Is blockchain really a “truth machine”?

I’ve recently been reading some excellent blogs and appreciating the value of thinking “out loud” in blog form. I thought I’d resurrect this old site and post semi-regularly to challenge myself to clarify my thinking.

I am currently some 20% through The Truth Machine; a book about the blockchain’s potential to bring trust and credibility not just to finance, a la Bitcoin, but to just about anything. The book’s authors argue that blockchain’s ability to record an uneditable ledger can help restore trust in the global finance system, as broken by Lehman Brothers’ dodgy accounting, or in developing shared facts across society, as threatened by Trump and his Fake News bogey man. I got the book because I feel very skeptical of the application of blockchains to anything in the real world and this seemed like the book to convince me otherwise. So far, I remain a skeptic. Here’s why:

An absence of verifiable fact is often only a tiny part of most problems

The authors zoom in on dodgy accounting practices at Lehman Brothers as a key cause of the financial crisis and the leftwing (Occupy) and rightwing (Tea Party) protests that followed. They point to the UNHCR’s delivery of food aid to Syrian refugees using biometric verification on blockchain as a major advance in support to refugees. But the 2008 crash was due to way more than dodgy accounting practices at one bank: what about sub-prime mortgages and cheap credit? They seem to have contributed much more to the crisis. And much of the accounting “dodginess” was due to genuine difficulty in valuing many assets: the fact that a blockchain can make an immutable record of the risk that a particular family in Florida will default on their mortgage does nothing to assure us that the risk calculation was ever actually accurate. For the Syrian refugees, reduced food aid fraud is, sure, nice, but not remotely as important getting their kids back into school or ensuring access to clean drinking water, the kinds of essential but boring things that have little to do with cryptography.

Where verifiable facts are needed, they often won’t change minds

There are cases where verifiable facts would make a difference. Take COVID-19 vaccination safety and efficacy, for example, or whether Bill Gates personally created the pandemic. Verifiable truth in those cases could literally save lives. But people don’t follow anti-vaxx beliefs because of a lack of verifiable facts to the contrary, they follow them for a million other reasons, including because those beliefs suit their personal prejudices. Somehow using a blockchain to show someone that COVID vaccines were properly tested is not going to change their minds anymore than showing them a New York Times article will. After all, you say that the blockchain is infallible, but isn’t that exactly the kind of thing an elitist globalist in the pocket of Big Pharma would say?

Blockchains will reach most people via fallible middle men

If I buy 0.5 Bitcoin using Binance, I am trusting Binance to buy Bitcoin for me. Like most people, I have no idea how to verify that they really bought Bitcoin or just created a fake account that says I own Bitcoin. Regular people will interact with blockchains via these kinds of trusted, fallible intermediaries, not dissimilarly to how we use banks or newspapers today. Sure, the blockchain may be infallible, but a fake website can use the fake content of a non-existent blockchain to convince me of whatever they want and, like most others, I won’t really know the difference.

Perhaps I’m missing something, and I hope the remaining 80% of The Truth Machine will get me there, but I remain unconvinced that the blockchain can really fix all that many of physical the world’s problems. Sure, it can do fully digital stuff well, like encrypt messages or digital money transfers, but so far in the book, the real world applications look like a nerdy hammer in search of a nail.

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