Breaking the Spell — A Call for the Collapse of Blockchain Pillarization through Knowledge Redistribution

Published on May 09, 2022

 

An article published by Alexandra Overgaag on Feb 7th, 2022.

The arguments as made in this article are expressed by the author in a personal capacity and do not necessarily reflect the views of the author’s employer, Radom Network Limited. [1]

Abstract

By analogical reasoning on the concept of pillarization, the article calls for a redistribution of blockchain knowledge within and across different actors dealing with blockchain. The article seeks to describe how the focus of different ‘pillars’ — either policy-makers, media, investors or technologists — appears to be coloured by a non-comprehensive lens on the impacts and potentialities of blockchain technology. The article highlights this notion in a non-quantitative, yet conceptual manner by observing some flaws in the current appreciation of blockchain by the various pillars. Grasping that blockchain may be appreciated as a General Purpose Technology, the different pillars may spur dialogue, create a common language and obtain new knowledge on blockchain. Combining different perspectives may ultimately generate a more fruitful evolution of blockchain’s development.

Introduction

The theoretical concept of pillarization first emerged in the Netherlands where, broadly from the late nineteenth century up to the late twentieth century, Catholic, Socialist, Liberal and Protestant ‘pillars’ determined the (political and social) life of their group members [2]. Pillarization theory is based on the idea of the façade of a classical temple. The pillars do support a triangular pediment (the state), yet the pillars represent segregated groups of individuals between which little interaction exists. Being perceived as ‘self-contained worlds’, pillars had major effects on people’s (political) lives and societies in general [3]. The theory illustrates that ‘segregated’ worlds may flourish and co-exist and may result in rather stably evolving (state) structures. In the Netherlands after World War II, the analytical concepts started to have a negative connotation, representing closed worlds with outdated constraints. This post-war rise of mental discomfort led sociologists in 1957 to note that ‘the spell of pillarization’ had been broken [4].

It may be argued that the influence of mental constructs (such as ideas, beliefs or ideologies) in political or social interaction can be particularly visible when actors try to extend interaction into new areas or establish new modes of cooperation. Therefore, in this article the current distribution of blockchain knowledge in society is addressed while using the analogy of Dutch pillarization as an illustrative lens. In that light, blockchain development is the triangular pediment. Although this is a qualitative, conceptual discussion without specific quantitative data or analysis, it is useful to reason upon blockchain and pillarization by analogy. Indeed, reasoning by analogy rests on the idea [5] that when two things are similar, they can be treated as instances of the same thing and information from the familiar domain can be used to ︎fill gaps in information on the unfamiliar domain. In other words, by analogical reasoning new knowledge can be sought by exploring existing concepts.

The pillars in the Netherlands collapsed rapidly after 1965 as de-pillarization occurred through mergers, disappearance, and identity generalization [6]. The sections of this article aim to highlight the assumption that blockchain may be viewed through the lens of pillarization as different groups across society are dealing with blockchain in their own, rather segregated, ways. The article argues that actors within the pillars of policy-makers, media, investors and technologists should ideally merge, make room for new ideas and develop a general understanding and common language upon blockchain. For that, it is crucial to characterise blockchain as a General Purpose Technology (GPT), meaning that it is ‘a single generic technology, recognisable as such over its whole lifetime, that initially has much scope for improvement and eventually comes to be widely used, to have many uses, and to have many spillover effects’ [7].

Fundamentally, GPTs have profound impacts on pre-existing economic and social structures [8]. Therefore, regulators and other stakeholders dealing with blockchain could ideally recalibrate their assumptions on the long-term trajectory of blockchain in a holistic manner. To facilitate this, increased interaction and communication between and across the different pillars is key. Simply put, the pillars should not view blockchain narrowly from their own perspective alone. Rather, they could facilitate inclusive dialogue and mutual understanding of the structural impacts of blockchain as a GPT.

The different sections shall highlight in a descriptive and exemplifying manner how the focus of the different ‘pillars’ — that is policy-makers, media, investors and technologists — appears to be coloured by a non-comprehensive lens on the potentialities and development of blockchain technology.

Pillar I: Policy-Makers

Ideally, policy-makers consider not only how technologies such as blockchain may be developed and deployed in unintended or intended ways, but also how technology shapes the broader environment (and vice versa) in ways that are disruptive or beneficial. Taking a comprehensive perspective on blockchain means grasping fundamentally how the technology works and how it interacts with environments such as the economy, the various legal domains, societal inclusiveness, and so on. Since both the operations of blockchain itself and of political systems can appear to be black-boxes for outsiders, more transparency can potentially be obtained by discussing openly what policy-makers’ approaches to the technology are. However, the old debate about innovation versus regulation and policy-makers lagging behind technology appears to apply a priori. Indeed, while blockchain may be understood as a cross-border phenomenon with profound effects on the economy and society, legislative and political approaches to blockchain differ or seem to lack at all.

