Sep 12, 2018
| 3 min read

Podcast #26

The Social Singularity - A Conversation with Max Borders

Author Max Borders tackles an broad range of topics relating to his new book The Social Singularity: How decentralization will allow us to transcend politics, create global prosperity, and avoid the robot apocalypse.   Our conversation covered the factors that have led to the current political disfunction in the US, how unbalanced incentives evolve over time and the profound implications of decentralization. Drawing from the arguments outlined in the book, Borders applies a philosophical lens to understand the roots of decentralization, and how blockchain and related technologies have the potential to reshape power dynamics in organizations, the evolution of hierarchies in society, and the structural dynamics of economies and culture.   

Book Recommendation:

The Evolution of Everything: How New Ideas Emerge by Matt Ridley  

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Good day everyone, and welcome to another episode of the Momenta Edge Podcast, this is Ed Maguire, Insights partner at Momenta. Today we have with us a very special guest, Max Borders, who is the author of The Social Singularity, How Decentralization will Allow us to Transcend Politics, Create Global Prosperity, and Avoid the Robot Apocalypse, which is quite an expansive subject and he covers it beautifully in the book. I had first met Max virtually through a community of likeminded people online and reached out. I’m thrilled Max that you’re able to join us. 

I’m so happy to be here, thank you for having me. 

 

First, just to provide a bit of context, could you share a little bit about your background, and some of the factors that have shaped your thinking, and we’ll get into it a little bit later. But I think your book really takes a unique and very broad historical view of a lot of the forces that are coming together, to drive this decentralization trend. 

Sure, and it’s never occurred to me until this moment that a question about my background would somehow inform my thinking now, but I guess it really has. Let me put it this way, I did my graduate work in philosophy, and philosophy is a pretty useless throw away degree by most people, at least from the standpoint of the marketplace, we don’t often think about hiring philosophers per say, but I think it certainly has done a lot to affect the way I think about things. When you marry that with, around 1999 to 2001 I did a stint writing about technology for Accenture tec labs, I was covering emerging technology during the first tech bubble, and what a great time. I don’t know if many of your listeners will remember this time, but it was an exciting time for technology, the Internet was exploding, and everything was possible. 

So, I got pulled into writing about tech by a friend and got hooked on everything to do with technology. But marrying that with the background in political philosophy, philosophy of mind, which is what I did my graduate work in, and then having to do a job writing about emerging technologies, those things started to weave together, those interests started to weave together in ways that I think have only now reached their fullest expression, and I’m very happy to talk about that. 

 

That’s great. Philosophy comes up in the discussion of decentralization, blockchain, and cryptocurrencies, it’s funny that you mention that because I had an ‘A-ha’ moment earlier this year when I heard Patrick Byrne, the CEO of Overstocks, speak. There had been something that had really been alluding me, it wasn’t the technology, but there were some fundamentally important threads that have to do with organization of society, the distribution of power and value. Well, it turns out that Patrick Byrne has a PhD in philosophy. So, I think the value of philosophy is certainly not to be underestimated. I have a son going into college this fall, and I think due to my urging one of his classes is an intro to Political Philosophy. 

Oh, fantastic. 

 

I really do think that being able to think about the world is hugely useful in pulling together all these different threads.  

I’d love to get a bit of a sense of the forces and the context that are coming together, that you see have created the dynamics behind this move toward decentralization, if you could provide a bit of a background of what led you to write the book? 

Well, it’s interesting because in thinking of it in philosophical terms, which not everybody is used to doing that. There’s a couple of what we might call levels of description to this phenomenon, let’s call the phenomenon the social singularity, or the idea that we’re moving through some sort of process, and what that process is I’ll go to in a minute. But they were moving through some sort of process to a moment where the nature of human relationships will fundamentally change, I think we’re approaching that through the kind of decentralization technologies that are only now just coming online, in a much more robust way than 1.0 which was the Internet. 

