The Blockchain Will Destroy The World As We Know It

Though many see cryptocurrency as a fascinating technology, get rich quick scheme, or a bubble about to pop, what most are blind to is the implications of the technology, specifically smart contracts. Smart contracts are in their infancy right now and because of a limitation known as the oracle problem, they are more of a curiosity, rather than something that is actually useful for business. However, this will not always be the case and once this problem is solved, the world as we know it will end. Allow me to paint you a picture of the very near future and see for yourself why your life and the lives of everyone you know will be mind-bogglingly changed.

But first, let’s briefly go over what the oracle problem is. You see, current smart contracts are limited to information that is on the blockchain. Essentially, for outside data to be fed into a smart contract, it needs to go through an oracle which translates info into something that can be used by programs. However, all current solutions are centralized, which is anathema to the philosophical underpinnings of cryptocurrency. What good is having a trustless contract automatically distributed trustless funds if the information that triggers it relies on trusting a single party? This is one of the reasons why businesses are hesitant to adopt the technology. But once this problem is solved--and there are trillions of dollars’ worth of incentive for doing so--the world as we know it will end. What follows will sound like a corporate dystopia to some, a libertarian paradise to others, but the one thing it isn't is avoidable.
In the future, everything will be tokenized and recorded on the blockchain, and I mean everything. All of your extracurriculars and hobbies, from little league to space camp, your school work, and first summer job will be tracked and measured. This is because what you will become and what you have done are often two sided of the same coin. “The child is the father of the man,” to borrow a phrase from Wordsworth. In essence, what you were can be predict what you will be.

As you progress through your early studies, a clearer picture will begin to form, and it will be searchable in a database. There won’t be a set time and date where studies are complete as they are in our current system. No, the system in the future will be much more self directed. You will spend as much time studying what you think will be the most productive topics for yourself to know. That is not to say that you will have nothing to guide you—every conceivable topic will be available in its proper sequence in some form online—but rather that you must be the first mover, the prime determiner of your own destiny. I can make a valid case for why learning to write well is better than not, as there are a myriad of benefits that come from the ability. Therefore, I don’t need to force anyone to learn how to write well because they will realize that since they will need to know how to do it at some point down the road, they might as well do it now.

Once you feel that you have sufficiently progressed in a subject, you should take the decentralized test for that topic. Once completed, your results will be instantly available to be queried. After you have progressed through enough topics and been tested on them, you will begin to receive offers of apprenticeship from companies. Companies will be constantly searching for people who meet certain criteria and offer them an apprenticeship as a trial run to see if they are a good fit with the company. Perhaps a tech company will have a constant search running for people who score in the 90th percentile for programming ability.

Should you accept their offer, more and more of your progress will be recorded. Things like on time percentage, projects worked on, and employee evaluations will begin to accumulate. This will bring the picture of yourself on the blockchain from a hazy outline into sharp relief. It is at this point that I imagine you might cry out that this is a corporate hell that puts the worker at the mercy of their employer! And you would be correct if there was only one employer as a variable. However, since Apple competes with Microsoft and they both compete with IBM, it is actually the opposite. Since all this information will be publically searchable on the blockchain, IBM will be able to see which of Microsoft’s workers are their very best and offer them a higher pay to come work for them. So, the only workers that have anything to fear here are the lazy, incompetent, and overpaid.

This process I have described will make the entire education system obsolete. College degrees have become a proxy by which employers gauge competency. Most people don’t actually work within the field that they studied in college. That means that people don’t want a degree for its own sake, but for the secondary benefits of signaling to employers that they have a base level of intelligence and the tenacity to complete a goal over the course of several years. But since decentralized testing will prove both of those points, the need for a degree will diminish over time.

Employers will actually be able to pay people less, while simultaneously paying them more. Let’s say that your starting salary is $4000 per month. If you have to pay $1000 per month to cover the interest on their student loans and another $1000 to pay down the principal, you are only making $2000 per month. But, if you were hired based on decentralized tests with little to no overhead, your employer could start you at $3000 per month—paying you both more and less at the same time.

Yet, while business is just one facet of the future that will be changed forever by this technology, it is far from the only one. The insurance industry will be completely unrecognizable in the not so distant future too. Insurance companies will cease to exist. Instead of buying insurance from a corporation, you will have a web of insurance smart contracts. In the case of health insurance, you will agree to pay some amount per month in return for whatever level of coverage you see fit. While this isn’t a wild divergence from what we already have, the incentive structure will be drastically different. In a word: dynamic. Remember now, everything will be tokenized in the future. Each time you go to the gym, as a part of your gym contract, the number of times you go in a week and the duration of each visit will be recorded; whenever you go to the grocery store, your decisions on what to buy to put into your body will be recorded; and whenever you go to a bar or McDonalds, the amount you consume will be recorded too. Decisions that you make, both good and bad, will be used to automatically determine the rate of your health insurance premium.
In the end, this will result in people living healthier lives. A big mac might only cost $5, but will it be worth the hundreds in increased insurance costs over the years? Certainly not. And since those companies will be faced with utter ruination, their only option will be to increase the quality of their products. Over time, no one will even sell fast food except as a luxury item to those who are wealthy enough to have poor health habits.