Looking at the Dutch Coalition Agreement of 2021 for instance, one can read that the current executive branch has argued that science, businesses, start-ups, knowledge coalitions and government all ‘join forces’ to capitalize on the opportunities offered by digital technology [9]. Interestingly, the current Dutch Minister of Digitization and Kingdom Relations, who is ultimately responsible for the Dutch approach to digital technologies, has not enjoyed any education related to digital technologies or technology, nor does this specific policy-maker appear to have work experience relating to this very sector [10]. Being combined with relationship building, there emerged no reason to create a single ministry of digitation in the first place, even though the societal and economic importance of digital technology is arguably known. Besides, in the light of blockchain as a GPT, it is unsettling that the Coalition Agreement (which is the guiding framework for Dutch legislative development in the coming years) does not mention blockchain in the first place. It only lays down a non-comprehensive approach to technological development in general. Indeed, the lens is merely economic and regulatory.

It is illustrative that the Minister and the Coalition Agreement both appear to lack attention for the technical world that is blockchain as a ground-breaking technology. Instead, it may be argued that many policy-makers, including those in the Netherlands, arguably would benefit from increased dialogue with academia, technologists and blockchain businesses to start bridging their knowledge gap. Indeed, the United Kingdom’s Houses of Parliament Blockchain All-Party Parliamentary Group [11] is an excellent example of such an approach where different pillars of policy-makers, technologists and industry leaders come together on a structural basis.

Pillar II: Media

Along the lines of the trias politica, state powers are shared by the legislative, executive and judiciary branches so that control and checks and balances are incorporated in democratic state structures. The media can be understood as a fourth, imperative branch, facilitating crucial aspects of democracy including the freedom of expression and public debate. In terms of traditional media (such as television shows and newspapers) discussing blockchain, one may observe that the pillar treats blockchain in a rather neglecting manner.

Indeed, the discussion on the very potentialities of blockchain technology does often remain absent. Instead, talk shows and newspaper articles discuss topics such as the latest fear and greed upon Bitcoin’s volatile price movements, crypto ‘finfluencers’, or may more narrowly report about environmental impacts of Bitcoin’s consensus mechanism [12] (although important indeed). A lens beyond cryptocurrencies would be crucial. Moreover, the case can be made that when discussing blockchain, a deeper level of knowledge may be added, for instance by replacing the usual economists and familiar opinion-makers with other new stakeholders, such as blockchain industry professionals, blockchain entrepreneurs or blockchain specialised academics. Only in this manner, the broader public will start to grasp blockchain as a GPT, and families may start to discuss — during their next Christmas lunch — topics beyond whether or not Bitcoin is a ‘bubble’.

Finally, in terms of media facilitating the freedom of speech and debate on blockchain, it may be argued that there is a need for including more women. Without aiming to shift the tone of this article to identity politics per se, it would be interesting and arguably crucial to hear more female perspectives on blockchain. Although the greater part of individuals involved with blockchain is indeed men [13], blockchain as a set of technologies will have and already has a systemic impact over the whole of society, across all industries, ‘classes’, ‘identities’, or ‘groups’. Nevertheless, many women are industry leaders in the rapidly evolving and expanding blockchain sector, illustrating the inclusive, horizontal and merit-based approach that many blockchain companies take in terms of upward mobility. It would be worthwhile to echo this inclusiveness out in the open arena that is the media, so that new ideas can replace the old ones.

Pillar III: Investors

With increased media coverage of cryptocurrencies, it is not a surprise that retail investors and consumers are developing an interest in digital assets [14]. Alike, the interest of venture capital in blockchain start-ups and the interest of institutions to invest in blockchain is growing [15]. Indeed, with blockchain having profound effects on both the economy and society, many see a reason to invest for medium-to-long term gains or to invest or trade more regularly so to outsmart the market.

There where retail investors or digital asset enthusiasts are involved, one might make primarily the argument that unfortunately many lose considerably while trading and investing. Hence without aiming to patronise, it might be worth arguing that retail investors should open up their lens on the pursuit of profit towards obtaining more education as regards investing and blockchain in general, either through technical analysis and fundamental analysis or blockchain-specific educative programs. There might be a role for (social) media actors to highlight risks as well. Besides, it would be worthwhile for investors to consider partially shifting their lens from a purely crypto-asset focus, and indeed broaden one’s vision towards other vehicles for investment too.

