I am a crypto fanboy. I own a few crypto-miners, I own a few crypto-coins (hundreds of dollars not thousands), and I support the idea of moving away from government control of money. However, I also like walking into things with my eyes wide open—and my conclusion is that while the blockchains that control these currencies are great, they might not be government killers.
The problem is that facts are facts. While blockchains are good at managing data and a ledger, they don’t own the guns, own any physical land, or have the power of incarceration.
My thoughts on this have developed as I consider more policy areas in which blockchain could shrink government. In fact, last year I wrote an article for in these pages praising the way blockchains could bring economic growth to developing countries. While that article is still completely true, and the possibility still exists for a blockchain revolution—there are still some rough edges that everyone needs to be aware before drinking the Kool-Aid.
For instance, let’s say that a country like Georgia adopted a blockchain in order to track private property ownership, as Hernando de Soto has been preaching. That might help unleash economic growth as the current corrupt bureaucracy could be brought into the light on a public ledger for everyone to see. Much of the gray areas around private property ownership in a country like Venezuela could be eliminated thanks to blockchain transparency.
That possibility is very real, and even happening in some countries currently.
However, like the TSA is largely security theater, this new government adoption of a public ledger can be theater as well. A public ledger is great—if the government abides by it. But, what if they decide not to? What if they decide to fork the blockchain and replace the old (distributed ledger) information with the land ownership the way that they want it (crony inspired) just stop using a blockchain altogether?
When it comes to currency, the story is a bit different. If someone wants to accept a method of payment – whether it’s a chicken or a bitcoin – then they can accept that almost no matter what the government says. However, if you are using a blockchain to track land ownership, the only group that enforces that ownership is the government, so if they decide to use a different blockchain or stop using a blockchain altogether then there is almost nothing that can be done.
The government is the group that enforces land ownership, has the power of incarceration, and has the guns. Pointing to a screen and showing the ownership on a computer screen isn’t going to change a corrupt person’s mind. Blockchain fanboys might cry foul. But, this is where big government, big money, and corruption collide – or where the crony rubber hits the corrupt road—and where a corrupt government reveals that government is always only what it wants to be. Blockchain or no blockchain.
Now, voters do have power – where people are allowed to vote and the vote is real – so politicians do have a motivation, or profit motive, to support what is best for the overall economy and the public good. However, in places where adding private property to a blockchain would help create an aura of assurance – voters aren’t necessarily the biggest interest of the politicians.
That all said, I am still supportive of keeping track of private property on blockchains. I still agree that this movement could help spur economic growth in developing countries. But, when it happens people need to be aware of the potential downsides and that merely implementing a blockchain doesn’t eliminate the possibility of corruption.
Over the next few years, more and more companies are going to start implementing blockchain into their processes. That means that government adoption of blockchain technology will increase as well. These are all good things and will help shed light on areas that need exposure. But, that doesn’t mean that blockchains will be infallible. More blockchain usage won’t mean that we can relax our oversight. Blockchain usage is just a step in the right direction, but good government—limited government—is always going to be the most important piece of any reform.