By now, most are aware of the bad outcomes we see in our ad-based economic model today. Of these, lacking privacy and poor consumer data ethics are most relevant. Organizations are incentivized to get your data by any means necessary. With that data, they use algorithms to increase the “stickiness” of their platform and sell you products. What initially seemed not-so-bad has morphed into a business model that takes advantage of people’s innate biological tendencies and desires. As a result, we’ve seen social phenomenons like filter bubbles, tribalism, and mental health issues. Under an Ad-based economic model, AI is built solely to take advantage of humanity; to deceive it, and ultimately to destroy it.

For the past decades, many have speculated that Artificial Intelligence (AI) is among the biggest threats to humanity. Elon Musk and Stephen Hawking are just two of many highly respected intellectuals that theorize its dangers. And these theories are based on the premise that we may one day lose our authority over machines. As Microsoft CSO Eric Horvitz puts it; “we could one day lose control of AI systems via the rise of superintelligences that do not act in accordance with human wishes — and that such powerful systems would threaten humanity.”

Among the most recent growing trends in crypto, blockchain, Web3, dWeb (whatever your preference) is the emergence of DAOs that govern protocols and communities with common incentives. Ethereum was the first to start “The DAO” which ended in a smart contract hack that led to a network fork, and the original Ethereum chain was renamed Ethereum Classic. The purpose of The DAO was to transparently provide capital funding for Ethereum’s projects and manage the rules surrounding the protocol.

DAOs require blockchain as a common point of truth and a no-trust-required distributed database. The ability to govern protocols and rules for how a digital entity acts is the primary use-case of a DAO. Many in the blockchain space already know the power of DAOs, but many outside seem to be oblivious to its ability to govern technologies that may threaten or harm humanity; technologies like AI, whether in the form of algorithms, robotics, artificial neural networks, or almost anything digitally-native.

If through DAOs, humans have the ability to govern a digital entity’s behavior, one has to ask, can we govern AI in a decentralized way, and would it prevent the possibility of an adversarial AI? The issue with this premise is that many will continue to build ungovernable autonomous AIs regardless of any regulations, thus the solutions may have more to do with checks and balances within the market. To create these checks and balances, the collective power of DAO-governed AIs must be greater and/or faster than autonomous AIs.

Outside of possible regulation to slow down the pace of autonomous AIs, DAO-governed-AIs would have the ability to keep autonomous AIs in check and mitigate its dangers in the long term. But how might we get there?

First off, sharing input (voting) in a DAO has to be as quick and cheap as possible. Current Ethereum gas prices make it difficult to cast votes in a cost-effective manner, and the speed of confirming a transaction is slow. Many DAO tool providers are cognizant of this issue and have strategically positioned themselves based on scalability expectations. Most scalability speculators have two major outlooks; that blockchain will scale vertically through Ethereum, or horizontally through other blockchains like Cosmos or Polkadot.

Overall, blockchain use is expected to follow both axises of scalability in the coming years, and the prevalence of using a specific blockchain may not be as important as its virtual machine compatibility, to which the Ethereum Virtual Machine (EVM) is currently the most popular. In other words, it might not matter which blockchain is under the hood, especially for the average user.

Another requirement for DAOs to combat the negative effects of AI is that voting has to be as fast and effortless as a simple thought. The pace of autonomous AI decision making may be immediate. Thus, its negative decisions could badly hurt humanity if the time required to correct that bad decision is too large.

Currently, the process of sending a transaction or voting on chain requires a digital signature, which is usually a simple press of a button to confirm the transaction. Improved signature methods have been coming to fruition lately, such as multisig wallets, which requires multiple pre-set signatures specific to that wallet in order to send a transaction. One potential evolution of multisig wallets is that you can assign each signature to a biometric reader. These could be in the form of a fingerprint, Face ID, DNA swab, your unique neurome (brain image), and/or, if you had some form of brain implant, a unique thought. Multisig wallets can also be used to own and manage a single asset or NFT, which may be the most realistic means of managing an AI, especially in the form of a car, bot, or algorithm.

In order to maximize the speed at which the decision data is transferred from the human to the device, invasive technologies like microchips, nanobots, and/or brain interfaces must be strongly considered. Unfortunately, the Ad Model has destroyed any possibility of public trust in such technologies, and privacy laws in government are sorely needed, but that’s a topic for another day. Put simply, mixing the Ad Model with deeply personal technologies like brain-machine-interfaces is an apocalyptic combination. Thus, devices like Neuralink can’t be sustained in an Ad Model economy; they must be innate to a token-based economic model.