Indeed, not only do bring different investments varied risk and reward ratios for individuals, but ultimately these decisions reflect impacts on the broader blockchain ecosystem. For investing in blockchain beyond crypto directly, it might be worth considering investing in companies that offer crypto-related services [16], firms that make blockchain(-related) tools or products [17], those that implemented blockchain solutions [18], companies that invest in digital assets through their balance sheets [19], blockchain EFTs [20], or other derivates [21]. For more direct effects on the very development of blockchain, one can also consider investing in blockchain start-ups that develop solid solutions for society.

Finally, the same argument goes for professional investors that consider the risks and rewards. They might not only consider the project itself and the buy-in prices and lock-up periods of tokens, but may also look through the lens of responsible investing. Indeed, projects may spur the social good, for instance in terms of the United Nations’ Sustainable Development Goals, or projects may have laid down a proper environmental, social, governance and data stewardship strategy.

By grasping that blockchain is a GPT with profound economic and societal effects, (retail) investors may broaden their fundamental analysis and hence optimize their decisions on how to fund blockchain development.

Pillar IV: Technologists

For non-engineers and non-experts outside of the tech pillar, it may be difficult to grasp how blockchains function in the first place. In the meantime, progress is taking place in a context marked by ‘software eating the world’ [22] and the ‘datafication’ [23] of the world. In this light, calling for increased dialogue between technologists and other pillars — and between the computer sciences and social sciences in general — does not seem far-fetched. Another fundamental issue is if and how blockchain technologists interact with law and policy.

Technological tools have a ‘utility value’ that is, ‘the value of being useful for a certain end, whether that end is good or bad’ [24]. This concept fits with the idea presented in this article, namely that blockchain fundamentally enables society and economies to develop further. Regarding the differing time horizons of innovation and regulation, policy-makers might argue that technologists should always develop their solutions in accordance with standing rules and legislation. Yet, when considering blockchain’s development per se, embedding legal rules in blockchain design may be theoretically preferable, but practically problematic. It has been held that engineers tend to focus on functional requirements [25], and even if not, blockchains may be developed by groups of engineers over time.

Moreover, engineers need to be able to translate primary legal norms into blockchain code, which raises issues. This would either imply that engineers reflect on the types of values that they aim to embed, that they all become lawyers, or that they simply execute designing rules as prescribed by law. Whichever path is taken, engineers’ choices in developing blockchains would then require normative and moral reflections from their side on the legal rules that they will embed in the blockchain. Thus, normative values that ultimately underline many rules may become inherently connected to a technology that aims to be open, decentralised and inclusive. Besides, there arguably remains a preemptive clash between the prescribed nature of code and the flexibility and adaptability of many legal rules. The same line of reasoning applies to the development of smart contracts.

All these complexities make a holistic understanding of the development process, operations and rules embedded within blockchain (governance) systems less attainable for the other pillars. Since blockchain technology can thus also appear as a black box (alike politics, as mentioned above) for outsiders, a case can be made for enabling more mutual understanding and a common language through discussing more holistically what engineers’ approaches to the technology are and how policy-makers may come in to provide rules that spur both technological development and societal progress.

Conclusion

The line of analogical reasoning on blockchain pillarization served as a means to show how the current blockchain ecosystem flourishes all the while the different pillars involved, either directly or indirectly, live past each other. The pillars in the Netherlands collapsed rapidly after 1965 due to mergers, disappearance, and identity generalization [26]. This article aimed to argue that Blockchain as a GPT could be discussed across and within all pillars so to facilitate dialogue, merging pillars and a common understanding of blockchain. Dialogue between policy-makers and technologists is crucial to bridge knowledge gaps and to create rules that spur technological development and societal progress. Besides, in today’s media landscape a comprehensive discussion on blockchain may be enabled by introducing new faces. Moreover, understanding blockchain as a GPT with profound economic and societal effects may help (retail) investors in their decisions on how to fund blockchain development. Ideally, stakeholders redistribute their blockchain knowledge across society to shape together how the technology impacts the world.

Hopefully, the redistribution of knowledge may ultimately break the spell of blockchain pillarization. Combining different views and facilitating dialogue may altogether generate a more fruitful evolution of blockchain’s development, ‘in the same way that a feast to which all contribute is better than one supplied at one man’s expense’ [27].