I won't exhaustively go through how every kind of insurance will be radically changed, but there is one more worth examining: car insurance. This will be the holy grail of decentralized dispute resolution. Your car will be equipped with sensors that record all kinds of data. Your average driving speed, braking time, your current location, and time of driving are but a few. In addition, external factors like local weather conditions and your health report will be used as factors for determining your current driving rate. That is to say, insurance will be based on usage per trip.
It will simply cost more for a 90 year old with bad vision to drive home at 2 in the morning from a bar while it is raining than it will cost for a 25 year old with perfect vision to drive home from the gym at 10 am on a day with clear weather. This will lead to a massive reduction in car accidents because it will cost too much to be a bad driver. But in the rare event of an accident, sensors in the car will assess damage automatically. The driver at fault will have their rates adjusted accordingly and the injured part will be automatically compensated by the smart contract.

At this point, I imagine that you are itching to comment about how this is entirely impossible because people will simply not drive with smart insurance or disable the sensors in their cars out of protest. But to this, my dear reader, I say that it only seems like a valid problem if you look at it in a vacuum. When I say everything will be recorded on the blockchain, I mean everything. If you want to buy a car, part of the purchase contract will be an agreement to also buy insurance. Car salesmen will have to ensure that they are selling only to responsible buyers because it will be a part of their business insurance. Failure to sell to a responsible buyer will incur a hefty penalty and a decrease of their company rating. But should you seek out a private sale of a vehicle to avoid having to purchase insurance, you will find no one willing to sell to you. Since most everyone will be insured, a condition of their insurance will be that they only sell their car privately to people who are also insured.

But let's assume that you somehow manage to find someone willing to sell you a car knowing that you are uninsured. The first thing is that you will notice is that the car will be incredibly expensive. This will be to cover the fees that the seller will face for selling to you. But the second thing that you will notice is that no business will serve you. For instance, as soon as you enter your grocery store’s parking lot, they will notice that your vehicle is not reporting it’s insurance status to them. Since this can only mean that you are driving without insurance, they won’t even let you through their doors. This is because serving you will be a massive liability. The only reason people drive is to get somewhere and the designers of insurance contracts will know this. By serving people without insurance, businesses would effectively be incentivizing irresponsible behavior, so as a part of their business insurance, they will have to agree not to serve anyone driving to their location without insurance.
But the really interesting thing about all of this is not what I have written about, but rather what I haven’t written about, namely governments. In the future powered by smart contracts, they will not exist. This is a bold claim, yes, but do hear me out. Governments currently exist as a means of collective bargaining between members of a population. That is an idealized definition, but let’s take it on its face for a moment. Once these webs of insurance are adopted--and they will because they will reduce costs--obsolete government functions will become vestigial. Universal health care only sounds like a good solution in a world where people aren't universally healthy; and traffic cops only sound like a good solution in a world where people aren’t incentivized to drive safely. There is still the issue of national defense and welfare payments, but even these can be tokenized. Charity and national defense clauses will be included in health insurance smart contracts. This will ensure that no one manages to fall through the cracks. And anyone who opts in for specific national defense training will have their premiums reduced.

But let’s take off the rose colored glasses for a moment. Of course governments aren’t going to slowly fade away. They would do so if they were only the Platonic ideal of a means for collectively bargaining between populations with divergent interests, but they are far more than that. Without starting from a position that assumes intent, bureaucrats do not want to see their means of making a living diminished. This is natural and darwinistic in the same way that horse and buggy manufacturers didn’t laud the invention of the car. It will feel like an existential threat to them and who can blame them?
People are what they do. That doesn’t mean that there isn’t more to people than their job, but a horse and buggy manufacturer in the age of the car is superfluous. Obviously people can retrain, and the political class will be better than most at doing so because they are generally above average intelligence, but people don’t want to retrain. And since it is within the power of the political class to hinder the adoption of the blockchain, they will try to do so.

Yet, it still won’t work. It is inevitable that the tidal wave of blockchain will sweep over the world because of the basics of game theory. I’ve said before that we cannot look at this issue with limited variables, and the variable I’ve been limiting until now is the number of governments. In a scenario where there is only one government, it would of course be possible for smart contracts to be outright banned for use by business. But in a scenario with many governments, we find ourselves stuck in a prisoner’s dilemma.

The prisoner’s dilemma is a situation where multiple people can make the most rational decision but not get the optimal outcome. The original formulation goes like this: two prisoners are being separately interrogated by the police. If neither of them rat out the other, they both get sentenced to 1 year. But if one of them confesses, and the other doesn’t, the one who confesses will go free and the one who doesn’t will get sentenced to 10 years. Since they want to minimize their sentence, this leads both prisoners to confess and both getting sentenced to 10 years.

In the scenario with governments trying to collude to maintain the security of their positions, it follows the above pattern. It would be in all of their best interests to outlaw blockchain. However, the first one to break ranks will receive a massive boost to their nation’s economy. Since the best possible outcome for any one government is to cheat while the others remain in lockstep, this will lead to most or all of them cheating over time.
I did say that bureaucrats will view smart contracts as an existential threat, which is true, but it is an abstract threat somewhere off in the future. The economy of the nation, however, is not. The careers of politicians can live or die based on the state of the economy. Or, in other words, people vote based on their perception of their economy’s health. Someone like Trump was able to win in 2016 because people in middle America felt like they were left behind by the Obama recovery. You can argue technical points about that, but they’re largely irrelevant. People don’t vote based on facts, but on their feelings. If a nation like China was the one to break ranks and allow their businesses to utilize smart contracts to the full potential that I described above, the resulting surge of growth could probably be explained away by a number of things that don’t involve smart contracts. But since it will be perceived as a direct connection, people will vote as if it was a direct connection.