Blockchain Revolution

Implications for the Blockchain Economy: Perhaps such a platform could enable new distributed models of wealth creation. Perhaps new kinds of peer-to-peer collaborations could target humanity’s most vexing social problems. Perhaps we could solve the crisis of confidence and even legitimacy in today’s institutions by shifting real power toward citizens, equipping them with real opportunities for prosperity and participation in society, rather than through PR trickery.

3. 
   Value as Incentive
   

Principle: The system aligns the incentives of all stakeholders. Bitcoin or some token of value is integral to this alignment and correlative of reputation. Satoshi programmed the software to reward those who work on it and belong to those who hold and use its tokens, so that they all take care of it. Sort of the ultimate Tamagotchi, the blockchain is a globally distributed nest egg.¹³

Problem to Be Solved: In the first era of the Internet, the concentration of power

in corporations, combined with their sheer size, complexity, and opacity, enabled them to extract disproportionate value from the very networks that endowed them with rights. Large banks exploited the financial system to its breaking point because “incentive structures for most of the top executives and many of the lending officers of these banks [were] designed to encourage short-sighted behavior and excessive

risk-taking,” according to economist Joseph Stiglitz. That included “preying on the poorest Americans.” He summed up the problem: “If you give people bad incentives, they behave badly, and they behaved just as one would have expected.”¹⁴

Large dot-coms dangled free services in retail, search, and social media in

exchange for user data. According to an Ernst & Young survey, nearly two thirds of managers polled said they collected consumer data to drive business, and nearly 80 percent claimed to have increased revenues from this data mining. But when these firms get hacked, it’s the consumers who have to clean up the mess of stolen credit card and bank account information. It’s not surprising that, in the same survey, nearly half of consumers said they’d be cutting off access to their data in the next five years, and over half said they were already providing less data, including censoring themselves on social media, than in the previous five years.¹⁵