Kik, a startup that makes a messaging app popular among teens, offers a more recent example of distributed-ledger tech in action. The company recently announced plans to introduce its own cryptocurrency, called Kin. Kik will automatically dole out Kin as rewards for developers who build apps on its platform, like stickers or chat bots. Kik’s CEO, Ted Livingston, presented the move as nothing short of emancipation from the oppression of ad-driven content platforms like Facebook and YouTube: “a cryptocurrency for an open future.”
Kin is built atop a platform called Ethereum, which is based on the same distributed ledger as Bitcoin. But Ethereum uses that technology to express a different aspect of the ancap model: contracts. For libertarians, contracts exist to facilitate market exchange, so smart contracts are always backed by currency (Ether, in Ethereum’s case). If Bitcoin is digital money for people, Ether is digital money for computers. It decides how to spend itself via software automation.
Why tout a private, distributed-ledger currency as an agent of liberation when it amounts to a complicated, software-backed, company-town store? One answer: It could give the workers a stake in the company store. In the world of cryptocurrency, this is known as an ICO or Initial Coin Offering. ICOs incentivize the use of an unproven platform, like Kik’s, by distributing an initial batch of cryptocurrency to early adopters. In theory, that value will increase if the platform becomes popular, creating a valuable base investment for its initial users.
In the extremist libertarian aspiration, smart contracts would allow anonymous actors to trade anything whatsoever in an untraceable way, via unregulatable markets. Instead, actual smart contracts, ICOs, and distributed ledger-backed devices mostly offer new ways to interface with the private technology industry. For example, in Brooklyn, a solar microgrid startup called Transactive sells clean energy to a community via Ethereum. And Toyota just announced a partnership with MIT to develop distributed ledger-based infrastructure for future autonomous vehicle services.
On that front, the anarcho-liberatarians share something in common with the plain-vanilla technolibertarians: a belief in the wisdom and righteousness of a fully computational universe. My hypothetical smart-contract parking meter, Toyota’s future blockchain-backed rideshare system, Slock.it’s blockchain lock, Kik’s Kin, Transactive’s solar grid—all are just technology companies enjoying the capitalization and publicity spoils of the latest hot trend. They might become more than that, of course. But in order to do so, something terrifying has to happen first.
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Consider an off-the-cuff example of smart contracts from an Ethereum advocate:
An individual wants to purchase a home from another person. Traditionally there are multiple third parties involved in the exchange including lawyers and escrow agents which makes the process unnecessarily slow and expensive. With Ethereum, a piece of code could automatically transfer the home ownership to the buyer and the funds to the seller after a deal is agreed upon without needing a third party to execute on their behalf.
It sounds so easy. Who needs real-estate agents, closing attorneys, assessors, mortgage brokers, title insurers, municipal tax authorities, and all the rest? Just transfer some Ether after the computers shake hands.