Philosophically I think what’s interesting about it is, the fact that at some level of description there is a non-ideological aspect to this, or should I say, it’s not ideological per say; everything that you want to build in the decentralization space, you might call it an engineering problem. So, if you have some ideological priorities, for example, a lot of people are really interested in experimenting with universal basic income, I personally think there’s a lot wrong with the idea of a UBI, I think its problematic on a number of levels. But what’s great about blockchain distributive ledger technologies and other kinds of similar technologies that serve to either disintermediate people, or hyper-mediated them, and I think there’s both; disintermediation is getting rid of middle-men, and hyper-mediation is making everyone a middle man. Both of those forces are at play in interesting ways, but it allows us to experiment with different kinds of social structures, and determine which ones are the best fit for any given one of us as an individual.  

So, when that process happens, we join communities of practice, opting out of old systems and into new systems that are much more robust, or track with our sense of the right and the good, or work rather than not working. There’re all kinds of considerations why someone would want to opt into a system, than opt out of an old one that isn’t working anymore, and this space, this decentralization space, distributor ledgers, blockchain, allows us to do that in ways we haven’t been able to do before. It’s also pointing the way for systems of law and jurisdiction in the classical sense of it. It’s challenging our notions that rules should be attached to territory, and causing us to think ‘Why is it that by accident of birth I have to abide by some system of laws under some jurisdiction?’, When we look at it historically it probably had something to do with conquest, otherwise some sort of process that we built on top of that. But what’s interesting is now we’re getting to a situation where this opt-in/opt-out makes it not so ideological unless it’s in some sort of medicine, because in the medicines, in one level of description up it’s highly competitive, and if its highly competitive that means if you can opt into it, or opt out of it, it’s more like a market and thinks more like a market, some people would say its ideological. 

But if we think too much about it, our head starts to spin, suffice it to say, decentralization allows for much more experimentation, many more systems of governance that we can opt into, and in doing so we’re going to find far better ideas or perceptions of the good, far more diversity in the kind of communities we can create, and also I think the kind of businesses we can architect which aren’t based on old legal structures that we’re used to. 

 

Let’s talk a bit about hierarchies, and in your book and your talks you talked about the origins of social hierarchies, and the role that having these centralized organizing model adds value, but also the way that our current structure has evolved, has resulted in horrifically polarized culturally and political environment in our country, where it’s become as I think you’ve described it, its trenched warfare. Wherever you fall on the political spectrum, I think all of us are concerned that there are many incentives that really do not encourage people that at their best are the most civil. Again, it resulted in some real gridlocking and people who are getting frustrated with this lack of solutions. I’d love to get your sense of why are hierarchies valuable in the first place, but how is the current environment and climate a result of some of the maybe unintended consequences of evolution? 

It’s such a fascinating and complex question that you’ve just posed, and I’m going to try to take it in three parts, and if I forget one of those parts which is likely due to my declining memory in my old-age, I’m going to try to do three different components to this because I think it’s an interesting question. 

  1. This is really a theme of the book, The Social Singularity, which reappears over and over again in the book, and that’s a quote from a guy Marshall McLuhan, a social theorist from Canada who is no longer with us, but he was really an important 20th Century figure in social theory. This fellow has a quote which he is credited with saying, ‘We shape our tools, and then our tools shape us’, I develop corollary to that which is, we shape our rules, and then our rules shape us. So this vacillating tandem between the rules we live by and the cultural aspects of our lives, the way we behave, because any time you have a  rule set you create a set incentives, incentives are not just like I pay someone to do something, and they do it or not, or I offer to pay them something and they do it or not. It’s also that any time you have a rule that gets enforced through whatever means or provide a framework of movement in certain directions and not in others, you create an incentive system, and that’s just the way things are, slowly over time these incentive systems shape culture. Now, that’s not to say that culture does not also shape the systems, it most certainly does; but focusing on this causation going from the rules to the culture for a minute is important, and here’s why. 
  2.  This whole business of why politics is so awful and acrimonious. You mention hierarchy and that’s certainly what politics is meant to sure-up and protect, but social hierarchies are a phenomenon and that will be part three, which I’ll come back to in just a moment, but the little detour here is in terms of American politics, and I don’t want to alienate any readers from other countries, because I’m quite sure they suffer from similar kinds of partisan stripes to the United States, but to be centered on us for a moment here in the US, we have a two-party system and it seems that people are interested in both the spectacle on the one hand, and in arguing over who gets to sit at the top of the hierarchy to make the rules for everyone else. 

