A symbol for ‘nothing’ doesn’t seem to mean very much, but the biography of the number ‘zero’ shows what a dangerous idea it has been since its very first creation. The Sumerians of ancient Babylon invented it about 5,000 years ago, the Greeks banned it, the Hindus worshiped it, and the Church branded it as demonic figure that implied the negation of God.
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Rehabilitation started in northern Italy in the 13th century. Zero became the most important tool in mathematics. It enabled the merchants of Venice to create modern finance: they invented the double-entry bookkeeping system. In her book ‘Double Entry’ author Jane Gleeson-White states that double-entry bookkeeping is ‘one of the greatest advances in the history of business and commerce’. She argues that ‘the process of recording profit and loss was nothing short of revolutionary: it fuelled the Renaissance, enabled capitalism to flourish, and created the global economy.’
Jacob Soll, the author of ‘The Reckoning’, states that basic accounting tools not only form the basis of modern capitalism but also of ‘the nation-state’. Our present is the outcome of this innovative system of accounting.
The acceptance of the double-entry bookkeeping system didn’t happen overnight. One of the main obstacles was the Church. Pope Leo the Great forbade charging interest on loans by canon law. In his eyes banking was sinful. It was prohibited to profit from money ‘without working’. Soon various ways around the prohibition were devised. Christianity and Judaism generally ban usury, but allowed usury towards heretics. Thus Christians could lend to Jews and vice versa.
History repeats itself
With the introduction of the binary number system, the base-2 internal machine language of computers, we are now seeing the dawn of a new system for double-entry accounting. Instead of using a centralized ledger — that is controlled by banks, notaries and insurance companies — the Bitcoin Blockchain proposes a new distributed bookkeeping system, where every node in the network maintains its own copy of the ledger. The ledger is completely transparent, everybody has the same view on reality. There is an excellent video that explains it further over on Khan Academy.
The blockchain is a shared single source of truth. Or as Alex and Don Tapscott explained it: ’It basically enables a global spreadsheet — an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, transactions between smart objects, and anything else that can be expressed in code.’
No wonder that the popes of our modern economy find it hard to grasp how Bitcoin and blockchain technology works. A new Renaissance might be at the horizon. The blockchain not only radically transforms the way we do commerce, but it basically redefines the nature of the firm and has the potential to fundamentally shift the way in which our society is hierarchically organised.
A supercomputer for any kind of reality
Melanie Swan, author of ‘Blockchain: Blueprint for a new economy’ says that ‘in some sense, blockchain technology could be a supercomputer for reality.’
In his upcoming book ‘The Blockchain: Mapping the future of decentralization’ author Simon de la Rouviere builds upon this idea. He argues that the blockchain can even support ‘alternate realities as legitimate avenues to “live” in several ways’.
Using a combination of decentralized finance, property, trade, organisations, artificial intelligence and law, it not only creates a decentralized basis for our current reality, but any other one.’ So the blockchain is basically a supercomputer for every kind of reality we can imagine. It’s a ‘computational universe with true time dimensionality.’
The possibilities are endless. At the moment we are only scratching the surface of what alternate realities blockchain might enable. Just think of all the virtual realities that the blockchain can support: Minecraft, the massive multiplayer online game EVE Online, just to name a few. And what about Oculus Rift? Last year Mark Zuckerberg acquired the company for $2 billion. During his keynote session at the F8 conference he showed the above picture that summarises his vision for Facebook neatly.
Facebook moves from simple text messages to realtime virtual reality experiences. In the near future billions of people will communicate, interact, play and trade with each other in the virtual reality that Facebook displays on their eyeballs.
The blockchain might be the ultimate protocol to support this kind of global digital nation. With bitcoin blockchain there are no borders or limits. Blockchain cracks Pandora’s Box. It’s a rabbit hole inside of a rabbit hole inside of a rabbit hole…
Robocorps and robosociety
In his book ‘Sapiens’ author Yuval Noah Harari tells a brief history of humankind. He explains that one of the things that separates us humans from animals is the fact that we can imagine things. ‘Fiction has enabled us not merely to imagine things, but to do so collectively.’ One of the greatest figments of our collective imagination are corporations.
Humans have invented corporations to overcome the boundaries of Dunbar’s number, the ‘cognitive limit to the number of people with whom one can maintain stable social relationships.’ Over the last couple of centuries these companies have become the main players in our economic arena. Measured by their generated income, some of these structures are even bigger than nation states!
Now, with the invention of the bitcoin blockchain, the idea of corporations is evolving. Blockchain removes all kinds of friction. In doing so, it enables leaderless organizations. Companies whose mission statement is encoded into the blockchain and can thus operate completely autonomously. These so called Decentralized Autonomous Corporations (DACs) aka Robocorps are a new economic entity, next to people and corporations, that are entering and participating in our economy and society.
Wrong Side of History
For centuries, ‘capitalism’s basic institution‘, the corporation, has remained relatively unchanged.
Hierarchy, vertical integration and bureaucracy — hallmarks of the industrial age — still reign. We now stand at the edge of a new digital revolution. The internet is beginning a new phase of decentralization. As I’ve explained at the beginning of this article, the decentralized ledger removes all kinds of friction and thus the need for intermediaries. It therefore creates an alternative future that enables a new kind of company, a new kind of economy and a new kind of democracy and society. The future is the reverse of the centralized 20st century.
In a recent interview, former U.S. treasury secretary Larry Summers, one of the world’s most influential economic thinkers, made the following statement: ‘The people who rejected the internet as a curiosity for scientists were on the wrong side of history, the people who rejected digital photography as really an artificial thing were on the wrong side of history, and the people who felt that nongimmicky tennis racquets were made with wood were on the wrong side of history.
So it seems to me that the people who confidently reject all the innovation here [in new (blockchain-based) payment and monetary systems] are on the wrong side of history.”
It’s time for companies to wake up . Don’t fight the new system, but experiment with it and try to innovate. Embrace the possibilities of the bitcoin blockchain. It’s Digital Darwinism: adapt or die.