What Blockchains Are And Why You Should Care: A Parable

Matthew McKeever
12 min readJul 9, 2018

(This may or may not be a draft that I’ll improve. Comments very welcome.)

It’s easy to criticize cryptocurrency. Fun, too.

As to easy: it’s environmentally disastrous, it helps bad criminals like people traffickers, for a decentralized system it (or at least its most famous exemplar, bitcoin) sure does rest on centralized mining cartels, and it, or again at least bitcoin, is so unequally distributed that it is de facto centralized, in the sense that a so-called whale (someone who has a lot of bitcoin) could — though no one knows if they really do — manipulate prices easily, if they so chose.

As to fun: it’s a currency one can’t really use, well, as a currency. You can google for stories about bitcoin conventions where one can’t pay with bitcoin because it just takes too long. Ethereum, one of the biggest players in the field, was hobbled last year because too many people started using it to buy digital kitties. The people who make money from it or defend it are obnoxious libertarian types. (Actually, this last point is unfair. While there may be tons of such people, many of the people ‘in the space’ as the locution goes are very smart, interesting, and seem quite nice.)

This nothwithstanding, I think there is much to learn from cryptocurrencies, or rather from the technology underlying it, or rather from the vision underlying the underlying technology. Even if bitcoin shouldn’t exist because of its environmental costs, and even if any such attempt at decentralisation will fall victim to human beings’ lust for power (as manifested today in whales and mining cartels), the basic underlying principles of blockchains are ones which anyone, and in particular leftish people whose visceral dislike of crypto’s current form might lead them to dismiss the whole idea, ought to like. (Terminology note: bitcoin is an instance of a cryptocurrency, some of which make use of blockchains. In what follows I only concentrate on proof-of-work based blockchains. If you don’t know what that means, don’t worry.)

I’m going to try to make this case by considering three reasons why leftish people, construed wildly loosely so as to mean basically people who care about equality and fairness, and the institutions which hinder those values, should heed crypto. I’ll do so by introducing blockchains using a parable that, while loose in central respects, gives the big picture story in a way that is more digestible than the presentations one typically finds.

There’s a group of people on an island somewhere, and they want to record their history as it happens, day after day. How should they go about it?

Their first thought is as so: have a book kept under lock and key that a dedicated historian adds to every evening at 7 pm.

They don’t like this idea, though. They think it’s wrong that any one person should get to speak in that way for the whole community, and that biases and such would all too easy warp the history. Rather, they think the community as a whole should get to tell their own history, and so they think that everybody and anybody should be allowed to update the history, to reflect the congeries of perspectives people have on reality.

They hit upon this idea: a person gets randomly elected each day, and they go and write it up.

Still, there’s a problem. If it’s under lock and key, someone must look after the lock and key; there must be a guard. That person will know the identity of the daily updater. And that’s risky. The updater might feel pressured to tell a history that the powerful like, in case the powerful have bought the book guarder. Even absent that, they feel rightly uneasy about a guard having all that power and knowledge.

They think about getting rid of the guard: the book is kept unlocked, but there’s a policy that the town square, where it’s held, is completely empty at 7 pm each night, so the updater can update it without anyone learning that they did so.

But that, too, has a problem. What’s to stop the updater from deleting old bits of the history, or even from bringing in their own doctored book and swapping them out? The anonymity brings risk of the history getting corrupted.

Then someone has a good idea. Instead of writing the history, they decide to carve it in stone. Not a fancy stone: just a standard, squarish, 3x4x6in stone, of which there are many around. The clever thing they do is, as a community, precarve the last year of their history on it. It takes three hours for one person to carve a day, so it takes them about one thousand work hours. But there’s one hundred people, and so, working three hours a day, they get it done in under half a week.

What does this achieve? That it’s stone means someone can’t come in and selectively erase bits of the history they don’t like. That it’s precarved means it’s essentially impossible for a single person to forge. Working alone, it would take them a year working three hours a day, or about three months working flat out at twelve hours a day.

Even then, it would be no good. If they went away from three months and worked their socks off, making their forged stone with a view to sneaking it, say, under their shirt into the town square, the actual stone would have, by the time they returned to camp exhausted, have had three more months of history written on it. More generally, unless they were to find a way to work quicker than humanly possible, the actual stone will always have the advantage. They won’t foreseeably be able to catch up, given the precarving the whole community performed.

What this means is that the stone is essentially unforgeable, because it is the product of too much work for a single person to reproduce. And this means that we don’t need guards to look after it, and so one of the major worries about having a decentralised history that anyone can write to is solved.