 

In practice even if we thought this was a good idea, this is not really how things exactly play out, there’s tons of compromises, horse-training, and all kinds of other influence by special interests that really does govern so much of what we do, so even if we thought our votes counted or mattered, which they really don’t in some grand statistical sense here, you’re trying to change the tide to your teardrop in the ocean, it just isn’t terribly effective. But those special interests they really do hold sway in so much of what’s going on, and the areas where we might have more control or influence over the political process where we install people at the top of the hierarchy, would be much more effective if we paid attention to local politics, but we don’t.  

 

The dynamic is such that it’s always about what Trump said, or it’s always about what Trump’s opposition said, or what sort of shenanigans are going on at the national level, when we have much-much more direct influence over things that are happening locally, that people really don’t care; most people don’t know who their congressman is, and their senator they might, but beyond that your alderman or your city council person, respectively you may not know. 

So, this is a problem, but I think it is really an evolutionary feature of the system within which we find ourselves, and the media creates a set of incentives, the political system creates a set of incentives, and it’s really designed to be rather zero sum, or sometimes negative sum. If I can take from you and win, then I get to make the rules and I curry the favor of the special interests. This sort of dance between the special interests and power has generally governed our democratic republics for quite some time, and democracy becomes the sort of spectacular window-dressing we put on this process, in my view.  

That may seem a little weird to hear for your audience, but I think largely it’s the case, and it’s not to say that democracy isn’t better than the past where we were living under dictators, or where we resolved conflicts with bullets instead of ballots. But now we have the ability to do better, and I mean much better, we’re starting to see that in some of the technologies coming online.  

So, to part three quickly, if my brain can handle it! And then we’ll get to the next question, I promise, and that’s this whole business of hierarchy. 

3:From the standpoint of social evolution through time, I think hierarchy has been a necessary thing to have evolved. We think of hierarchies as being planned, and certainly they are by some of the agents who are responsible for developing them, but hierarchies really are an emergent phenomenon in evolutionary systems, particularly human evolutionary systems. That’s because in the past when we had tribal life the information process and problem of human social activity was very different in hunter-gatherer times. When we began to settle agriculture, we had to protect resources and territory, and as we became roving bands, we encountered other roving bands that were competing to settle with varying lifestyles. 

So, protecting territory was of utmost importance, and the difference between not just mine and thine in a private property sense, but ours and theirs, was very much on the minds of people in a tribe, and if you wanted to act quickly, if you wanted to act quickly in unitary fashion against the enemy, i.e. those who are going to compete for resources, you had to organize yourself in a hierarchy quickly, and have someone who was strategically quick on their feet, a strong leader. In order to do that, that’s how you’ve maintained the territory, that’s how you protected your people, and that’s how you moved quickly relative to any sort of external circumstances such as a tax on that territory. 

The development of hierarchy is an absolutely national phenomenon in time, and then over time hierarchies start to develop and create special interests around them, the dynamics of the dance between the special interests and those in power perceives, and we get around the world the sort of contemporary – even the contemporary republics, the ones that don’t have Kings on top still have this strange set of relationships that are about option and power. 

So, that is a lot Ed, and I really appreciate you letting me talk about it, but these are all interconnected things, and this phase, this phase of hierarchy and partisan politics that we’re seeing now is coming to a close, and how it evolves, how it changes is a scary thought. My hope is that it is an easy transition, that people rapidly adopt the technologies we’re talking about, and see the benefits of them quickly, just as we’ve stepped out of the cab into the Uber as it were. But it’s not clear that’s going to happen, there may be big wars between hierarchies and network relationship situations that are ahead of us. It’s just hard to predict. 

 

No doubt. Well, the reason I asked about politics, and on a podcast series where we’ve been focused a lot on connected industry and advanced technologies, it might seem a little bit out of left field. But there’s a reason that I asked that, because in many respects politics is just a reflection of a much larger evolution of culture.  

