Why Texas Needs a Blockchain Summit
We are at a moment of re-founding for the American Republic. Protocols enabling coordination among distributed actors, with no centralized point of executive authority, are pulling us in the direction of bottom-up, decentralized value. This requires us to give thought to what we will do together, and who we will become, both as a state and as a country.
This Fall, a group of policymakers, industry leaders, researchers, and activists will descend on Austin, Texas for a one-day event--the Texas Blockchain Summit--to discuss the present and future impact of the protocol revolution we call Bitcoin. Bitcoin is, of course, the first instantiation of the technological infrastructure of a timechain--or a blockchain--a distributed digital ledger that records transactions in an immutable data structure.
Texas has seen extraordinary momentum behind blockchain technology over the past year: the passage of two pieces of landmark legislation; a pronouncement that Texas banks can custody digital currencies; a political climate where the technology is welcomed and encouraged at the highest levels; and an influx of Bitcoin miners helping to shape the next generation of Texas’s energy economy. Behind each of these developments is the Texas Blockchain Council, a nonprofit trade association working persistently to ensure that Texas is and remains a leader in blockchain innovation.
With all this success, some might ask--why a Summit? And why now?
The answer is straightforward: the process of thinking must accompany the process of doing. In other words, in order for action to have the most impactful and beneficial effects, it must be accompanied by periods of reflection and camaraderie. People must come together to see their compatriots in the project to which they are dedicating their lives. They must take a step back from the grind of execution to consider why, and to what end(s), they are doing what they are doing. To take stock of what has been achieved, consider soberly the challenges ahead, have their approach watered by the exposure to and confrontation with differing views, and decide how they will align resources--time, labor, capital--in the direction of what has yet to be done.
This is how founding occurs. And it is no exaggeration to say that we are at a moment of re-founding for the American Republic.
The challenges we face now are profound: a climate in severe jeopardy; a multipolar world increasingly inflected by struggles between the great powers of China, Russia, and the United States; the dissolution of the post-WWII order of military and monetary alliances and allegiances; the uncoupling of government spending from any constraints, fueled by debt monetization as routine practice; rising inflation and income inequality; a labor market rocked by an exponential growth curve in automation technologies; and the inadequacy of many of our inherited institutions to address these challenges. The resulting frustration and fear among the American people has spurred a rise in extremism and flirtations with autocracy across the political spectrum, accelerated by the virality of information spread via the internet. The American project itself is being called into question, reexamined, and re-implemented on new platforms enabled by universal computation.
Into this fray has stepped a new kind of institution--the protocol. A technological infrastructure, the protocol is, simply, a set of rules for moving information from point A to point B. Yet this simplicity is what has taken the protocol from a human diplomatic institution--rules governing affairs of state or treaties between states--to a technological institution: rules governing the communication of information using digital means. The protocol is thus a new tool of governance, a new mode of organizing human collectives.
Protocols enabling coordination among distributed actors, with no centralized point of executive authority, are particularly transformative in this historical moment. Our Enlightenment-era political institutions attempted to distribute power by embedding different, and complementary, powers in different branches of government. But as our political reality demonstrates, this has resulted not only in a drive by the various branches of government to capture as much power as possible for themselves (the theory of the Unitary Executive is probably the most well-known example of this phenomenon), but to permanently ensconce a particular political faction (party) in positions of pre-eminence. This has resulted in a set of perverse incentives, where many see the more favorable outcome as rendering the machine of government itself inoperative in order to preserve temporary advantage for their own faction. When coupled with the practice of limitless debt monetization, the oversized authority of party leaders on policy and the legislative process, and an executive branch empowered by decades of de facto unaccountable warmaking authority (including the normalization of mass surveillance, foreign and domestic), the democratic transfer of power has become an exercise in flipping between what most people experience as two different flavors of monarchial rule. Accordingly, nearly half of Americans--citizens of the world’s paradigmatic democracy--simply do not participate in the political process.
Protocols stand to disrupt that status quo. Most prosaically, anyone can write a protocol. On the open source model of software development, anyone can contribute to the authorship, evolution, and strengthening of a protocol. Anyone can build software that embeds that protocol into a product or solution which solves a real human need--thus spearheading the adoption of the protocol. This open, decentralized process of software development is creating new modes of governance that are beginning to provide alternatives to legacy political institutions.
The power of bitcoin as a protocol for deriving consensus across a distributed network cannot be overstated. It means that, for the first time, we have a system that can preserve and grow value without the imprimatur of a centralized authority--whether that is the state, a corporation, an industry consortium, a religious bloc, or any other human arbiter of truth. The protocol specifies the criteria that determine whether a transaction is legitimate, and then encodes it permanently into the historical record of the chain. As no one actor can capture this ledger, no one actor can capture its value. This renders bitcoin a global “translation layer” of value--legible to anyone, anywhere, any time.
At face value, this seems to chip away at the sovereign privilege of the state. Upon closer inspection, however, bitcoin may become the very reason that states remain solvent as we enter this new period of unprecedented climate and geopolitical disruption. This is because bitcoin serves as a non-state “safety net”, able to catch value that is fleeing crisis and catastrophe or simply wishes to remain unaligned with the priorities of any particular state. The problem with a governance model where every public good and common pool resource is both authored and managed by the state--from the printing of money to monetary policy to the delivery of social services, a commons, and a social safety net--is that it introduces a massive single point of failure in the state itself, rendering entire populations vulnerable to profound systemic risk. After all, the sovereign ability to infinitely print money means nothing if nobody wants it--and if nobody wants it, there are no incentives to set up economic engines (including those operating on a nonprofit basis) in that jurisdiction. The vicious spirals of hyperinflation, currency devaluation, economic devastation, and the resulting economic “recoveries” through oligarchic, cleptocratic forms of value capture are all results of centralizing value creation and management in the state while cutting off the off-ramps for people trying to save their livelihoods.
Going forward, we will see not an elimination of national fiat currencies, but their existence in a trade-pair with bitcoin everywhere in the world. Countries that adapt to this reality soonest, and fold its assumptions into their institutions of governance, will out-compete those that do not. It is for this reason that states like Texas, the world’s ninth-largest economy and a critical contributor to America’s software and energy sectors, should have something to say about this emerging order.
That is why the Texas Blockchain Council is bringing the brightest minds in Bitcoin to Austin on October 8th. Unlike other blockchain conferences, this will be an intimate, high-bandwidth event that privileges substance over slogans, dialogue over soundbites, and content over celebrity. It is critical that those who have the skill, experience, and expertise to contribute to building what is next meet one another and remain open to the possibilities generated by their proximity.
A new historical current has emerged, and it is pulling us inexorably in the direction of bottom-up, decentralized value. This requires us to pause and give thought to what we will do together, and who we will become, both as a state and as a country.