(You’ll realize that the equations change if more people are corrupt and in cahoots; but provided sufficiently many are honest, forgery won’t be possible. This is a crucial feature of actual blockchains.)

At least one problem remains, though. What’s to stop the anonymous historians from telling a version of history favourable to them? When it comes to be the day I get randomly elected, I go and secretly write about how great I am.

To solve this problem, they introduce another innovation. They don’t carve directly on the stone, but on some slow-drying concrete applied to the stone. This concrete takes 28 hours to dry, and they have the following policy: if the history of the day before you seems egregiously bad, you can wipe it over and tell your own version. Now, it’s egregiously bad for the stone to say how great I am: after all, I’m not. I once lifted the hind legs of a dog and used it as a vacuum cleaner, for example.

What that means is I won’t be tempted to lie. Because the person after me, just like me, will be randomly chosen. And there’s no reason to think that that person will look on me as favourably as I look on myself; maybe they remember the dog vacuum incident, maybe they’re unimpressed with me for some other reason.

So I should think, if I lie, there’s a pretty good chance my history will get erased. But I don’t want that: I’m committed to the idea that there be a solid history that I contribute to.

(We could even incentivise it: as a community, we love poetry, and as a reward, the historian of the day gets to write their own poem on the stone. We all want nothing more than for our poems to get read and appreciated. So I should definitely not want to risk my poem getting erased because I was silly enough to lie about myself. Cryptocurrencies incentivize adding to the blockchain; this is mining, as we’ll see below.)

We’ve come quite far. An unamendable unforgeable history, collectively written, which we can roughly trust because if you lie, your contribution is likely to get erased by the next person. This, roughly and allegorically speaking, is what a blockchain is. Note how our community got rid of centralized power and its abuses. Instead of one historian telling the story, we each tell a part of it, relying on the fact that unless our stories are roughly accurate, they won’t get accepted. One single story is replaced by the community collectively each telling a bit of the story. Instead of having to have a guard to make sure no one messes with our story (and who thus knows who is writing it at any time), we rely on making our story unforgeable by each putting in work that it’s infeasible to counterfeit. And we don’t have to worry about telling anything but the truth and facing repercussions, because our contributions are anonymous.

Screenshot from p39 of Bitcoin And Cryptocurrency Technologies, explaining how identity is protected on a blockchain (something I don’t discuss). Definitely check the book out for more info on how blockchains work.

Let’s translate this, partially, into blockchain talk. I’m going to leave some important and cool stuff out, but I hope what I don’t leave it out is enough both for my purposes and to get a rough sense of how bitcoin works. I recommend this book or, if you’re in a rush, this article.

A blockchain is digital entity. It consists of blocks linked together. Each block is a list of transactions: statements involving the transferring of some bitcoin to someone else (how this works I’m leaving out; you’ll have to take it on trust that there’s a neat way of representing and verifying transactions). The blocks record the history of bitcoin transactions, just as each day’s write-up on our stone records what happened that day. How we do ensure that the blockchain is an accurate record of the transactions?

For one, we make it hard to amend, like our stone was. The blocks are linked: for every sequential pair of blocks b1 and b2, where b1 is added to the chain before b2, in b2 there is a special bit of data — a hash — which is determined on the basis of the contents (i.e. recorded transactions) of b1 such that if b1 had different contents, the hash would be different. What this means is, if you want to go back and amend one particular block (say because there’s a transaction in it you don’t like), it’s not so simple: if you amend it, then the hash in the subsequent block will be incorrect, and you’ll be found out.

Still, though, that might not be so difficult. If it’s easy to add blocks, then it might be easy to add many blocks. So even if you wanted to amend a block ten links down the chain, that wouldn’t be a challenge.

But it’s not easy to add blocks. In order to add a block, you have to solve a very hard puzzle which uses the information in the block you’re proposing and the hash of the previous block. The solution to this puzzle is called (unfortunately for British English speakers) a nonce and it too must be included in your block. So if you wanted to amend a block ten links down the chain, you’d have to recompute each of the nonces for those blocks, and that’s very, very difficult (this is a slight misrepresentation, but hopefully cognoscenti won’t hold it against me). In our parable: the stone is the chain and carving the day’s history is adding a block.

It takes a lot of computing power to find a nonce (this is the source of bitcoin’s fabled energy consumption). So it takes a lot of computing power to amend a blockchain.

But it also, by the same logic, takes a lot of computing power merely to add to a blockchain. Why would you bother? Or rather: if you’re going to bother, wouldn’t you be wise to propose a block favourable to yourself, that may not be accurate? How do we guarantee the record kept by the blockchain is trustworthy?