I had a fascinating conversation with David White who is a cognitive anthropologist several episodes ago, and David was an old buddy of mine from my jazz musician days, so it’s funny how we all end up in different places. David had talked about the difficulty that organizations have dealing with digital transformation, so in larger businesses or economies that are shaped by businesses that are adopting technology, and having to really adapt both their cultures, their business models and even fundamental processes about what people do, you do have the same phenomenon of incentives that evolve, that shape people’s behavior and they get fixed into these patterns, and it becomes very difficult to shift patterns of behavior, or recharacterize roles.  

Anyway, there’s a lot of relevant lessons to be learn from looking at historical-political structures and hierarchies. Then thinking about the depth of transition that’s involved with what we call digital transformation, because businesses are thinking about themselves, and we’re running on the cusp of some profound changes, which was a very long and round-about way of asking you my next question! What do you see as the catalyst for this broad interest in decentralized technologies? What had changed in 2008? People have been thinking about different modes of organization, but I’d love to get your sense of how this new wave of thought has just gathered enormous momentum? 

Well, there are a lot of factors I think that lead up to this, and as a prelude to answering the question, I want to go very quickly to your friend David’s observation, or both of your observations, that people get stuck in systems. There are network effects in systems that make it very difficult to exit, and we have to look at network effects, but it can all be boiled down to two T-costs I guess you could call them, which is transition costs and transaction costs; is it at some level easy for me to transition to the new system, whether that be through a not so steep learning curve where I can easily adopt it, or I can immediately see the benefits of doing so, where my opportunity costs are not so high? So, I know I’m giving something over here to adopt this, is the perceived benefit of the switch greater than the costs of leaving the old system?  

All these transition and transaction costs question are really-fundamental to the way we do systems thinking, and that’s the abstract part of this. 

But to your more concrete question about 2008, you mentioned that year, and I think everybody is very clear, particularly those folks who are in the financial sector and in the business sector, with everything that happens with the housing market, the economic collapse, the financial sector at the precipice, and there’s a lot of debate about whether or not the financial sector should have been bailed out, and you have this phenomenon of privatized profits and socialized losses. Some of the poorest people and middle class in America bore the costs of that in order to prop-up the system that seems to be broken. 

Now, we can get into some ideological conversation about whether or not it was the right thing to do to prop-up the financial system as it was, whether it actually worked, whether it had been better for it to collapse entirely, but I don’t think that’s what you want to do, because what you asked is, what specifically precipitated some of the things we’re looking at now? The answer lies in some fellow who is synonymous called Mr. Satoshi Nakamoto, and this could be a person or a small group of people, but essentially Satoshi Nakamoto is a person or people who were a member of the Cypherpunk community. The Cypherpunks, if you’re not aware of these, were a group of people who were a bunch of tech geeks who were into cartography, and really had a radical sense of first and foremost free speech; we want to be able to communicate with each other, and we want to be able to do things together around the world without the intercession or regulation of third-parties.  

That sort of radical Cypherpunk philosophy I think had a very definite set of cultural and ideological dints for Satoshi Nakamoto, so, here’s an example of maybe culture affecting the rules because what Satoshi set about to do in the Bitcoin white paper, was to create a situation whereby there was no third-party, there was no central bank, no financial intermediary whatsoever, except for the entire community itself organized as a network, a network of both contributors, minors, and by now most folks probably are aware of the way the bitcoin/blockchain works, how money works. 

As imperfect as it is, it was a quantum leap past the way we think about our financial institutions. It very much still is, it’s still an evolving eco-system with a lot of different participants and people, who benefit from the creation of that eco-system, its organized in such a way that you might call it decentralized or also self-organized. That feature where the need for a mediating structure like a central Bank, or central financial Institution, it leaves a proof of concept that said, you don’t need this anymore, you can create something that works, you can reduce transaction costs for people at least to some degree, and we no longer need an intermediary to ensure that the set of relationships in the system is legitimate. We need neither the government nor the central banks to ensure that, I guess you can call it the systems security infidelity and so on, that’s not to say that there haven’t been problems with Bitcoin and decentralized systems, as the proof of concept goes it really showed the way. 

