Bitcoin and the Blockchain

Bitcoin and the Blockchain: A coup d'état through Digital Heterotopia?

Donncha Kavanagh and Gianluca Miscione UCD School of Business University College Dublin Quadrangular conference Lancaster University Sep 14-15, 2015

Why bother with Bitcoin?

BTC, based on a public ledger of transactions (blockchain), provides insights into relations between state power and digital infrastructures Donncha Kavanagh - Gianluca Miscione

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What is money? Transactions

Savings

What if you burn money? Have you burned value? NO, goods are still there! You have burnt your possibility to buy it (as long as people and state accept Sterlings) Donncha Kavanagh - Gianluca Miscione

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“money is a claim upon society” OK, but…

What is “society” today? Does it correspond to countries?

Donncha Kavanagh - Gianluca Miscione

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Five pillars of the state We identified 5 traditional pillars of state power (corresponding to countries): 1.

Monopoly on violence (since Hobbes, 1651)

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Non-interference (since Westphalia, 1648)

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Fiat money

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Bureaucracy

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Statistics

These pillars autopoietically have been reproducing the state as a specific, territorially-bounded social order Donncha Kavanagh - Gianluca Miscione

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Gianluca Miscione

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Money and state are decoupling… 1. 2. 3. 4.

post-Bretton Woods (1971) Liquid modernity (pun: Bauman and easy movement of money, late 20th century) Currency unions, without political union (the Eurozone, 1999) Cryptocurrencies like Bitcoin (2009) also challenge the state’s quasi-monopoly powers Donncha Kavanagh - Gianluca Miscione

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Digital Heterotopia as an alternative to finite states 1. Like Hobbes, Nakamoto starts from a trustless society, but envisages a radically different mechanism that works to prevent conflict and maintain order: faceless authentication of transactions 2. He proposed a scalable record of transactions (blockchain) without any unique (state) guarantor  Heterotopia: Any real or metaphorical space that permits nonhegemonic thought and action (outside of states, here)

How does this digital heterotopia interplay with the 5 pillars of state power? Donncha Kavanagh - Gianluca Miscione

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1. Monopoly on violence • The state’s monopoly on violence has been fundamental to the constitution of state power, and the state, in turn, is constituted by the power to create and control the money system. • With Bitcoin, violence is curbed, apparently, by a faceless algorithm. • Emerging issues about a ‘world wild west’. • What forms might violence take in a ‘digital society’? Donncha Kavanagh - Gianluca Miscione

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2. Non-interference • Westphalia Treaty (1648): principle of non-interference. • Westfailure: Individual and corporate actors routinely transcend and opportunistically move between jurisdictions • The blockchain exceeds state infrastructures, members have few or no intelligible connections with one another

• Digital heterotopia characterised by emergence of stateless or post-state actors, or a new ‘state of nature’. • ‘Digital’ laws to right wrongs in digital heterotopia. Donncha Kavanagh - Gianluca Miscione

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3. Fiat money • Pillar already undermined by growth of credit money, post-credit money, decoupling of states from fiat money (e.g. Eurozone). • Digital heterotopia is a cold place for fiat money. • BTC—which is money without Gold, State or Credit (to the extent it is believed)—supplements this ontological unease • Cryptocurrencies as a claim on ‘sociation’ (a more fluid and even playful concept that focuses on immanent social relations rather than 'society’ existing above individuals) Donncha Kavanagh - Gianluca Miscione 11

4. Bureaucracy • Bureaucracy as the state’s preferred technology of organizing. • The blockchain as an alternative (disruptive) technology. • Potential use of blockchain to organise passports, contracts, title deeds, and a variety of registers, many of which are at the core of the state’s bureaucratic activity • The state as an ‘incumbent’ facing, but not seeing, a disruptive technology.

• New accounting technologies were implicated in the emergence of new forms of economic citizenship and governance in the early 20th century. Similar phenomena with the blockchain?

Donncha Kavanagh - Gianluca Miscione

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5. Statistics The first systematic collection of factual information coincided with the extension of 17th century European states’ administrations. Staatswissenschaft (state science) was the origin of statistics. The starting point for all economic stewardship is the measurement of activity. Most countries have at least one official statistics agency charged with this responsibility. More widespread use of a virtual currency would mean that statistical agencies would have to gather data on activity in virtual currencies. Otherwise, measures of economic activity would not be complete. We should not underestimate the range of purposes for which national accounting measures are used in the stewardship of economies. In that regard, the completeness and integrity of these statistics is vital. Gareth Murphy, Irish Central Bank’s Director of Market Services at BitFin 2014. Donncha Kavanagh - Gianluca Miscione

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Do libertarians dream of electronic money?

Life of Brian Donncha Kavanagh - Gianluca Miscione

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Real-politik All spectrum of views, from frictionless trades to doing to Wall Street what Napster did to music industry up to replacing fiat currencies altogether • “Emerging economy” • Irreversible (individual transaction AND the whole thing) • No full control of states/MNE • No global stealth action Gianluca Miscione

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Where to? • It’s true that Bitcoin originated from a techie cultural milieu, but no specific reasons why it would not translate into very different domains  avoid techno determinism • global experimentality (no origin in state or R&D) • beyond Laboratory Life (Latour) • Phronetic research (Flyvbjerg) • Current forking as empirical work?

So… why bother? “To this war of every man against every man, this also in consequent; that nothing can be unjust. The notions of right and wrong, justice and injustice have there no place. Where there is no common power, there is no law, where no law, no injustice. Force, and fraud, are in war the cardinal virtues.” Hobbes, Leviathan “We reject: kings, presidents and voting. We believe in: rough consensus and running code.” David D. Clark

Thank you! (paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2624922) Donncha Kavanagh - Gianluca Miscione

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