Many of our concerns about the first generation of the internet have come true. Powerful corporations have captured much of the technology and are using it in their vast private empires to extract most of the value.
The recent Facebook scandal is a recent case in point. This dominant, secretive centralised network exploiting us all.
“The internet’s inherent value and power come from the fact that it is globally interoperable and decentralised,”
says author Rebecca MacKinnon in her book Consent of the Networked.
They have closed off opportunity and privatised much of our digital experience.
We use proprietary stores to acquire new apps on our mobile phones, tablets, and now watches and other wearable devices . Search engines and marketing departments alike interrupt our content with advertising. Big companies that promote and prosper from consumer transparency are notoriously secretive about their activities, plans, technology infrastructures, and information assets. To be sure, some companies have opened up voluntarily, but many others have merely reacted to the sunlight of whistle-blowers and investigative journalism.
Such disclosures are dwarfed by efforts to hide operations and conceal information.
Simply put they haven’t been good stewards of the public trust.
Case in point: The banking industry. “Banks are traditionally secret keepers,” according to Izabella Kaminska of the Financial Times. She explained that banks make good judgements about who to lend money to and how to process payments when they have good access to private information, and they get that information by promising to keep the secret. The more secrets they hold, the greater the information asymmetry and the greater their advantages, but those advantages have harmful systemic implications.
The banks have understood the challenge of digital currencies on their central banking systems, we might expect central bankers to oppose blockchain technology. Not surprisingly the most forward thinking central banks have understood and embraced blockchain technology. The blockchain importance to their respective economies.
There are two reasons for this leadership.
First, this technology represents a powerful new tool for improving financial services, potentially disrupting many financial institutions and enhancing the performance of central banks in the global economy.
Second, and this is a big one, blockchain raises existential questions for central banks. How do they perform their role effectively in a global market with one or more cryptocurrencies out of their control? After all monetary policy is a key lever in a central bankers' toolbox to manage the economy, particularly in times of crisis. What happens when the currency is not issued by a government but exists globally as part of a distributed network?
To understand why central banks are so interested. You only have to look at economies where their currency becomes virtually worthless. In Zimbabwe a loaf of bread can cost a trillion dollars one day and 500 billion the next. In Greece and Venezuela citizens are buying cryptocurrency and storing it as assets - it gives them more confidence for immutability on their asset and inherent belief back in their worth. This will be a theme worldwide as the decentralised immune blockchain becomes more well known and widespread.