Very often, the way people learn about systems is not through abstractions, they learn through use, they learn through adoption. I think that is really the most promised… and by the way Ed, Dan Hughes or someone like me who loves to think and write about abstractions, and loves to teach people about things, teaching philosophy in higher education, or writing articles or writing books is what I love to do, but I think most of this is going to be catalyzed through people like me perhaps, who want to talk and write about this stuff, but ultimately mass adoption is going to happen through other means. 

 

There’re some fascinating examples in your book, you talk about the importance of decentralization as a new social, organisational and of course economic, paradigm. I thought it was really fascinating when you were talking about the concept of emergence, this idea that you can have an invisible city like Blackrock city at Burning Man, we’re talking the week after Burning Man just concluded, but now you have this characteristic of spontaneous self-organization that seems to be again gaining ground. Can you talk about the significance of that, and the human element in decentralization, and how we are evolving and embracing in new ways, this new paradigm? 

Yes, I think the best I’ve heard it perhaps described is by Andreas Antonopoulos who is a cryptocurrency evangelist. He describes it as dumb networks, the Internet is a dumb network; so, we went from an era, remember back when they had to break up the bills into baby bills, and Ma Bell’s was no longer. We spent time away with consolidation for various reasons, but back then, I think it was the eighties, there was a time in which it was amazingly byzantine system of people in the background, or systems in the background, particularly back in the old days, the forties where you had people staffed to plug in different plugs to connect people in the network, and that was all highly centralized. You would go to a place and when you dialed the operator, they would connect you with someone else, and that was something that happened not peer-to-peer, or person-to-person, but through that great big byzantine intermediary. 

When you can create certain kinds of protocols that allow for lateralized and peer-to-peer relationships, that’s a game changer, and it tends to be the case that the relative complication of the rules that governs such systems is smaller. So, to get complexity, you want simpler rules, and paradoxically when you get complicated systems, you don’t get much complexity, it’s very hard for complicated systems to scale, there is a limit, and information process and limit to these. Hierarchies as such tend to be those kinds of systems, they’re centralized, and they reach a certain level of complication, and they can’t make the complexity transition. 

But when you design protocols that are like done networks and create opportunities for people to connect and lateralize their relationships peer-to-peer, the game completely changes and self-organization is enabled to happen. That’s what we’re seeing now in some of these decentralized technologies, and with so much experimentation it’s starting to look like the basics of a coral reef almost, you’re starting to see this whole array of different – I guess you’d call them species or different system types that people can join or exit, and that’s because of the development of dumb network protocols, and the ability to enter and exit systems as is beneficial to the agents who are opting into those systems. 

This process is going to push us to the social singularity whether people like it or not. And of course, partisans don’t like this, because no partisan wants to hear that there’s something valuable in what every other partisan has to say. Conservatives are right in that we have to be very careful about change, because there are some systems that have benefits, if we change too quickly, we might be losing benefits of an old system that we’re not aware of, and that is most certainly true. The progressive, likewise is going to have a modicum of truth in that we ought to be concerned for the least advantaged in society. The liberaltarian is going to have this, and there’ll be a truth in that markets tend to be much better at solving certain kinds of social problems, than centralized authorities and state largess dropped from on high. 

If you take the wisdom of different partisan tribes and weave them together, and synthesize them, you don’t have to have arguments about politics anymore, just like businesses and start-ups are out there trying all sorts of iterations on ideas, to see which one is going to work best in the evolutionary fitness landscape of the market. If we transpose our ideological priorities to that marketplace, you might call a marketplace of governance, if we’re going to see just an array of systems that we haven’t been able to imagine before, then the best systems are going to win. The weaker ones, the ones that are not as successful, the ones that depend on pacts and threats are going to eventually lose ground to those that are able to have their own gravity, by pulling people into their orbit. 

