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Ethereum is communism

I’ve been thinking a lot about communism lately and I got to the conclusion that its biggest flaw is that people end up outsourcing their decisions to an external entity — the state.

Also I’ve been thinking a lot about Ethereum. In what follows I will not argue that it’s a scam or that it’s centrally controlled because too many have talked about these things already.

The “communist” path

What I see as the biggest issue with Ethereum is that it assumes that we need a “world computer” in the first place. That contracts between humans should and can even be described in code and processed by an external entity.

My contracts with other humans should really be between me and these other humans and not involve a third party. Ethereum as a system and the “world computer” as a concept are basically a trusted third party that is, in this new world, required for processing and enforcing contracts between humans.

In the “old world” people sign contracts in front of a lawyer or notary but that entity will not automatically intervene in the relationship between the two or in the enforcement of the contract. The two people could very well just burn the contract if they decided it doesn’t matter to them anymore. So the contract is more like an insurance policy which helps people get help from the justice system if they are screwed by the counterparty. Only in a case where they voluntarily decided to appeal to a court would the external apparatus come into play ever again after the contract is signed. All decisions and micro-decisions about how to “execute” the contract still belong to the people involved and do not depend on any third party.

In the way I see things the “world computer” is society itself. Or the free market. Or nature. Or evolution. Or karma. Or God. However you want to call it.

Analog versus digital

The reason why this is important is that in meat space things are never black or white. And by this I am taking the oracle problem to the next level: an oracle is not only bad system design because it is a trusted third party with potential downtime or adversarial behavior, but because the oracle’s “sensors” attempt to translate an input from the real world into something on the blockchain just to have it applied to the real world again later at the enforcement step.

Humans take decisions based on much more factors than a smart contract could ever consider. Positivists will disagree, but in my books that’s a good thing.

The Bitcoin path

In my post The great software renaissance I noticed how Bitcoin can be used as the basis of a new system which, on the contrary, is built from multiple components that interoperate on a fully opt-in basis. Bitcoin in this case would be the blood of the system rather than the brain.

I also like the parallel between the Lightning Network and smart contracts that Conner Brown makes in Bitcoin: The Blockchain for Truly Smart Contracts. He sees the Lightning Network as a way to execute a “smart contract” off-chain while keeping only the signature marking the beginning and the end of the interaction on-chain.

The Bitcoin way is the opt-in way. And this leads to the first large scale implementation of pure capitalism.

The two worldviews

Natural order versus fiat. Natural order is established through a mechanism of evolution which encompasses a huge number of micro-decisions taken by all participants all the time. The more you try to detach the decision making and contract enforcement from the participants themselves, the more you drift towards centralized decision making and later central planning, also known as fiat.

By centralizing decision making humans are basically giving up their free will, which is the essence of humanity, and break the chain of evolution which is required by the natural order. This happened under communism and this is the main promise of Ethereum as well.