Daniel Mark Harrison is a Chairman & Chief Executive Officer of global investment company Daniel Mark Harrison & Co. (DMH&CO), a Family Office with offices and active operations in Singapore, Bangkok and Hong Kong. He is also Managing Partner of FinTech and blockchain venture capital firm Monkey Capital as well as the author of The Millennial Reincarnations, a novel published in 2015.
Ethereum has risen over 2000% in 2017. But it’s far from just another open ledger-turned-online-ATM; it’s an innovation reaching for a greater social role.
As for most of the demographic of the organization that Vitalik Buterin co-founded, developer Aaron Bale is almost a whole decade older than Buterin. In most organizations, such a diversity might be expected to strike up an element of conflict. That’s not the case here, however.
At Ethereum, which is best described as a league of software-savvy rocket scientists working together to solve the problems of the world’s next economic cycle, the atmosphere is one of harmony and intellectual purity.
A case in point is Bale’s brainchild Bitvote, which runs on the Ethereum blockchain. Bitvote takes direct aim at the United States legislature. For this reason, Bitvote’s role in the immediate future is rather less defined than are other start-up concepts, but that’s not to say that the core foundational technology won’t be implemented first on a number of smaller initiatives that slowly give rise to its preeminence. In fact, many would argue that is what happens in the case of radical technologies.
As Bale tells it, the concept of Bitvote was born out of the internet blackout on January 18th, 2012. Two proposed laws, Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), posed a serious threat to online freedom of speech by giving central authorities increasing jurisdiction over the net.
In response, a group of geeks shut down over 115,000 websites in the US alone for a 24-hour period in protest. In other words, the activists completely disarmed the power of the value network on which the internet thrives. Bale was one of the protest movement’s ringleaders.
“I was part of that collective; what happened that day is that effectively for 24 hours people stopped using the internet to vote against SOPA in protest,” he explains proudly. Ultimately, the action he took with his co-developers all over the world indeed led to the amendment of the proposed Acts.
Ethereum: The Hyper-Democratic Protocol
“But take that scenario and you see that it’s a one-off,” says Bale. “It’s not a sustainable way of doing things like passing laws. So what’s the longer plane? How do we bring the effect of that day and get the governments and companies to yield to the people but do it in a viable and sustainable way?
“So that is where bitvote came in – it was basically the most promising solution we found that could work long-term.”
Here, Bale shares a thought experiment: Let’s say you have a choice. The choice is whether to pass a particular law, or not to pass that law. On the left side of the House you have 10,000 people who each have 1 work hour (1 work hour is the payment unit they receive in Bitvotes for providing, say, 1 hours’ work of government service). These people say “pass the law now!” On the other side of the house sit 10 individuals, each with 1,000 work hours in their possession. In the event of a tie, who do you rightfully give the decision to?
Of course, there are so many variables such a thinking exercise involves considering. Has each of these men earned these hours himself? And was the act of earning them equally fair?
This sort of tough decision, maintains Bale, will be always hard to make without the technology of the Ethereum blockchain, which will be required in an economy that runs on the Internet of Things, where such scenarios are more commonplace (as for example in the SOPA case.)
In the event of another SOPA, if the internet was run on an Ethereum-type Blockchain, explains Bale, people could simply vote against the House of Representatives and thereby establish meaningfully their rightful status as citizens of a democracy.
In other words, political officials will be nothing less than civil servants, indentured servants to the populations they represent.
For now, Bitvote has a community of adopters who are looking to implement the token in a range of social activities (albeit slightly more theoretical stuff).
Arguably though, it’s only a matter of time though before another SOPA makes the political challenges that Bitvote is uniquely designed to regulate. This is especially so as the economy of the Internet of Things gets underway.
While the focus in 2017 among virtual currency traders has been Ethereum’s astonishing 2000% jump (on the back of a similar rise last year), for Buterin it’s not the value of the currency that is all-important.
Rather, it is sort of real-world futuristic effect that his innovation may have that potentially makes Ethereum so valuable to the world. It’s also these effects that will likely make Buterin a thirty-something year old billionaire.
It’s Not Rocket Science (But It’s Almost That)
Anyone who has spent any amount of time inside the virtual colossus that is Ethereum’s Blockchain development lab – sprawled out across the world from the far corners of the United States to Israel and another three thousand or so miles further east on the edge of the emerging world, Asia – soon realizes that the complete lack of acrimony or political in-fighting among this diverse demographic is what is so distinct about the organization.
Those working on the Ethereum blockchain genuinely love the work they do. And while it is true that crypto enthusiasts are more ideological on the whole than your garden-variety engineer, there’s a more clear-cut relationship between action and reaction when it comes to the Ethereum guys.
Partly it’s down to the product they are all working on, which is smart, original and complex by design while being easy to use, multi-purpose and intuitive to use. Partly it’s that all of them are genuinely as super-bright a group of people that you could ever expect to meet.
Writing on Ethereum’s blog on June 21 in 2015, co-founder Anthony Di Iorio pretty much admitted this was the case at the point when the blockchain was besieged back then by bad publicity in the face of various delays:
“Bitcoin is complex to explain, Ethereum takes it up a couple notches,” he wrote.
