is made freely available and may be redistributed and modified. (Google Definition)] brings forth the creation of Bitcoin. An anonymous person, by the name of Satoshi Nakamoto, was the inventor of the bitcoin protocol, publishing a paper via the Cryptography Mailing List in November 2008. What is bitcoin you may ask? Well, I asked the same thing. Lucky for me, my housemate that lives in the room next to me is an undeniably intelligent Computer Science/Electrical Engineering major. Needless to say, he explained this new world to me in a way that makes a lot more sense.

 

Bitcoin is a decentralized currency: meaning that there is no singular bank or government that controls it. Not even the founders of bitcoin control the bitcoin- they created the algorithm and then let it go. Every transaction is based on other people’s computers doing the transacting and encrypting. You don’t even need a bank teller. You get a number, type that in to the bitcoin wallet, then several computers on the internet check the validity of the transaction and update the block chain- updating it to say ‘money was sent from here to there’.” – Cedric Holz

 

Thanks Cedric, on behalf of every non-computer science major everywhere.

Now let’s break down some key terms.

Blockchain: A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. (Google definition).

Further explanation: “Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.” (http://www.investopedia.com/terms/b/blockchain.asp)

In the block chain every transaction is saved; It knows exactly who has how many bitcoins, you can’t lie about how much you have, and it won’t change unless an exchange takes place, and therefore is recorded.

“This means no one can undo the work one has done. No one can fake the work or go around it. Miners at the heart of the bitcoin ecosystem have to perform hash operations by using precious resources and if they play by the rules they receive value, and if not, they lose value. In other words, all are held directly accountable by being required to spend their resources and show the presentation of their work. This makes the blockchain bulletproof and resistant to manipulation. It also guards against the hyperinflation created as a result of government intervention through measures such as quantitative easing. When looked at as a larger governance model, this accounts for potential selfish attempts that try to benefit from the good will of people.” (http://www.coindesk.com/consensus-algorithm-and-a-new-model-of-governance/).

This sounds great right?

Well, what about our current banking system? Are repercussions coming that could break down our current governance systems? I believe the new technologies that we are producing has the potential to makes existing governance structures less relevant. The question that comes to mind next is whether or not it has the power to make it obsolete. Also, are we really ready for that as a society and is that what we really want? A government’s job is to protect its people, but without trust, how is a government supposed to function successfully? Are hiding things and lying to the people just an attempt at protection, or do the citizens have the right to know all the little ugly details that goes on behind closed doors? Is it really better to have a system that is not controlled by anyone or anything?

I believe that this movement definitely has the power and following to create change. What’s scary about this new technology is that I find no sense of security in it. Then again, we haven’t been on the gold standard for years and the “Full Faith and Credit of the United States” is, at its simplest, just a few words strung together-right? Is Bitcoin providing the same, just without a third entity controlling the use, fees, etc.?

As the movement grows, the more popular Bitcoin becomes. This puts more pressure on the government to earn back the trust from the public. Without this, people will continue to turn to decentralization, and create different systems that have the potential to challenge our current ones. I am on the fence about whether this can be categorized as ‘good’ in my mind yet. I need more information, but I believe this movement is underrated and frankly not publicized enough. I’m hoping that my blog post will bring to attention the power this movement could gain in its future.

Taylor Weiss

Character Count: 7,147

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s