First, let us use the term ‘cryptoledgers’ to cover this general concept, of Bitcoin, Ethereum, and all that kind of stuff. The core here is a twofold arrangement of info: multiple users of it, connected in a rigidly secure way. We have cryptographic tech applied to a coherent collection of info: hence, ‘crypto-ledger’.
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What do cryptoledgers do ‒ how should we understand them in a basic way? If we want some sense of their direction and effect, we need to find their deeper form.
The two keys to clarifying this are security and scaling. You can see this by starting with their basic elements: encryption and computerisation. Encryption is a way of controlling the flow of info: an encrypted message stops info leaking out ‒ providing secrecy, and it stops info (influence) leaking in ‒ providing security or assurance that the info was not tampered with. For cryptoledgers it is the second, the assurance security, that applies.
What changes is that where encryption, in its basic form, creates info security between two parties, cryptoledgers expand that into a multiparty, broadcast form ‒ they link everyone (potentially) in a commons system. And fused to this expansion of security is the second key: the digital implementation. And what is that essentially about? Scaling: finer, faster, more.
Cryptoledgers do for info assurance what computers did for hand calculation: what digitisation does generally: the machinization does not change the fundamental form, but greatly increases its detail, rate, amount, and complexity. Cryptoledgers' most important characteristic is not about ‘decentralization’. Instead, it is the provision of high-scale/fine-grained processing to multiparty assured data ‒ resulting in what we could call an ‘apodictic data commons’.
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Proceeding from the more abstract fundamentals, we then need to look toward the specifics. Any algorithm has a particular structure of operation, and people using it are constrained to a corresponding structure of behaviour. What is that here?
The character of cryptoledgers is to map contentional, rivalrous domains ‒ arenas where one segment of ownership excludes all others. Cryptocurrencies epitomise this, and show us this character. Cryptocurrencies digitise the centralization of currency. A currency is the same structure of usage, whether implemented by humans shuffling paper between wallets and banks, or software shuffling bits: a strictly limited token-set (as a model of limitedness of resources), upheld by single rule-set. Cryptocurrencies machinize this.
The most decentralized way of approximating this would be people striking up idiosyncratic irregular agreements pair-wise. Each knows what is expected of the other participant, and everyone else not involved knows nothing. So promoting cryptoledgers on their ‘decentralization’ is mistaken: if decentralization were the most important thing, then ‘manual’, ‘colloquial’ agreements would be better, not the single global database of cryptoledgers. If cryptoledgers offer any value, it can only be by the value from their elements: machinized expansion of commons data: ie, the value is precisely not in the decentralization, but the opposite, the centralisation.
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Cryptoledger stuff is not consumer tech, it is for automation; it is for computers to run a hyper-economic calculation with things connected to the internet. First, cryptoledger interfaces are not for humans, but for other software. Human interaction is messy – we cannot depend on people for crypto discipline. This must be wrapped in buffer services, like banks. Second, the distinction of cryptoledger tech is in bringing computational scale. Cryptoledgers enable a magnified network of apodictic data – i.e. superhuman size and detail. The example to look to would be something like high-frequency trading.
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