***

[1] Written by Alexandra Overgaag (Executive MA Politics and Digital Technologies, LUISS Guido Carli University / MA International Relations and European Studies, University of Florence / LLB, University of Amsterdam). The author declares no competing interests. This work did not receive any funding from public, commercial, or not-for- profit sectors. The companies mentioned in the footnotes relating to the ‘Pillar III: Investors’ section are not meant as financial advice, but serve mainly as illustrative examples.

[2] Hellemans, S. Pillarization (‘Verzuiling’). On Organized ‘Self-Contained Worlds’ in the Modern World. The American Sociologist, 51 (2020), p. 125

[3] Infra 2, p. 126

[4] Infra 2, p. 127

[5] Peterson, M. J. (1997). The use of analogies in developing outer space law. International Organization, 51, 2, p. 248

[6] Infra 2, p. 132

[7] Bekar, C., Carlaw K. & Lipsey, R. 2018. General purpose technologies in theory, application and controversy: a review. Journal of Evolutionary Economics, Springer, vol. 28(5), pp. 3–4

[8] Infra 7, p. 24

[9] Dutch Coaltion Agreement 2021, Omzien naar elkaar, vooruitkijken naar de toekomst, p. 30. See for the integral (Dutch) version: https:// www.parlement.com/id/vloreou0m8t6/regeerakkoord_2021 (last retrieved Feb. 2022)

[10] See for details on the education and career of the Minister of Digitization and Kingdom Relations (in Dutch, under ‘Opleiding’ and ‘Loopbaan’): https://www.rijksoverheid.nl/regering/bewindspersonen/alexandra-van-huffelen (last retrieved Feb. 2022).

[11] See for more details on the Group: https://publications.parliament.uk/pa/cm/cmallparty/211006/blockchain.htm (last retrieved Feb. 2022)

[12]See for instance, NRC, Jan. 14, 2022: ‘CO2-uitstoot van één bitcointransactie overtreft huishouden’. See, https://www.nrc.nl/nieuws/2022/01/14/ cryptomunt-co2-uitstoot-van-een-bitcointransactie-overtreft-huishouden-a4079250 (last retrieved Feb. 2022)

[13] With initiatives such as the DLT Talent Program, organisations seek to empower women to get into blockchain technology. See: https://my.dlt- talents.com (last retrieved Feb. 2022). This article was written within the DLT Talent Program, as the author is part of cohort 21/22.

[14] Visa (2021). The Crypto Phenomenon: Consumer Attitudes and Usage, p. 8: ‘[…] the hype and headlines have made their impact — we see almost universal awareness of cryptocurrency at 94% globally among adults with discretion over their household finances. Crypto is […] moving to a broader market increasingly accessible for mainstream and new adopters. While cryptocurrency adoption is still in the early stages, it is significant — and growing fast. Nearly one in three crypto-aware consumers already own or use cryptocurrencies […]’.

[15] CB Insights (2022). The State of Blockchain 2021 Report, p. 9 ‘[…] venture funding to blockchain startups hit new heights every quarter of 2021, driven by growing consumer and institutional demand for crypto […]’.

[16] Such as International Exchange, CME Group, Coinbase or Square. Infra 1.

[17] Such as Riot Blockchain or Canaan. Infra 1.

[18] Such as Lemonade, IBM or Walmart. Infra 1.

[19] Including MicroStrategy, Tesla. Infra 1.

[20] Investors aiming to hedge their bets on blockchain may consider investing in EFTs such as BLOK, or even more indirectly through for instance Siren Nasdaq NexGen Economy BLCN or Amplify Transformational Data Sharing. Infra 1.

[21] Such as (combinations of) crypto funds or Grayscale’s Bitcoin Trust for example. Infra 1.

[22] See the blog by Marc Andreessen, ‘Why Software Is Eating The World’, https://www.wsj.com/articles/SB1000142405311190348090457651225091 5629460 (last retrieved, Feb. 2022).

[23] The process of turning something into data is known as ‘datafication’. According to Susskind, J. (2018). Future Politics. Living Together in a World Transformed by Tech. Oxford University Press, p. 61, this century has seen an explosion in the amount of data generated, captured and processed and it is expected that in the near future systems will generate the same amount of data every couple of hours as humans generated from the onset of civilisation until 2003.

[24] Leenes, R., Lucivero, F. (2014). Laws on Robots, Laws by Robots, Laws in Robots: Regulating Robot Behaviour by Design. Law, Innovation and Technology, 6:2, p. 216

[25] Infra 24, p. 217

[26] Infra 2, p. 132

[27] Aristotle, The Politics, translated by T. A. Sinclair (London: Penguin, 1992), 1253a1, p. 202

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