I kind of assumed, in the parable, that people just intrinsically wanted their history to be recorded, and that meant they didn’t write egregiously bad histories. But I also noted we didn’t need that assumption — we could assume that there’s a reward for having your history recorded. In the parable, that was that the stone would contain, along with your history, some poems you wrote, that would thereby be published and preserved for posterity.

There’s also a reward for adding to the blockchain, and that’s, in part, how we guarantee an accurate record. What happens is that when you propose a new block, you get to put in a transaction which pays certain newly created bitcoin to you.

(quick aside: I’m not getting into the nature of transactions, but there’s still one question that’s hard to pass by: what is a bitcoin? A bitcoin, I think, should just be thought of as the capacity to make certain transactions, which transactions can then be added to blocks. It’s a right, not an object.)

What this means is that you really want your block to get added: if it does, you get bitcoin. By contrast, if it doesn’t, your work finding the nonce has been in vain. And for your block to get added, like with the stone, is for the next person adding a block to add their proposed block on top of it (and not to erase it, the equivalent of which would be to ignore your block and add to the block which preceded yours). But that person, as with the stone, is determined randomly (it’s whoever manages to solve one of the tricky puzzles, and solving the puzzles is, roughly, a matter of luck). So you should aim to make your block as uncontroversial as possible: something that a complete stranger would accept as an accurate reflection of reality.

The blockchain doesn’t care who are you; names have no power. You don’t get to add a block by being famous (as with our putative historian in the stone parable), but simply by doing some work: by solving the puzzles. The blockchain doesn’t need guarding: by all the work collectively done which it encapsulates, it guards itself by being unforgeable and unamendable.

Anonymity, work, collective action and no centralized power: these are the reasons I think blockchains should serve as an (idealistic, certainly) model for how we should live in many domains. I end by illustrating this.

Contemporary society encourages atomization and atomization is bad. Blockchain tech suggests collective action, so the blockchain is an inspiring vision for how to face contemporary society.

It’s in the interests of people with power to prevent the powerless from cooperating. If they were to do so too much, the wisdom of crowds might lead them to come to realize that the source of the bad things in their lives is not, as they’re told, other poor people, but their rich overlords. That benefit fraud, for example, is a pea when measured against the sun of tax evasion.

Less tendentiously, it’s simply a fact that things like civic participation waned in the last third or so of the twentieth century, as we became happier to spend the evenings we would formerly have spent bowling or in the pub watching TV alone (this is a fact documented, in the case of the US, in Robert Putnam’s Bowling Alone). If the next technological revolution were to fight against this trend, that should surely be welcome.

Contemporary society rests too much value on name and resting too much value on name is bad. Blockchain tech suggests anonymity, so the blockchain is an inspiring etc.

We’re obsessed with names, to ridiculous extents. Newspaper columnists exist: people who get regularly paid to regularly have opinions. We haven’t quite caught up to how ridiculous that is, when you can open your twitter and get as many opinions as you wish, opinions which are frequently from experts and backed with data, for free (and in the domain of politics, at least, it has been repeatedly shown that the professional opinion-havers have laughably bad — as in, demonstrably wrong — opinions.) For any given column, there’s an equally good or better one languishing on someone’s hard drive, unpublished simply because the columnist has a name and the unpublished person doesn’t. That’s silly.

Ditto for books, songs, movies, etc. 20% of them receive 80% of publicity, despite equally good or better books, songs, movies etc. existing, and they do so because of the name of the author/artist, not because of their superior ability (I made up that figure, but I’m sure if anything it underestimates the problem).

Blockchain doesn’t care about name; it is anonymous, everyone participates, and they do so via work. And while that work could be carving stone, or solving computer puzzles, it could also be writing and editing and publishing articles or books or songs or movies.

We should care about work, and not about name, and blockchain does.

Contemporary society relies too much on big, powerful institutions and relying too much on big, powerful institutions is bad. Blockchain tech shows a way of doing without big powerful institutions, so the blockchain etc.

This is, of course, pressing. We pass most of our social interactions through powerful businesses (twitter, facebook, medium), a fact that it seems has already had massively bad social and political consequences. Anything that tends to the destruction of these big, powerful, institutions, is good, and blockchain does, so blockchain is good. We should turn our attention to decentralized social media, for example, heeding the adage that if you don’t know what the product is, you’re the product. We should be willing to put in some work in its maintenance, collective work, and thus escape from the grip of the big tech companies.

I could talk about these three things at exhaustive length, but I won’t. I hope this post has shown that if you don’t like — as you shouldn’t — some of the worst things about our society, then the theory if not the practice of blockchain technologies is something you should pay attention to. We need new models for how to think about our future, and blockchains, if nothing else, provide such new models for thinking.