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The Power of the Distributed Network

10 Nov 2014

Money, as the old cliche says, is half of every transaction. That’s why the distributed network systems that do not rely on third-party trust relationships represent a bright future.

the Power quote 1

F.A. Hayek wrote in the Constitution of Liberty that the value of information to a humane prosperity exceeds even that of physical capital.

The growth of knowledge is of such special importance because, while the material resources will always remain scarce and will have to be reserved for limited purposes, the uses of new knowledge (where we do not make them artificially scarce by patents of monopoly) are unrestricted. Knowledge, once achieved, becomes gratuitously available for the benefit of all. It is through this free gift of the knowledge acquired by the experiments of some members of society that general progress is made possible, that the achievements of those who have gone before facilitate the advance of those who follow.

That’s an overwhelming thought. What if we had systems that enabled unlimited amounts of information to be transmitted in complex networks built by end-user volition? What if those networks were not bound by geography and jurisdiction? What if they were universally accessible?

We began to see glimpses of this emergent world toward the end of the 20th century. The most wonderful innovation of all came when the network came to be decentralized. For most of us, the first contact with such a thing came with Napster, the file-sharing service that allowed peer-to-peer exchange of digital files of music.

I can recall the fascination and amazement I experienced the first time I logged on. There were two types of activity taking place: seeding and feeding. Giving and getting. If you did one, you did the other. The resource expended was computer power. Otherwise the “goods” you were sharing were not scarce because they were simultaneously reproducible unto infinity. It takes your breath away to consider the implications.

Napster, of course, was taken down. But that did nothing to stop the distributed network. The innovation had been seen and experienced, and the innovations never stopped. What’s called “piracy” is more prevalent than ever but that’s not the right to place to look. What matters is the innovation of the distributed network alone, both in its legal and illegal use.

Why does it matter? We are used to thinking of ownership as physical and therefore bound by the constraints of exclusivity and geography. Those features of private ownership whet the appetites of gangsters and governments. If you can lean on the owner with a protection racket of some source, you can take a bite of the resource and even control the whole thing.

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But the distributed network is different. Anyone can be an owner of and participant in the building of it. It can live on any computer node anywhere in the world, and all activity on the network is reflected in every individual instance of it. What that means is that there is no central point of control. It can vanish from one or a million nodes and reappear just as quickly to another one or million nodes.

That’s why the distributed network evades the despots of the world. It knows no power, no geography, no jurisdiction, no regulation, no regimentation. It lives freely, developing like a global garden cultivated by an invisible hand.

It’s a technological marvel, one that emerged inauspiciously but has come to play a beautiful role in the freeing of the world from all forms of tyranny. Looking past the data and code, what’s really at stake is the liberation of lives.

An example is a service run by Ms. Fereshteh Forough, scientist and philanthropist. She grew up as a refugee in Iran. Today her work centers in Afghanistan. Her passion in the liberation of women from poverty and oppression in the developing world.

Toward that end, in 2012 she established the Women’s Annex Foundation and opened clinics all over the country. Their goal was to take maximum advantage of new economic tools that would allow women in Afghanistan to acquire and use computer skills to become economically empowered and independent.

In today’s world, anyone can provide value to others, thanks to technologies that defy the limits of borders. You can code, design, input data, and deal with customer support from anywhere and for anyone.

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Following her successes, Fereshteh began to notice a problem. The women who attended her clinics could acquire skills, offer those skills on a global market, and otherwise achieve great things in a country in which they are severely disadvantaged. But the sticking point was that they couldn’t get paid.

Why? Every conventional form of payment system requires a depository institution. The women in the clinics didn’t have bank accounts. They couldn’t get bank accounts, either because they weren’t near a money center or because woman just cannot get them by custom or law. Lacking this ability, they had no rights to acquire much less accumulate wealth in a monetary form.

Without the ability to get paid for their work on a basis that is not contingent on proximity of the service receiver, their training could not be converted into real improvements in their living standards or personal freedom.

That’s when she discovered Bitcoin, an advanced product of the distributed network.

Bitcoin allows all the women in her clinic to open a bank account without permission from anyone. If they owned a smartphone, they only needed a free wallet app. Then they could receive and spend money without permission from any authority. That was the missing piece.

Given her background in computers and code, she saw the potential of the cryptocurrency and encouraged its use. It made the difference. She then began to accept donations in Bitcoin. Bitcoin has become a centerpiece of her work, not because she is an anarchist or a geek or a digital futurist but simply because it works to improve people’s lives.

How many people are in a similar situation to the women in Afghanistan? Perhaps half the human population is excluded from the cartelized, controlled, elite-dominated payment and money systems that prevail today. Money, as the old cliche says, is half of every transaction. That’s why the distributed network systems that do not rely on third-party trust relationships represent a bright future.

These technologies will not be uninvented. Over the past 10 years, they’ve found ever more applications. Over the next 10, we will see exponential increases in their uses. Their basis is not ideological but performative. They use existing opportunities to create more opportunities, and also work to disrupt the status quo.

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People tend to look at innovations in isolation. Here is my new e-reader. Here is an app I like. Here is my new mobile device and computer. Even Bitcoin is routinely analyzed and explained in terms of its properties as an alternative to national currencies, as if there were no more than that at stake.

But actually there is a historical trajectory at work here, one that we can trace through its logic, implementation, and spread. It’s the same logic that led from the dial phone at the county store, operated by people pulling and plugging in wires, to the wireless smartphone in your pocket that contains the whole store of human knowledge. It’s all about technology in the service of individuation, and individualism in the service of building communities of shared interest.

It’s one thing to dream of a world of universal human dignity and opportunity. But the structure of the world cannot finally escape scarcity of resources. We cannot merely wish the world we want into being, and we certainly can’t force its creation through politics and state control. It has to be built one piece at a time using the right tools. Those tools have to be created.

Distributed networks are doing just this, making the highest material aspirations of humanity more within our reach. Once you understand the driving ethos — voluntarism, creativity, networks, individual initiative — you can see the outlines of a new social structure emerging within our time, an order that defies a century of top-down planning and nation-state restrictionism.

It is coming about not because of political reform. It is not any one person’s creation. It is not happening because a group of elite intellectuals advocated it. It is emerging organically, and messily, from the ground up, as an extension of unrelenting creativity and experimentation. In the end, it is emerging out of an anarchist order that no one in particular controls and no one in particular can fully understand.

(This is an excerpt from Tucker’s forthcoming book Bit by Bit: How P2P is Liberating the World, published by Liberty.me)


Jeffery TuckerJeffrey Tucker is Chief Liberty Officer of Liberty.me, a social network and online publishing platform for the liberty minded. He is also distinguished fellow Foundation for Economic Education, executive editor of Laissez-Faire Books, research fellow Acton Institute, founder CryptoCurrency Conference, and author of five books.


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