Peer-to-Peer, Cryptocurrencies, and CPE

I made a strained, yet provocative analogy in my last post (well, I found it strained and provocative) that a theoretical peer-to-peer type implementation of CPE could utilize a cryptocurrency architecture for distributing units of value. Obviously, that is going to require some clarification, especially as there are only certain aspects of the way that cryptocurrency works that fit the analogy.

Cyrptocurrencies, like Bitcoin, are simply a form of money. Bitcoin can do nearly everything that the dollar bill in your pocket can do:  in the vernacular of the economist, it can serve as a medium of exchange, a unit of account, and a store of value. The difference between a bitcoin and your dollar is that the former doesn't exist outside of the Internet.

While the USD/BTC exchange rate is volatile, one can purchase bitcoins with US dollars and toss them around (where accepted) as one would any other foreign currency. One difference, however, is the method of acquisition.  

A "wallet" account of some kind is one of the most common ways to conduct transactions, especially for newcomers, and there are an increasing number to choose from, for example https://www.coinbase.com.

A wallet account provides you with what are called public and private keys (or addresses). If anybody would like to send me money via a bitcoin wallet account, my public key is: 12KooHV72oQwyDx6xbSTY5daDA5rtNjEoK, or you can use a mobile wallet app to scan this code 

  and add me to your list of “sending addresses”.  The private key however, is just that, and needs to be kept secret, as a Bloomberg anchor discovered the hard way.

When one party bestows bitcoins on another party, the bitcoins traverse the internet in exactly the same way that an encrypted email does. It knows the destination (in my case, "12KooH…jEoK") and once it arrives, it looks for the private key stored in the wallet. When the data matches the two keys, the authenticity of the account it confirmed, and the bitcoin data is decrypted.  This is similar to a secure electronic transfer of any currency, be it crypto or fiat.

Online credit card transactions take days or even weeks to verify.  They appear instantaneous to us because the credit card company assumes the risk of guaranteeing each transaction.  One of the benefits of working with billions in reserves of a fiat currency backed by the government — a benefit that Bitcoin and other cryptocurrencies do not enjoy, but they have a clever way around it that is revolutionizing the way we interact online.

Tom Geller from Lynda.com in “Up and Running with Bitcoin” explains it well: "The wallet uses [the] private key to sign the transaction, then it publishes a signed copy of it to the entire internet", where the real magic (some would say sorcery) happens.  It is also where my analogy picks up steam.

In order to avoid fraud or “double spending”. That is, in order to prevent Alice from taking her 50 bitcoins and giving them to accounts held by both Bob and Ted, the published transaction is legitimized by groups of enterprising geeks called “bitcoin miners”.

In a nutshell, miners are required to “solve a puzzle” that is mathematically generated by the addition of a "block" of new transactions.  The solution earns the miner a reward (currently 25 bitcoins or about $6,000), validates the block and adds it to what is called the “block chain”.  The block chain is a digital record of every transaction ever conducted on the Bitcoin network going back to the very first transaction of 50 bitcoins by the elusive network founder(s), "Satoshi Nakamoto" himself in 2009.

From this address, https://blockchain.info/ you can see every single bitcoin transaction as it becomes available to the miners.

The block chain is a ginormous, publicly accessible digital ledger that exists on thousands of computers worldwide, is updated with each transaction and requires no centralized authority to legitimize.

Think of the Yap stone currency of Micronesia. The stones, some of which are two meters wide and weigh several tons, are obviously too large to carry around. Ownership passes from one party to another via oral agreement. If villager X owns stone ABC and says, "Villager Y, you now own stone ABC", the value stored in that token changes "hands".  The Yap oral history of ownership serves the same function as Bitcoin's block chain, the shared public ledger. No Federal Reserve required.

Full disclosure… Let’s put aside for the moment that the Bitcoin Foundation, the nonprofit organization devoted to propagating the currency and fostering trust in its use, is flat broke and besotted by infighting. Along with that, let’s place the fact that two of the largest bitcoin exchanges (Mt. Gox and Bitstamp) went away without warning, literally overnight, taking millions of dollars with it. Bitcoin is not the only way of running a cryptocurrency; it is merely the first on the scene to achieve success of such scope.  We can still base our potential (albeit highly theoretical) CPE paradigm shift on what is happening in the field.

In the "economy" of CPE, the units of exchange and value are knowledge and authority. A "transaction" takes place when knowledge, in the form of a "competency" is transferred from one party to another. 

Unlike money, this is not a zero-sum game in that the one dispensing the competency still retains her expertise after sharing it.  But technology modeled after cryptocurrency networks might still be employed to generate a decentralized system more responsive, more dynamic, and more useful than existing structures.

One scenario involves using peer-to-peer mechanisms to restructure the knowledge-receiving party's demonstration of the learned competency.  For example, instead of solving mathematical puzzles, individual CPAs in a network can be incentivized (financially or with credits) to collectively validate "transactions".

In the 20th century, the "credit hour" was the smallest unit of value that could be handled efficiently in a large system. That has changed.  While, the precise way in which members of P2P learning networks participate has yet to be defined (or, shall we say, “has yet to emerge”), these new systems (at this point, theoretically) open the door to measure competencies in innovative ways that are more accurate, more useful and more valuable than a tick mark on an exam or a number representing hours spent viewing lectures.

In a future post, I’ll discuss how the TinCan API pushes traditional learning management systems in this direction.