For now, much of the focus within DAOs is on governance philosophy. The emergence of blockchain governance solutions has brought a plethora of different governing structures. One simple way to put this is; would you prefer a DAO governed in a democratic way or one that relies on representatives? While direct democracy is appealing from an equality standpoint, it has downsides. When making a collective decision via a proposal, the population must be educated on the issue and quick to vote. A representative would be knowledgable on the topic and vote quickly, whereas the average voter is likely to contrast this tendency. Representative systems, however, can lead to class separation that encourages inequality, especially if vote-buying is not mitigated. One example of an optimal mix between these two systems of governance may be “liquid democracy”, where each voter can delegate their vote to any other voter they wish, and the vote passes when it has reached a certain threshold. Liquid democracy considered, it will be fascinating to observe the many possible forms of optimal governance structure that are sure to arise in the coming years. 

Scalability, ease-of-use, governance structure, and security are all of major importance for constructing DAOs that can match the pace of AI. And it is through the evolution of cryptographic technologies that we can control and mitigate AI’s negative impacts that the world’s most prominent minds have warned against. Scaling DAOs is our ultimate solution.

One of the most prominent hype waves in crypto right now is Non-fungible tokens (NFTs). While NFTs' most realistic long-term value prop is tokenizing real world assets, there are additional use cases that arise. Projects Alchemist (MIST) and Non-Fungible Yearn (NFY) (the first yield bearing NFT provider) are two recently emerging innovators in the NFT space. Each of these projects combines Liquidity Provider (LP) tokens with NFTs, which are then staked for additional earnings. For example, the user would provide capital to the $MIST-$ETH Uniswap pool, which would auto-generate an LP token, and thus auto-generate an NFT of that LP Token; a coming default feature of Uniswap V3. The user would then stake that NFT on alchemist.farm, which is called “minting a crucible”. The application of these three technologies into one is compelling to anyone fascinated by NFTs, LPs, and staking, due to the double-compounding growth curve this stack creates, but one should be wary of high inflation rates of the underlying currency. Due to high inflation, which is used to pay out stakers, these tokens have downward economic pressure on their price, but the compounding growth of staking the NFT mostly offsets this downward momentum. So the question is; can we implement buy-side pressure / upward price momentum of the underlying currency?

One of the ways blockchains have influenced buy-side pressure is through burn mechanisms. Currencies can have multiple burn mechanisms, which contribute to the overall scarcity of the currency. For example, Handshake burns HNS any time a user wins a name that has at least 2 bids in its auction. Handshake also burns currency anytime DNS records are updated on chain, and anytime the name is renewed, which is required after a 2 year period. Due to these coin burns and their contribution towards HNS scarcity, the Handshake blockchain, which is responsible for containing a record of unique domain names, is an attractive asset to build compound growth finance products on, though it’s unclear what this might look like. Recently, badass.domains integrated the .badass/ HNS name into an ENS contract for the first time, allowing it to utilize Ethereum's robust smart contract functionality, and opening up a spectrum of new possibilities with HNS names.

Speaking of Ethereum; another example of a burn mechanism that is talked about quite often these days is EIP1559, an Ethereum proposal in which extra gas fees that exceed the newly implemented “base fee” will be burned, giving Ether more scarcity and thus higher price. These burn mechanisms are methods of engineering token scarcity, but for LP NFT staking projects, it is seemingly difficult to find ways in which they can be implemented.

For Alchemist, the road ahead is unpaved; a blank slate of ideation. There is no immediate plan of action for creating a burn mechanism that would create upward price momentum, and so, the cryptocurrency will indefinitely inflate away its value. One idea passed along through the discord channel is to burn $MIST upon changing the name of your NFT / crucible. However ideation is ongoing, and so additional ideas are yet to be presented. If and when a $MIST burn mechanism is implemented, an Alchemist crucible could truly become a super-asset, or as many in the community put it; the philosopher’s stone.

