It can be hard to understand the long term, even the short term implications blockchain will have. Cultural, financial and practical implications of the latest raft of technology such as IoT (internet of things), Blockchain, Bitcoin etc leave us trying to quantify how, why and where it shall lead and just how profound an impact it’ll have. In renaissance Italy double entry bookkeeping, supposedly pioneered by Luca Pacioli, revolutionized finance and banking with long reaching implications as far as art, economics and international politics et al. So I shall now compare the implications of Double Entry Bookkeeping in the 15th century with that of Blockchain technology in order for us to quantify the effect of such a new technology on the global economy and society as a whole.
Firstly we’ll look at the economic implications:
Double-entry bookkeeping was used by the Medici in Florence around the 15th century, it has its origins way back, used initially by Jewish traders, coming to Europe with the venetian empire. What it did was apply safeguards and checks to accounts which streamlined the movement of credit via banking and made markets more efficient. Blockchain applies an added efficiency also, by safeguarding the security of transactions, allowing credit to move to areas where no banking apparatus currently resides and eventually creating market systems through DAPPs, this mean vendors and customers don’t have to pay the middle man who owns the market place (like Amazon, Facebook etc). Essentially streamlining the link between vendors and customers online. Think of it like the travel, with technology is sped up and made cheaper allowing better connections between people and businesses. Now with the rate of advances the internet brings, imagine that supercharged.
The wide ranging cultural implications of a more efficient financial system brought about by double entry bookkeeping meant international banking could expand, this allowed credit to move throughout europe. A massive benefactor of this was the Medici bank which was one of the first banks to utilize double entry bookkeeping. This Bank became bankers to the Pope’s in Rome and financed the artistic movement in Florence and beyond known as the renaissance. Artists such as Michelangelo, Vasari, Da Vinci all benefited from Medici (and other figures such the Duke of Sforza) money all financed by Medici credit in someway or another. Heck! Da Vinci worked with and illustrated Luca Pacioli‘s greatest work ‘Summa de arithmetica, geometri. Proportioni et proportionalita‘ (Venice 1494) and together with the might of finance now revolutionized by double entry accounting, the renaissance became a melting pot for talent and thinking that led to the modern world.
Blockchain is naturally still in its infancy but expect similar implications, as credit becomes more accessible, the ability to manage and prosper by having more options increases. This means projects previously considered too risky, odd or challenging will have a greater chance of coming to fruition by being able to appeal to a wider audience. The way money is moved about and how fortunes have changed thanks to bitcoin is a brief and early understanding of the impact blockchain will have. Imagine being able to finance a city via a ‘citycoin’ funded by the citizens automatically. The accountability is black and white in the programme of the coin, the political power of individuals is reduced as bureaucrats must work to the system written out in the coin to act out the will of the people. Corruption shall be reduced as the security is held in place by strict cryptographic conditions that can’t be cajoled or swayed by hearsay and political whim. With a constitution written out as a DAPP (decentralized application), the idea of a despot overthrowing the constitution is undone as the money and value will naturally and automatically follow the pre-programmed path. The arts will get their funding as promises and on a macro level a contract will be upheld.
So in conclusion. As double entry bookkeeping made money more efficient, safeguarded its security through checks and balances. Blockchain will do the same thing, with an added evolution of binding those to public promises which will guarantee the contract and the mandate to the public is upheld. This tackling of corruption (as we have seen as a society becomes less corrupt) only leads to better lives and living standards and a fairer opportunity for all. Just make sure your constitution’s are written very very well.