What It Means for the State to Support Blockchain

Recently, after President Xi Jinping made remarks promoting blockchain, Bitcoin surged by more than 40%. That alone shows how enormous the influence of China’s leader is on this market. President Xi said blockchain technology could be used at the national level, with applications spanning a wide range of areas from financial support to public transportation and poverty alleviation. What about South Korea? The Korean government designated Busan Metropolitan City as a blockchain regulation-free special zone, making clear its commitment to fostering the blockchain industry. Setting aside, for the moment, the argument that blockchain and cryptocurrency should be separated, I find a major contradiction in governments’ pro-blockchain moves. Today, I would like to talk about that.

First, there is one thing that should be made clear. I have no intention of simply reciting the Bitcoin white paper and saying, “This is blockchain.” But at the very least, the blockchain as I see it closely resembles the form Bitcoin originally had. The value blockchain had in its early days, the reason people were so excited about it in the beginning—in the end, I believe the trustless and permissionless qualities pursued by Bitcoin and the blockchains that followed were blockchain’s essential values. That is why I think the anarchists known as cypherpunks were the first to recognize Bitcoin’s value. From the start, the dream was not to debate whether blockchain should be regulated or not, but to create a protocol that could not be regulated. Of course, that ideal of blockchain still remains today.

I still have not arrived at a clear answer as to what use blockchain has if it abandons those characteristics. If only my friend and I share computer storage and call it blockchain, what possible utility would that create? Fundamentally, I think the answer to the question of why blockchain should be used at all is this: “Because what I want to do—whatever it may be—has the potential to be regulated.” Some people may laugh and say, “Are you still saying things like that?” But if it is a real public blockchain, I believe it should possess a supralegal character. It is a protocol that transcends law, the state, and power, and for that very reason it becomes a space where applications that could not be implemented within the existing legal framework can be realized.

The finest example of blockchain use is gambling. In the first place, it makes no sense that if I gamble with my own money I should also have to pay an additional fine, but on blockchain one can gamble freely, transcending such absurd laws. If a gambling app is put on a blockchain, then even if it falls under the crime of operating a gambling establishment, how can anyone regulate it or hold someone accountable when no one knows who developed it or who operates it on the blockchain? Beyond gambling, one could also create black markets, or assign real-world value to goods created in games.

In the end, blockchain—or at least public blockchain—is by nature not confined to any particular country or organization. That is precisely why I find it impossible to accept talk of supporting such blockchain at the national level. The public blockchain as I understand it was created to do what the state says should not be done. Bitcoin made cross-border transfers possible without reporting them to the state or paying fees to banks, and Ethereum created a space where various applications can operate beyond legal constraints. And yet we are now talking about national-level support for this technology.

On reflection, it may actually be mistaken for the blockchain industry to try to improve user convenience. Convenience and autonomy are values that are inversely related from the outset. Just as gaining the right to my own life also means bearing responsibility for my actions, if we want to gain autonomy through blockchain, then what we may have to accept in return is the inconvenience blockchain brings us. Freedom is not free, and there is no such thing as a free lunch; perhaps the inconvenience of using an unregulated platform is something we should be willing to bear.

Whenever the state says it supports and backs blockchain, I regard it as mere lip service. It was never a field for the state to develop in the first place, nor is it that kind of technology. To me, the state saying it supports and promotes blockchain sounds very much like a cat saying it will develop the fish-farming industry.

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Original title: 국가가 블록체인을 지지한다는 것

Author: Nam-woong Kim

Date: 2019-10-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=17&idx=22007