Looking back on my old writings, it’s clear to me that I have aged. Many things of today seem to be moving in the wrong direction, other things seem to be moving in the right direction. My only fear is the forces moving backwards will cease the forces moving forwards. Since my last post, I deliberated into a healthy diet of Eloquent Javascript, Ethereum contract standards, YouTube, Medium articles, Polkadot/Kusama parachains, and the Handshake naming service. While I am certain the web will change drastically throughout the next decade, it’s not quite clear the exact structure it will take, however the web technology of tomorrow is promising.

In an older blog post, I briefly touched on the fact that individuals follow incentives, and if a product becomes unusable, the experience becomes dull, or the use becomes unethical, we often see consumers gravitate towards alternatives. With certainty, this is what is happening now.

The old domains of the internet; the .coms, .orgs, .nets, may be replaced by new domains structured like so: yourname/, brandname/, anything/, or even better, email handles structured as: “myname@whatever”. The traditional ICANN top-level domains (TLDs) are likely to be overrun by a decentralized root naming service like HANDSHAKE. The holes in the ICANN DNS model, which touts itself as an ethical non-profit, which may be true in some respects, requires trust that they will act in good faith. Recent stories of TLD back-door deals suggest ICANN leadership may lack the absolute integrity required in a trust-based, centralized system. Furthermore, any system that requires trust is highly likely to erode over time, as that would insinuate that there are moral and ethical requirements that can be exploited by financial incentive. Open criticism is also vital to the growth of any system for the exact reason of minimizing points of failure.

Throughout the COVID19 pandemic there have been consistent calls for identity connected to proof of vaccination, as well as internet user browsing data being used by insurance companies and credit rating agencies. While this is concerning, there are indeed evolutions outside of centralized identity issuance. Take for example, the ERC725 contract standard being built on Ethereum. The contract would allow for the existence of proxy contracts as proofs. The technology seems to leverage zksnarks, a privacy preserving technology first championed by ZCash (ZEC). The mixing of the two contract standards, ERC721 (unique assets) and ERC725 (proofs), opens up a world of opportunity in how we handle custody and/or delivery of items. ERC725 alone will clearly provide private, self-sovereign credit rating systems in which only you know your score, only you know whether your loan attempt is/will be accepted, and only you know your “social score”. It completely abolishes the need for centralized certification authorization. The possibilities of these proxy contracts are truly endless.

The immediate final frontier of decentralization is free market governance. The “chain-agnostic” philosophy of the Polkadot/Kusama parachain ecosystem embodies this value proposition in which consumers ultimately get to choose the governance system they play by. While my research is ongoing, this idealistic scalable economic system will create fluid transactions over a diverse set of blockchains, and precede value exchanges between parties that are truly unimaginable.

And so, due to recent events of censorship and the eroding user experience on the social and foundational structure of the web, I expect consumers to be on the look-out for new alternatives that contribute to the decentralization of power, ensure privacy, and optimize governance, and I believe these to be solid infrastructural predictions of what we are about to see on the web. The winners will be those who dare to deviate from the centralized, well-capitalized bodies of the internet in pursuit of new decentralized incentives.

“It’s our currency” President Trump said on March 24, 2020 in a Coronavirus briefing. As the coronavirus sweeps the nation, it’s possible that the age old argument of whether the Federal Reserve is an independent entity is being tested.

Financial innovations have typically been developed to render regulations and restrictions that put a damper on profitability obsolete. In similar fashion, when a currency is experiencing hyperinflation and is therefore an insecure asset, consumers will be drawn elsewhere, and thus innovation will evolve outside of that constraint. The anti-capitalistic, too-big-to-fail policy has raised moral hazard among corporations with massive debt because they are expecting a bailout. Meanwhile, these corporations outsource most manufacturing to foreign countries, and so the value that was initially taken from the American people leaves the country entirely. “The Cantillon Effect” describes this phenomenon of theft through localized inflation very well. It is because the money supply has a specific injection point and specific flow path through the economy that wealth inequality is so rampant. It seems a decentralized currency is more important than ever to combat this wealth inequality.

A far better approach to providing security to the American people throughout this pandemic would be to give money directly to consumers and let capitalism play out in free market form. The long term benefits of this scenario far outweigh the benefits of the current method of providing stimulus to corporations that supply politicians with campaign funding. The question that’s been raised for scenario 2 is “How do we get funds to people in a reasonable timeframe?”

