Society’s structures are broken. Here’s how blockchain can rebuild them.

When you first meet someone who spends their days immersed in building blockchain technology—whether technologists, lawyers, financiers, writers, or artists—they’ll talk to you about the promise of decentralization with a rare zeal. These conversations might leave you skeptical, asking, “Why does decentralization matter? How does it affect me?”

For thousands of years, our society has been structured by and run by many centralized entities, companies, and governments, which amass power by providing a trust layer to individuals. But when Satoshi introduced Bitcoin to the world, a new paradigm was unveiled. Suddenly, there was a technology that could reduce the cost of trust, providing a single source of truth without requiring a single source of power.

Here are my thoughts on why that’s revolutionary...

Top-down command and control as an organizing principle has enabled us to make tremendous gains globally as a society. It is an optimal architecture when communication and decision making is slow and expensive. But top-down command and control governing systems also have serious weaknesses. Decisions are made at the top, as far as possible from where the real data and the real expertise are concentrated. There’s a tendency to silo information both laterally and vertically. Your boss gives you info on a need-to-know basis. You give your boss and peers only the info that you think serves you best, not what is best for the situation. You certainly don’t share freely with your peers and other branches of the hierarchy, or they might move up faster than you. All this is done to grow and consolidate power and to avoid being usurped.

Finally, hierarchies are easily calcified and brittle. They don’t adapt to novel situations very fluidly. Top-down command and control has served us very well. It has enabled us to build great civilizations. But importantly, it has brought us to the point technologically where we’re enabled to build a decentralized society. Over the past few decades, we’ve wrapped the world in layers of communication networks. Nine years ago, Satoshi made a major breakthrough in computer science, enabling all actors on a blockchain platform to come to a decision within 10 minutes, even if up to half of those actors are malicious. Ethereum has pared that down to 15 seconds - and soon it will be much faster at both Layer 1 and Layer 2 of Ethereum. This context, in which communications are ubiquitous, instant, and cheap, enables decision-making by consensus that can also be cheap and rapid. An organizing principle relying on consensus among a richly communicating horizontal group of actors provides the most effective paradigm.

It will take time, but once they are built out, flatter, decentralized economic, social, and political systems will be more effective, more fluid, and far less subject to corruption.

Decentralization and horizontal infrastructure implies disintermediation. Intermediation is a great thing when it adds value to a transaction, when it adds information, reduces friction, but intermediaries tend to impose themselves into a transaction and then increase the spread between the value that they extract and the value that they add to that transaction. Blockchain provides a secure infrastructure and a trustworthy infrastructure, where all actors can trust that the system just works properly. All of that is realized on public blockchain in a fully decentralized, peer-to-peer context, a radically free market.

So when a radically free market with trustful mechanisms provides a very low barrier to entry for businesses, that’s going to serve as a force for universal disintermediation, shrinking the values that are extracted in value chains through intermediation, so that many intermediaries are squeezed out or are moved to extracting more appropriate amounts of value. We’re moving from a world of many silos that don’t communicate well to one of fluid integration. Our economies will see content creators, service and resource providers directly interact with their consumers without a large rent seeker in the middle extracting the bulk of the value created for blessing the transaction. This is already happening on platforms like Ujo Music and Civil.

One simple way to think about Ethereum is as a next-generation database system, one that supports collaboration as a first class principle. Because all actors on Ethereum have direct view of the data and programs on the system, all can trust that no minority set of actors can improperly manipulate the system. You can share infrastructure with a competitor and be certain that competitor can’t cheat the system. Up until the advent of Ethereum, businesses built their information systems on database technology that constrained the information systems to be siloed. This kind of architecture reinforces an us vs. them, business vs. customer mindset. A sea change has recently begun, where instead of businesses building their own information systems, industries, sectors, value chains, governments, and regulators can all get together and build shared, non-redundant infrastructure that will facilitate fluid interoperation within and across industries.

Since Ethereum is the only blockchain that can subserve use cases on public blockchain as well as on private permissioned implementations of the technology, Ethereum is uniquely positioned to move our society towards a more fluid, more collaborative trust foundation. Going natively digital will enable us to create more fluid, frictionless systems. Thousands of years of technology have been built on analog foundations—trust, agreements, identity, reputation, money—have all been realized with analog technologies, things like paper, dyes, inks, law enforcement, subjective judgement, jurisprudence, force.

We are just embarking on a process of rendering all of these elements in natively digital format. Smart contracts, or blockchain-based programs, make trust among counterparties virtually automatic and virtually guaranteed. When all of our transactions involving the foundational elements of society can clear and settle in the instant of the transaction on a shared source of truth foundation that requires no reconciliation, we will squeeze an enormous amount of waste and delay from our economy. And just like the power of compounding interest, if we can pack value creation events more closely in time, value creation throughout society will compound faster. A nearly frictionless economy will enable extremely rapid growth, probably exponential for a while.

We’re building a system with more economic opportunity and more autonomy, block by block. To meet the builders and technologists working to make decentralization a reality, join us at the New York Ethereal Summit next month. The next thousand years don’t have to look like the last.

Welcome to the decentralized future.