Reporting from the EU Parliament: Building an Open Bitcoin Coalition

Yesterday I spoke at the European Parliament’s STOA (that’s Science and Technology Options Assessment) workshop. I was one of eight speakers discussing, “The Collaborative Economy: Impact and Potential of Collaborative Internet and Additive Manufacturing” a wordy title to describe what turned out to be a fascinating budding coalition! Frank Piller of MIT and Oliver Gajada of the European Crowdfunding Network spoke about co-creation, lead-user innovators, crowdfunding and the open source movement. Yi-Ke Guo of Imperial College London and Thomas Heath of the Open Data Institute spoke about big and open data. Louis Turner of the Asia Pacific Technology Network, and Dr. Beverley Vaughan of Stevenage Bioscience Catalyst spoke about 3D-printing (including printing human organs!). And Elli Androulaki alongside yours truly, spoke about Bitcoin and blockchains!

That’s a lot of exposition, thank you for bearing with me. It’s important, I think, to give credit to all these contributors because the spirit of the workshop was derived from the diversity and yet also the commonality of this group. As a political movement, rather than a technical one, Bitcoin has been going-it alone for too long. We have strong potential allies in the open internet movement, the crowdsourcing movement, and the 3D printing and open hardware movement. Bitcoin is a fundamental piece of a radical and fascinating future where open networks begin to out-compete and out-innovate the corporate giants of the 20th century.

Mr. Piller taught me that the distributed and open network of lead-user innovators have been out-innovating the big companies for years. Where did things like the jogging baby stroller and center pivot irrigation come from? Not Mattel or Agco, they came from passionate individuals who built what they desired, and shared those innovations with the world at large.

Mr. Gajda adds a piece to this puzzle. How do we fund lead-users? Crowdfunding does just that. New ideas come from freaks and freaks can have trouble getting a grant from the government or a round of investment from venture capitalists. Freaks, however, can do pretty well if they find a small community (of fellow freaks) out in the long-tail of the Internet, and crowdfunding helps those groups assemble and engage in a communal giving experience that rewards and supports otherwise outlandish ideas and their freakish originators. And if you are successful enough with your freak idea and your early freak-prototype, you go mainstream. Freak-no more, these innovators go legit and their ideas become manifest in our, as in everyone’s, lives (if you’ve eaten produce lately you’ve almost certainly benefitted from center pivot irrigation without even knowing it).

Misters Turner, Heath, and Guo, and Dr. Vaughan add to this narrative. How can we lower the costs of innovation for lead-users? The answers are 3D printing and open data. Innovators need information in order to build their creations, big and open data supply the fuel to create important and even life-saving new tools (like data-driven apps that show flood risks in coastal communities). Those tools can come from the governments and institutions that collect data or they can come from a community of technically-savvy concerned citizens.

My lackluster and frustrating experiences with government-coded software tell me that, at the very least, we want both those producers engaged, and the only way for that to happen is for data to be made open and available. As Mr. Heath says, it’s not enough to post spreadsheets on a government website, we need data readable and standardized (hello XML and JSON) and we need it legally open (hello clear public domain dedications or permissive licenses). Meanwhile, 3D printing gives innovators of hardware rather than software the inputs they need to cheaply create novel prototypes, whether they are chassis for new cars or synthetic bone for skull repair (yes, skull… repair…).

And so that brings us to Bitcoin! To the uninitiated, it may boggle the mind how magical-internet-money can fit into this picture, and I’m afraid many policymakers (who are nonetheless thrilled about the above-mentioned innovations) still see Bitcoin as an irrelevant toy, or, worse, a threat to national security and the health of our youth! I was happy, yesterday, to do my part in changing those perceptions should ever they predominate.

First of all, Bitcoin is a lead-user innovation! Satoshi Nakamoto, whoever she, he, or them may be, was just a person with a freakish but brilliant desire to invent a better payment system. Nakamoto took existing open source tools, like ECDSA cryptography and Adam Back’s Hashcash, and connected them together in a novel way that happens to be a pretty-darn-awesome way to send value over the Internet. And like so many lead-users before him/her, Satoshi is well on the way to being freak-no-more; Bitcoin is going mainstream.

Second, in this world where a diaspora of freaks are building the future, how can these creators fund, govern, and support themselves? Bitcoin and blockchains provide myriad possibilities. At its most fundamental level Bitcoin and related cryptocurrencies are tools for building trusted, distributed databases that can be used for community governance. Reliably passing value from one person to another is the cornerstone of a future platform where individuals can pitch their ideas, get funding, give back equity to early supporters, and even delegate product-development decisions to an invested community of early adopters and users. That’s what a decentralized autonomous organization (DAO), what we talked about last week in Boston, should do. And, unlike the tools which predated it, Bitcoin is an open network. One does not have to belong to Kickstarter, or belong to the UK, or belong to a Bank or venture capital fund. One merely needs to run free, open source software on her Internet-connected computer.

Third, Bitcoin is an ideal tool for open data. One of the fears associated with big, as well as open, data is that personal identifying information (PII) will leak across these platforms. The scenario is encapsulated in the following hypotheitcal gripe: yes I’m happy big data saved my home from flooding, but no, I’m upset that everyone now knows my social security number and can make fake credit card accounts in my name. Bitcoin already fixes some of that trouble because, as a push-payment tool, it reduces the risk of identity theft. But that is just the beginning.

With blockchains and cryptography we can engage in what Nick Szabo calls trustworthy computing. We can own, truly own, our data as tokenized pseudonyms with credentials (to quote David Birch). Imagine a world where I accumulate important local knowledge: my address, the last time my property flooded, my health records, the size and dimensions of my skull. I’d like to donate this useful information to open public databases but I’d rather not have my name attached to it; it’s creepy to me that people know where I live and what the inside of my skull looks like! Now, imagine that I can keep this data in a tokenized form and share bits of it, discretely, with the open databases I’m willing to be a part of. The community flood-registry gets my elevation data and pictures of the last flood, the local health center gets a scan of my braincase. None of these individuals, however, gets my name, address or social security number, instead, they get a unique and verifiable pseudonym that shows that I am a legitimate (as in non-scamming, non-spamming) contributor. That tokenized ID can happen in a few ways. We can have a company go out and verify each person and attest to their humanness and their connection to real and useful data-points (floods or skulls) but then we need to trust that company to keep us anonymous. Instead, what if we prove our seriousness by staking something valuable on a pseudonymous network and attach that pseudonym to the data? No one needs to know it’s me that provided these data points, they just need to know that I’m a living, breathing person with some investment in the system. A bitcoin here or there.

These synergies between Bitcoin and open data, bitcoin and 3D printing, and bitcoin and crowdfunding are just the beginning. Smarter minds than mine will find even better ways to combine such technologies. My goal, Coin Center’s goal, at Brussels and in general, is to preserve freedom to innovate with these tools by helping to draw these connections and celebrate them with policymakers. The future is open and Bitcoin is the money that will fund it.