There have been a number of ideas floating around to solve this issue. The first proposed by Congressional democrats was to issue a “digital dollar” along with “digital wallets” that operate on a “digital ledger”. The second rumor was that the Federal Reserve would partner with Coinbase; an instant borderless payment provider with their own ‘USDC’ cryptocurrency pegged to price of USD. Lastly, news is now circulating that funds could be issued via a joint agreement between Square’s Cash App and payment provider, Venmo.

All the while, the price of metals like gold are on the rise. However, gold and other metals are tied to the means of production. Increased demand for scarce metals increases manufacturing costs for things like arms and electronics. As a result, the end consumer sees the prices of these goods rise, and thus the standard of living decreases.

While the Federal Reserve continues to inject stimulus and raise the money supply at an alarming rate, consumers are looking for safe haven assets. As a finite asset, real estate may be the safest investment of all, but for obvious reasons, real estate cannot function as a medium of exchange.

So now the question is; is the necessary sustainable infrastructure in place for digital payments? Guaranteed internet access and sustainable sources of energy are two components needed for this utopia. The first needed component is being developed right now. SpaceX’s Star Link Satellite Internet Service will provide internet access globally within the next 6 months to a year, and more competitors are entering the space race. This valuable infrastructure will allow for the security needed for digital payments to become a reality. It seems large tech companies are preparing for this reality as well, as the third largest tech company, Microsoft, filed a patent this week for a “cryptocurrency system using body activity data”.

Whether or not these changes spell the end for fiat currencies, it is certain that using a scaled blockchain with zero-knowledge proofs is the most ethical way to go about consumer data management. The article The Rise of the Invisible Bank gives us a surveillance state scenario in which “You walk in, we know where you are, where you entered, on which train you stepped in and where you stepped out, and you’re charged for your trip automatically,” Legrand said. “This is what you want.” While this is indeed what the consumer wants from an effort standpoint, personal data should be a property right. Even though using public services does not subject the user to immunity of data gathering, a line must be drawn so as not to take advantage of the rights of consumers through debilitating over-surveillance.

And so, blockchain will play a massive role in neutralizing the surveillance state though the encryption of data and the algorithmic execution of that data without human involvement. Details aside, the future of money is programmable, and it’s a fair assumption that most of the banking industry will eventually be dominated by programming as well.

I recently watched Lo and Behold: Reveries of the Connected World on Hulu. It’s broadly about the evolution of the internet. One of the things that struck me was a mother’s account of her daughter’s death at the hands of a self-driving vehicle. The mother then expressed that she believed the internet to be a manifestation of the devil or the Antichrist, due to her personal negative experiences of receiving hate mail about her daughters death. “On the internet, anyone can say whatever they want with no consequences” she expressed. And she’s right. This is a problem for those who don’t desire to be exposed to such content. While it can be argued that privacy in our expression allows for a broader range of creativity, the only ethical solution to combatting hate speech is the existence of a platform in which users possess a verifiable identity where they are held socially accountable for things they say. A cryptographically secure decentralized identity system would do wonders for society, and would allow for scalable growth of the internet of value.

I imagine a digital identity would look a lot like a digital wallet, which is also similar to a browsing cookie in that they each aim to capture the identity of the user. Essentially a wallet and a cookie both allow for quick verification that you are you. A wallet however allows for transactions of cryptocurrency in the browser. A digital identity would open up new possibilities like built-in credit scores for taking out loans in seconds, and would allow for new types of social networks to exist online that better emulate the economic/political system. For instance, a decentralized social network may be able to effectively guarantee that users possess a single democratic vote on a change to the social network’s governance. But without a verifiable ID, people can create multiple accounts and thus vote on things multiple times.

We have to be careful that an identification system is not too centralized however, or it will end up looking like the federal reserve does today; overrun by criminals that steal from the American people by “printing” or expanding the supply of dollars. Centralized systems contain too many points of failure, and thus greed corrupts them.

Recently Bill Gates has come under fire for suggesting something along the lines of a digital identity. Additionally, there have been smaller identity products circulating the web today, and it will be interesting to see what competitors arise in the digital identity space, as a monopoly would surely be a disappointment. Furthermore, I hope big tech companies have the integrity to create an identity product that is not overly centralized and truly gives power to people. // Edit: A contract-standard that allows for self-sovereign identity can be found on the ERC725 Alliance website.

