|The Devil’s Advocate™
- I believe for every drop of rain that falls, a flower grows.
- I believe that somewhere in the darkest night, a candle glows.
- I believe for everyone who goes astray, someone will come to show the way
- —Roger Whittaker
TL;DR: A feature, not a bug.
Trust: a fundamental part of every legal, political, and financial system that has ever existed and one the need for which cannot be dissolved by technology. Trust converts the single-round prisoner’s dilemma — in which a rational homo economicus would, and therefore should, throw her co-conspirator under the bus — to the iterated prisoner’s dilemma, in which the longer term benefits of not doing that outweigh the undeniable headrush it provides in short term. If you know you will see her again, and go through this again — or even if you aren’t pretty sure you won’t — the rational thing is to cooperate, at least as long as your co-conspirator does.
Trust is a moral imperative, not a legal one. It derives its power from the very fact that it is not backed by any obligation. It is not a compulsion; it is a voluntary submission to the mercy of a third party in the hope of a reciprocal submission back.
- A gentleman’s word is his bond.
- “I meant what I said, and I said what I meant. An elephant’s faithful one-hundred per cent.”
To trust someone is to take a risk.
Prevailing orthodoxy is to taxonomise, categorise, and eliminate every foible, variable, weakness, and risk, as you go, delimiting, boxing, reducing and bit-crushing risks down into their smallest components. “By so isolating and atomising risks,” the orthodox are prone to say, “you eliminate them, you see.”
A great risk in the system is that posed by humans beings: all their inconstancy, unreliability, stupidity or mendacity. Thus, eliminating risk tends to be conflated with eliminating individuals, or at least the need to trust them. Hence, a millenarian yen to rid the present system of the need for trust, replacing it with technology. To be clear here: distributed ledgers do not reinforcing trust between transactors: they eliminate it.
So in the same way that rules, playbooks and policies override the judgment of and confidence in individuals using them — thereby deprecating those individuals and stunting their ability to connect on an emotional level — the will to eliminate trusted intermediaries in a distributed Ledger system has the same fundamental shortcoming.
Trust is a feature, not a bug.
By way of analogy, the conversion of a moral obligation (pick your children up promptly at the conclusion of today's session) with a financial one parents will be charged £10 per hour for late collection of children after the session) has the same effect.
Social relations, friendships, emotional connections, vacation placements with colleagues' children, which modernists view as indications of graft or nepotism in the system, reinforce bonds of trust and confidence between existing market participants.
This may be inequitable to outsiders and those “at the margins” who have been disenfranchised (as they are systematically deprived of the opportunities to enter the market in favour of insiders) but a decentralised ledger where no-one needs to trust others in the market is hardly a decent no substitute. You cannot banish bonds of trust.
The answer is not to prevent these activities, but create alternative structures which lower the barriers to entry into relations of trust for those without the necessary connections.
- Not even blockchain. Especially not blockchain.
- You may remember this from Freakonomics