Yet, paradoxically, the ones that are successful may be much more communitarian than we can anticipate, so it’s not a political or partisan position at all to make that claim, it’s a reconciliation for different partisan positions, and that’s going to be different, and it’s going to change our culture I truly believe. 

 

It is really fascinating what you’ve just described, essentially this marketplace for the best ideas to win an implementation. The capabilities of Blockchain of course as, we’ll say, the fundamental engine of implementation for decentralization, there’s a lot of key innovations, and I’d love to get your quick take or your reflection on some of the more important innovations that have evolved from the decentralization principles into blockchain. One of the features or capabilities of smart contracts, there’s tokenization, there’s potentially distributed autonomous organizations; what do you see as most impactful in your view, or what strikes you as most important about these innovations? 

I say this with the upmost humility, this space is developing so quickly it’s difficult to keep up with it. There’s just so much going on, these armies of developers who are involved in these communities of practice, are sharing information and are creating new things daily. But some of the ones that stick out to me, I guess we could put it like this, if enough of your listeners buy the book that I could have a little bit of surplus to invest in something, I might go after for example the HOTs token, and that is Holochain. Holochain is an interesting technology to my mind, it is not a distributed ledger Blockchain-style technology, in fact it comes out of a larger technological model of computing called Ceptor, which is short for receptor. They base the construction of Holochain on a biological metaphor, and when you think of it in biological terms the self-organizing aspects really get interesting, and I think Ceptor and Holochain from Ceptor give us this really nice way of talking about how we can self-organize and exchange value, without being what they would call so extractive. 

It’s sort of a sentiment that there’s too much power, money and cruelty whether that be in politics or in the corporate work. To me this is not a question of one by ideological position, it is rather a way of saying, if we can organize ourselves in such a way that the benefits to individual members more broadly dispersed, I’m not calling for the redistribution of wealth by the coercive government apparatus, that’s certainly not what I’m calling for. But what these technologies allow is bringing more participants into the system and having more opportunities to be able to exchange value and grow. You’re going to get scaling all distributions in any system, so you’re always going to have some big fish and some little fish, that’s what nature looks like. If you don’t think that’s the case, you’re kidding yourself, that’s why egalitarianism as a political system just doesn’t work, because nature is not egalitarian at all. 

But we are seeing opportunities, for example in some of these systems, I think some of the guys behind Holochain like Arthur Brock and Eric Harris-Braun, were motivated also by the 2008 phenomenon. They saw a bunch of highly-wealthy people, they saw a bunch of very-very powerful government officials, and they all colluded to basically rescue a system that was broken, until the next time it would have to be addressed. They kicked the can down the road in large measure using tax-payer’s dollars to bail-out these extremely wealthy financial institutions. This pissed a lot of people off, on the left and on the right. Well, these guys, the policy developers, were trying to develop systems that would be parallel with the existing financial order, and would be able to reduce transaction costs, and reduce transition costs as we described earlier. So, that’s one I’d put my money on, just because I think it’s a really interest robust technology, its different enough from blockchain. 

Then you had Satoshi Nakamoto, the developer of the original blockchain, who had the same kind of sentiments. In the genesis block of bitcoin you had an article about a second bailout, I believe it was in London, where in the UK the central banks bailed out one of the financial institutions in London, and this is after a series of bailouts that had already occurred. I think this was 2009, its genesis block was created for bitcoin. They were basically sending the message, ‘We don’t want this anymore, this is too much power, too much money, and an unholy alliance between power and money that we’ve got to do something about’. So, in that sense it was ideologically driven on both technologies. 

But back to the question, what would I put my money on? Personally, I think HOT is a very interesting token, and the technology behind it Holochain, is interesting. I’m very excited about projects like Aragon and Dowstack which both of which allow for different kinds of distributed organization, and what you might call platform cooperatives. Platform cooperatives are systems that can do business and transact, and have organizations that are highly robust and anti-fragile, but they don’t need so much hierarchy, in fact you can program the protocols such that it’s not just decentralized, but the function is much more like an organism than a machine.  