In some respect, that woman was right about an evil entity being manifested by the internet. De-platforming and censorship are both reflections of overreaching powers attempting to control the narrative, but hate speech is also an issue. The internet of information is an ugly place, but we have the opportunity to make it better through well-scaled blockchains and their immutability. Giving tokenized value to data could allow for a more accurate representation of what is truly valuable to society.

In a recent interview with Lex Fridman, Jack Dorsey called Bitcoin a “total activist move”. To those unfamiliar with the pseudonymous Satashi Nakamoto, it is suspected to be an individual, though it’s more likely a group of people who never took credit for their creation. The oddity is that while no one took credit for creating bitcoin, the underlying blockchain technology created a reliable way for artists to guarantee credit for their own unique creation. Bitcoin itself is poetic. If you have time to kill, watch the film F for Fake (1973) by Orson Welles (Citizen Kane). It lays out the double spending problem and seems to parallel a bitcoin-like solution. Specifically, there’s a climactic, though quiet scene that displays the Chartres Cathedral. Narrating, Welles refers to it as “the premier work of man, perhaps in the whole western world, and it is without a signature.”

In the year 2019, competition in the tech industry is overwhelmingly one-sided. In search of where to point the finger, many blame lacking regulatory policies for the monopolizing industry. Tax havens and data centers have allowed these “spying empires” (Lanier, 2010) to flourish, leaving behind a trail of socioeconomic inequality, not just for places like Silicon Valley, but for the entire nation. The most glaring issues in tech have to do with users’ personal data, their privacy, and their identification. Regulating these issues with soft paternalism and technolibertarianism approaches by incentivizing consumers and businesses with digital nudges is ultimately the most productive way to ensure societal welfare. Additionally, utilizing an ordoliberal market agenda will maximize economic growth fueled by competition.

In 2004, the European Union pushed regulation on Windows to declassify Windows Media Player as a built-in application from their operating system because it created an unfair advantage over other media player applications. Today, there is an ongoing case of the same nature surrounding mobile phones and their built-in applications, which seems to be suppressing competition in the application building industry. This is one example of how ordoliberal competition laws are being implemented to enhance economic productivity, and this method of spurring innovation deserves consideration (Woersdoerfer, 2017).

In man’s quest for the ultimate tool, he created social media to maximize the efficiency of social connections. Somewhere along the way, Facebook, social media’s largest company, lost its classification as a tool, and devolved to a parasite. One reason Facebook holds so much power over social media is the fact that users have built valuable relationships with other users. Therefore, it may be time to allow increased accessibility to our relationship data so that it is easily transferable to other platforms in order to spur on competition in the social media space.

Digital nudges are one way economic incentives can be utilized to promote positive consumer behavior. When reviewing qualifications for the legality of a nudge, they should be pro-economy and pro-humanity. As it stands, these nudges utilize user data, which forms a digital identity currently unknown to the user. Harnessing this identity as a personalized, manageable self allows users the right to privacy, and sets the foundation for an internet in which users hold identification, and use it to access certain content. A current lack of user identification, paired with filter bubbles caused by irresponsible algorithmic nudging is largely responsible for the spread of fake news and hate speech. A soft paternalistic approach to this issue can be implemented by incentivizing identification upon the consumption of valuable content. If a government issued identification is required to use certain platforms, it also de-incentivizes illegal immigration, because they would not be allowed the same informational privileges as their documented peers.

The issues of data ethics, privacy, and identification are only the first of many in the complex array of outcomes our interconnectedness is bound to offer. As our governance of how users utilize technology evolves, it begs the question: are humans really cut out for it? In the near future, should we be focusing our efforts on implementing artificial intelligence into government, so as to create a perfectly functioning system of economic productivity and societal welfare? This is an idealized vision that seems theoretically possible, and we need to push toward the AI revolution with capitalistic incentive. We can achieve this by implementing digital nudges, by eradicating regulations that decrease productivity, and by promoting ordoliberal market agendas by implementing competition laws that increase productivity of specific markets.

References: Lanier, J. (2010). You Are Not A Gadget. New York, NY: Alfred A. Knopf. Woersdoerfer, M. (2017). Engineering & Computer Ethics. In M. Woersdoerfer (Ed.), Policy and Regulatory Issues (pp. 1–2). Retrieved from https://umaine.grtep.com/index.cfm/engineeringandcomputerethics/page