It’s not rocket science but sure can seem like it to many people … Let’s face it. This technology is not easy for the majority to grasp and the messaging needs continual refinement and crafting for this to change … how do we get Ethereum, and in general, complex ideas to the general public?
The intense level of complexity in Ethereum’s blockchain architecture is reflected in the level of average intelligence of Ethereum’s core developers. Without exception, they are all just naturally really smart guys figuring out solutions to insanely complex hypothetical problems with real world effects.
What’s so gripping and unusual is that the problems to which they are looking for solutions will surely have dramatic consequences in the way we live our lives ten years from now.
In order to understand how Ethereum differs from other cryptocurrencies, it helps to dial back and think of the question of fair and unfair principles in society. It also helps to understand a bit about the concept of Market Equilibrium: the tendency of markets to “revert to the mean”.
Much of the problems of the world can all be traced back to our overreliance on the idea that market equilibrium is a pervasive, ultimately unstoppable force. In fact, we depend on this recorrecting force of economic nature in many ways to sort out the mess we can’t ourselves fix, to keep our lives in balance.
When things swing wildly in one direction, it’s not long before the pendulum is pulled back towards the other side by the force of economic gravity, goes the thinking.
This economic gravity exists, claim economists, in the form of participants who are opportunistic in nature and will seek to exploit any deviation from market equilibrium to make a profit.
It’s a nice theory, but in practice we know that it doesn’t work quite like that. Periods of mania in markets remain abnormal for very long stretches of time, all the more so in opaque markets.
Some time ago, billionaire investor George Soros hypothesized that rather than swing back ni a pendulum-like fashion, markets are more prone to reflexivity, meaning they travel in the direction in which the current hype is taking them.
This tendency in reality creates massive social upheaval and distortions in the way the spirit of the law is applied. It also creates misalignment of incentive, which to Ethereum founder Buterin’s Russian mind, is a key motivating rationale for building his Blockchain in the first place.
For example, let’s say a man strikes it filthy rich by paying his employees little more than the bare minimum wage and no overtime.
Equilibrium theory states that a more generous employer would muscle in and set up shop, paying a little bit more for better trained, happier staff who ultimately sell more products as a result. (If he was too generous, of course, he might lose, but just the right amount of the benefactor-mix will, according to market equilibrium theory, ensure his swift victory.)
Well, go and tell that to the guy working 16-hour shifts in a garage out in the Bakken, or the guy who delivers your food next time at 4 am. The reality we live in, in other words, is far from being one whereby a market equilibrium regulates economic activity.
In reality, there is almost no “evening out” of the playing field very often, and the rising wealth gap shows this up better than anything else.
Now imagine that both guys, the ethical store owner and the unethical store owner, possess a unit of currency which, instead of always being valued at one static par value, move up and down according to the way that others who hold the same currency unit vote on their opinion of the holders. Clearly, the unethical partner would be immediately discouraged to play a game unfairly in a way that he is not in today’s world.
If not, the increased number of units of currency made in earnings would actually end up on a net basis being worth less than if he had less currency units of a higher par value.
The concept is mind-blowing. It has the potential to reform campaign contributions, the way companies collaborate on joint-venture partnerships, and capitalism, too.
Capital With Values
Israel-based developer Shay Zluf is working on developing Lazooz, a bitcoin-equivalent for Ethereum. He says that the potential of Ethereum is so far reaching that it could ultimately effect an overhaul of the entire legal system and way that law-enforcement is carried out.
“I am so excited by these possibilities I cannot stop working,” Zluf told me early in the small hours of one weekday morning, a certain nervous energy penetrating the air. “I cannot sleep; I am so excited by these ideas and what they might end up doing for the world!”
For guys like Zluf, the driving motive is hard to detect, but it’s entirely plausible that the money is not the main motivating factor here. After talking at some length with Zluf, you realize that his sentences feature a lot of mention of “consciousness”, “change” and “drive” and almost no mention of “profit”, “money” or “opportunity”.
“We thought that in order to make a consciousness change in the way people drive from place to place we have to do a consciousness change in the way we conduct our business,” he explained.
Zluf is fiercely bright. In a White Paper Zluf hands me on Lazooz, it shows how the Ethereum-based currency weights decision-based variables such as who to share a taxi ride with in terms of monetary value. By doing so, ride-share commutes will become more common, which will ultimately be a greener solution in the long run:
Not only will rider and driver share the expense of the journey, but real-time ridesharing will create friendships and relationships between like-minded people passionate about ride-sharing and reducing the amount of traffic on the road.
It’s clear what this is – a more attractive alternative to Uber.
Except the difference is that there’s no mention of surge pricing, no mention of “disrupting” industrialized society and no implication that Lazooz is looking to capitalize off the way we take our kids to school.
Zluf even has a solution to help de-risk the process of getting in stranger’s cars, in fact – something that has to date been perhaps the largest problem for Uber. As the extent of the “network” of ride-sharers paying each other in Lazooz for ride-sharing trips grows over time, the risk becomes comparatively much less explains Zluf, since the network itself makes it obvious who you can and cannot trust.