So, we’re designing our organizations… any kind of technology that allows us to run our organizations more like organisms instead of machines, where transition from machine thinking to biological metaphors for organizations, I think that’s a good direction. Now, of course, there’s all kinds of tokens out there for the next exchange, and all those I’m sure are going to be great. People who are on Wall Street and are into that stuff are going to be much-much better at identifying those tokens, which ones are the best. But for my money I like the ones that are going to change quite literally the latticework driven incentives for society. 

 

I think you’ve really hit on the fundamental precept here that it is this idea of redesigning incentives as a seed for what you refer to as human fractals, that allow organizations to develop organically. This is a pretty new idea, we haven’t had the capabilities or the technology, or frankly the connectivity to enable this mass self-organization before, but I think it’s incredibly exciting.  

I’d like to flip the focus to at least what you see as some of the challenges to mainstream adoption of these decentralized technologies, whether there’s some misperceptions that you encounter on a regular basis, which you think we just need to get past early adopters. What do you feel are big challenges? 

To me, it’s easy to state and hard to fix, and that’s three things, simplicity, security, transaction fees. If you can make it cheap to adopt in terms of transaction fees, that once you’re using it, every time you use it its cheap to do so, that’s great. 

Security, if I don’t have to manage all sorts of wallets, and figure out all kinds of private keys, writing them down somewhere, stuffing them somewhere else, and there’s some mechanism by which if I die someone else can access the private key. There’re all these other considerations for security that in order to have security adds layers of complication, which I think are not doing as much justice in terms of adoption.  

So, that then leads to simplicity, just make it easy for people to use. Now, one of the reasons that Coinbase is so successful is, when you get on there it’s just like breathing. But Coinbase is a central house exchange; in order to use Coinbase you have to accept the trade-off of centralization to some degree. So, it’s not to say that there aren’t benefits to centralization, and not everything needs to be on the Blockchain, and not everything needs to be fully decentralized, there are going to be all kinds of hybrids and interesting things going on. But why Coinbase is doing so very well is that they made it just so easy to use for people. How many times have you heard, ‘How do I get in Bitcoin?’ and you’ve heard someone answer, ‘Get on Coinbase’! It’s terrible in a certain stance but they have figured something out with simplicity, if we can get all three of those dimensions going at once, simplicity, security, and low transaction fees, that’s a complete game changer for mass adoption. 

 

Yes, no doubt. One final question, you’ve eloquently covered some extraordinarily complex topics in our conversation here, but I think your last point boils down to the fundamental precept of when we’ll see a real inflection in adoption, and that is simplicity. The implications are incredibly complex and powerful, but assuming that does come sooner than later, what are some of the implications that you’re mostly optimistic about, from your book which you’ve written about, and ultimately when we start to see a mainstream embrace of decentralized technologies, and organizations for that matter? 

The way I would put it is this to answer your question, this is a pretty well-played, beat up, and hackneyed example, but I’m going to use it anyway, because I think it gets us to where we want to go, in this broader question of how we move towards a social singularity, and to that inflection point where society is more lateralized than it is hierarchical, more networks than it is hierarchical, which is loosely how I define the social singularity, at that point when we’ve gone over the tipping-point, I guess you could say. 

The example is as follows. Uber is from a technical standpoint technology-wise highly centralized, but what they created with that technology is a peer-to-peer marketplace where buyers and sellers of services could meet, you could awaken capital in your automobile that was heretofore dormant, you could use that capital to make some extra money, and people who needed a ride find a ride. So, drivers and riders had a matchmaking service 

This operated within a legal grey area, and everybody’s familiar with the story of how people migrated from taxis to Ubers, and of course the taxi cab monopolies threw up a fit, and understandably so, because they had to invest in these artificially restricted taxi medallions whose supply was artificially scarce to government policies and so-on. They were understandably upset if they owned one of these medallions, because suddenly there’s this company operating in a legal grey area, and it’s taken over the world, rapidly, very-very rapidly. But the constituencies that were built up around Uber so quickly made Uber much more a force to be reckoned with, than we have ever seen before. 

