The Inevitability of Trusted Third Parties
The search for a crypto use-case continues
“Did you know that 87% of all conversations about blockchain technology are nonconsensual?”
It’s already an old joke, but it’s sure aged well.
Hardly a day goes by without someone demanding that I listen to their explanation of their blockchain idea. A lot of times, I listen. Look, a lot of people I consider to be smart and thoughtful are really excited by this stuff, and I know them well enough to believe them when they say they’re not excited about the possibility that they can get in on the ground floor of a Ponzi scheme and exit with a bunch of suckers’ money.
There’s a common thread running through most — possibly all — of the blockchain-for-good pitches I listen to: the idea that we can replace fallible, untrustworthy people with immutable, decentralized ledgers, and ask them to serve as referees and/or escrow agents in complex transactions between strangers who don’t have any reason to trust one another.
That’s no trivial proposition! The lack of trust among strangers is the source of many costs and inefficiencies in our society. Thirty percent of American health care spending is administration, and nearly all of that is insurers making sure they’re not getting ripped off by doctors and doctors making sure they’re not getting ripped off by insurers. Grocers station watchful overseers by the self checkout to make sure we’re scanning before we bag. Insurance companies pay adjusters to come and inspect your house when you make a claim. There’s a whole sector of our economy, a vast workforce, that does nothing but try to detect and prevent betrayal.
Imagine if we could outsource that to math! Imagine the human liberation — the ability of all those people freed from the drudgery of checking ID and comparing signatures and scrutinizing expense reports to move on to rewarding, productive work.
On its face, the idea of a computer as umpire sounds plausible. It’s easy to think of a computer as “neutral” and “unbiased,” a system built up of crisp ones and zeroes, untroubled by squishy, qualitative factors.