That’s possibly the smartest idea anyone has yet come up with in the world of logistics, and it hasn’t even hit the road yet.
Vitalik Buterin, Homo Economicus
What then of the mastermind of this network protocol that has so far created a little over $15 billion in new value, Vitalik Buterin?
On balance, you are more likely to come across guys such as Buterin in the form of fictional characters in Hollywood movies than you are to meet such a person in real life.
For someone who is just a handful of a dozen days over twenty-one, Vitalik Buterin’s expansive intellect is more than a little superhuman.
In fact, so conspicuous is Butherin’s genius – and we are scoring all facets of intellect here –logical, conceptual, mathematical, creative and ethical reasoning levels, all at the same time – he even tries to hide it a bit at first.
“Sometimes I seriously wish I was 36 already, just so I could be treated more normally …” writes Buterin. I tell him that I think that is highly unlikely, given the current path he’s on – by then, I point out, he’ll be a billionaire, and no one treats those guys “normally” at all. “Oh god, can people stop trying to glamorize me :(” he types into our private Skype group chat.
Buterin is a gentlemen in conversation. He doesn’t interrupt. He patiently explains how the Bitcoin Blockchain works (“there are two things that the Bitcoin Blockchain does: it stores data and it can send data … going forward, there are various other things that a Blockchain can do [such as perform more service-based functions]”). He quickly connects me with a range of Ethereum co-developers and encourages them to speak openly and honestly about the positives and the negatives of the protocol to date.
This strange combination of sincerity, dazzling intellectual brilliance and almost brutal honesty strikes a powerful contrast to the sleazier world next door in other digital currency circles.
A case in point: at the start of 2015, a smattering of senior Bitcoin executives, investors and venture capitalists headed off to the Bahamas to vacation the weekend away somewhere they could talk privately. Meanwhile, the protocol’s self-appointed “education and outreach” arm, called the Bitcoin Foundation, announced it was scrapping education and outreach in favour of focusing on “core development” again.
“It’s a chance for the senior guys to get away and talk openly,” one of them said at the time about the Bahamas weekend. The implication was clear: the virtual currency was beomcing an open forum for the elite holders (the Bitcoin community has since tried to make amends with its many smaller holders).
Ethereum folk are the opposite sort of people, if anything. Much of that it is clear is down to Buterin’s personality, which penetrates throughout the development community in the way that many chief executives harness the character and values of multi-national corporations they run.
Buterin is also genuinely interested in problems outside of tech. Uncharacteristically, there is no blowing of his own trumpet about how amazing or fabulous the protocol he developed is. Buterin was at his most immersed in conversation when he spotted a side conversation I had struck up with Bale about journalism.
“Journalism seems to have really taken a beating buy both technically with the invention of social media and politically,” Bale typed into our Skype group chat. “Society used to protect and value the journalist-source relationship. It was almost as sacred as doctor-patient and lawyer-client. But now Idk. It seems that kids growing up wanting to be journalists really want to be truth speakers. Advocates. Wordsmiths. But they end up some how becoming something different Parrots.”
Buterin, himself the former proprietor of Bitcoin Magazine, which he started before launching Ethereum, jumped in: “I mean, I’m a former journalist and present subject of journalism myself so have my opinions, biut (sic) would like yours :)” he typed into the group IM.
I told Buterin I agreed with Bale: many newsrooms today were staffed with lousy editors with no experience of how to train their staff. And most talented journalists opted out for PR at some point because the wages such just writing.
“Sounds like a case of massive risk-aversion,” Buterin began. “So, thinking about this from my economics background: current situation is high downside, low upside for doing anything unconventional seems to be the analysis.’
To this dilemma, the innovator suggested, one can either “make downside lower” but “imo not likely, and to some degree suboptimal even if it did happen, since then the whole thing would be low-incentive and low-incentive really means corruption-friendly if someone happens to have large incentives on the side.”
Or “[Option] 2. [is to] make the upside higher … journalism’s “decline” in quality is partially causally driven by the fact that the upside [of breaking new stories and taking risk to do so] has gone down in recent years due to the loss of ability to benefit from “exclusivity” since your story gets copied by everyone else within 1h. so, there are multiple layers here … homo economicus is good at sneaking his way in as much as people love dissing him 🙂 so, the alternative hypothesis here seems to be some kind of moral decline effect.”
The term Buterin employs to make his point, homo economicus is from 19th century Britain, and was coined by John Stuart Mill, the father of Utilitarianism, which is a strand of economic philosophy. It is surprising to hear it re-used at all today outside the classroom, and you certainly don’t hear it thrown about by early-20s tech multi-millionaires.
But that is what makes Ethereum so unique. Ethereum is not just another fintech concept or open ledger system-turned-ATM; it’s an innovation attempting to serve a greater humanitarian purpose, one which promises to make us a safer, friendlier, fairer, more intelligent society.
At the end of the day, that’s a lot to live up to. But if it succeeds, it will be ushering in a destiny the likes of which hasn’t been witnessed in the history of mankind. Ethereum will single-handedly make public service more competitive while at the same time force private industry to become more honest.