So, Uber and bitcoin, both are what we might say are the first examples of our ability quickly and easily to flip, and this is going to sound a little nerdy but I’ll just try to describe it in as simplest terms I know how; there’s this great old economist who is no longer with us named Mancur Olson, he described the decline of a lot of civilizations over time, in terms of what you might call concentrated benefits dispersed costs. So, we’re not aware that we pay a fraction of a penny to subsidize mohair industry, but ever since the World Wars, maybe even World War I, we’ve been subsidizing mohair which is a form of wool, in order to make jackets for the military, so that we could get through harsh winters in Europe in World War II say. So, our boys needed the mohair, so we subsidized it and made it cheap, at least I think that’s the story. But anyway we subsidized mohair, and we’ve never been able to get rid of the subsidy, because the mohair industry… it’s one of the concentrated beneficiaries. In terms of the cost of overturning mohair subsidies, nobody even knows what mohair is much less that we subsidize it. 

So, we have this ignorance problem for all the things that get funded in these fat bloated subsidized industries. But we also have very little emphasis for incentives to worry about something like a mohair subsidy because it’s so tiny, whereas the beneficiaries, namely the producers  of mohair have millions of dollars at stake, so of course they win every time in the citizen blues, this is just a fact of life for how it works when corporations and governments collude, concentrated benefits, dispersed costs. Well, suddenly with networking technologies, and they’re becoming more sophisticated, more robust, and more cryptofactorly protected, which means that many of them are now permission-less, suddenly we can change the game, it’s no longer concentrated benefits to dispersed costs, its concentrated benefit and the cost to enforce the old order are concentrated now.  

That is an inversion, it’s a slit, a kind of a flip of a switch, so people always say, ‘Well Max, all this decentralization stuff sounds great and everything, but how is it going to work?’ I say, ‘If you can create something, and within a year you have 20 million users, that is a heck of an unstoppable force. Uber’s still around, Bitcoin is still around, and its growing and growing, and more and more of these kinds of structures are forming on this earth, and yes there’s probably some sort of arms race going on behind the scenes between the regulators, the Russians… I say the Russians, jokingly! But there’s all this stuff going on behind the scenes in terms of how to maintain the current social order against the onslaught of these new networking technologies.  

It’s going to be interesting to see which prevails, it could be the central power prevails, but it’s going to take us into a dark-age in a very-very hierarchical situation, even totalitarian in order to stave off the network age, the social singularity. It would take very-very totalitarian means to do so, but I wouldn’t put it past. If history is our guide, we’ve got to be careful about that. But you asked me why I’m hopeful and why I’m optimistic, the reason I’m optimistic is people power. Really these technologies are harnessing the energies and the incentives of millions of people, and it’s just a beautiful thing to see. 

 

It really is something brand-new and incredibly exciting, and I do share your sentiments as well. 

One final question, and Max this has been fascinating. I can’t believe the time has just flown by, and it feels like we’re barely scratching the surface of this topic, I always like to ask my guest for a recommendation of a resource or a book that you find valuable, that we can share with the listeners. 

There’s just so much out there I love, and so I promised me when you sort of intimated that this question might come up at the beginning of the show, I said, well Max take the first one that comes from the top of your head, and that’s what I’m going to do.  I want to get the title of the book right, Matt Ridley has a book that I don’t think did very well, because it’s not a terribly sexy title… 

 

It’s not ‘The Rational Optimist?’ 

Oh, that’s a good one, that is absolutely a good one! I would say this is a more recent one called ‘The evolution of everything, how ideas emerge. 

 

I haven’t read that one, I’m definitely going to get that. That’s terrific, I did read the ‘Rational Optimist, but I hadn’t read the new one. Thank you for that. 

And now I just need Matt Ridley to go on a podcast and tell everybody to read, ‘The Social Singularity’, and I’ll be rich. 

 

It is a terrific book.  

Wrapping up our conversation again, this has been a conversation with Max Borders the author of the book, ‘The Social Singularity’, and founder of Social Evolution. This has been Ed Maguire, Insights partner at momenta with another episode of our edge podcast. Max thank you very much for a great conversation. 

Always my pleasure Ed, thank you.