Let’s Not Forget the Reason for Blockchain: Eliminating Middlemenbr>
With all the fervor around the price of bitcoin and news of crypto exchange hacks, the core advantage of blockchain technology isn’t discussed enough. The reason for an explosion in development of blockchain-powered systems across diverse industries, including finance, advertising, healthcare, e-commerce, and more, boils down to one fundamental desire: eliminate dependence on middlemen.
Satoshi Nakamoto first introduced bitcoin as “A purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution” (Bitcoin White Paper). Satoshi recognized, along with many others in the cypherpunk movement, that middlemen financial institutions were the root cause of many of the world’s economic problems. The Bitcoin White Paper was published in 2008 shortly after the financial crisis hit the United States, the impacts of which resonated around the world. Satoshi pointed to how central banks and lenders, necessarily trusted pillars of a stable economy and currency, abuse that trust by recklessly lending their fractional reserves to pursue profit over stability. (http://p2pfoundation.ning.
As a general rule of thumb, both individual people and centralized institutions, tend to act in their own self interest. Blockchain technology enables the creation of decentralized networks that are structured to combat this tendency toward selfishness. The bitcoin blockchain is comprised of a many independent nodes that validate each and every transaction. If a majority of nodes “agree” that the transaction is valid, it is recorded permanently on the ledger. This way, bitcoin need not depend on a central institution such as a bank or government to verify transactions.
The issue with centralized middlemen goes far and beyond financial systems. The digital advertising industry is bloated with intermediaries, creating too many opportunities for fraud and unforced errors. The healthcare systems is beset with inefficiencies due to dependence on middlemen to transfer data and communicate information between doctors, patients, and insurers. E-commerce is dominated by a handful of tech giants with access to such copious amounts of data that endows they control the entire ecosystem.
Blockchain is an ideal technology for building decentralized systems to counter the middlemen-operated ones that are not serving people the way they could. In advertising, Brave’s Basic Attention Token (BAT) enables the direct exchange of information and value between publishers, advertisers, and web users, thereby reducing reliance on intermediaries to facilitate transactions. In healthcare, Doc.AI empowers people to collect and control their own data as opposed to relying on broken healthcare systems to do so. The project I am working on, Spl.yt, harnesses blockchain technology to support the development of decentralized applications that will empower sellers and consumers to control more of their business. The protocol also supports various players in the e-commerce ecosystem make more informed choices without depending on middlemen for necessary services such as payments, affiliate marketing, reviews, and dispute resolution. We hope this will make it cheaper and easier for everyone to shop online without the need for large e-commerce intermediaries who dominate the industry at the expense of small businesses and customer data – and pocket books.
If reliance on middlemen can be reduced or even eliminated across major industries, we will have a more empowered and community-run society that makes decisions based upon what is best for the whole instead of what is best for a tiny fraction of the population. The emergence of blockchain technology enables us to rethink top-down power structures and replace them with decentralized ones that are more fair, transparent, and egalitarian. If we harness technology to the betterment of society, perhaps we can feel a little optimistic about our future.
Jason Civalleri is the Co-Founder and Lead Blockchain Strategist of Spl.yt. With three years researching and publishing on the intersection of Smart Contracts, decentralized governance, and the Law, Jason has built a uniquely intimate relationship with the crypto-community as it operates within the rest of society. He is well known as the Chief Compliance Officer of MyCrypto (formerly MyEtherWallet), his role in advancing/protecting the community’s interests during Ethereum’s DAO collapse, and advising multiple $20M+ ICOs. Jason is a frequent speaker and commentator on governance and law as they affect the blockchain ecosystem, and has published articles in HackerNoon, EthNews, and on the Berns Weiss LLP Virtual Currency Law Blog. He also assisted counsel representing users in the high-profile US v. Coinbase IRS case. Jason holds a Bachelor’s degree in Philosophy from San Francisco State, an MBA from the Paul Merage School of Business at UC Irvine, and a Juris Doctor from the UC Irvine School of Law.