News Analysis: Feroce’s Blockchain Plan

[See also “Chain Gang“]

Rhode Island Republican candidate for governor Giovanni Feroce has made his “Blockchain Center Development Act” – feroceforgovernor.com/fixri – a defining centerpiece of his campaign. He also advocates elimination of taxes on personal incomes, assets, and inventory as well as “right to work” legislation that would prohibit employer contracts from requiring employees to join a labor union, but it is the blockchain proposal that most separates him from other candidates.

Feroce in July published an article saying he wanted to be the “blockchain governor,” explaining: “This rare opportunity has been called by technology visionary George Gilder ‘the Cryptocosm.’ It promises to have an economic and social impact as powerful as computers, computer chips, the internet, the World Wide Web and fiber optics, all of which revolutionized the way we live and created trillions of dollars of new wealth and millions of great new jobs across the economy.”

“Blockchain” is a hot buzzword in business these days, but in practice it almost invariably serves as a magic incantation to ward off the bad spirits of FOMO (“fear of missing out”) rather than communicating anything meaningful. It was invented in 2008 (then called “block chain” but since losing its space between the words) as the underlying technology for the cryptocurrency Bitcoin. Nor is cryptocurrency a new concept, as it was an idea kicking around since the 1980s and actually implemented in the 1990s as “Digicash.”

Technically, blockchain technology is not complicated, and there are tutorial demonstration projects all over the place that implement it in, for example, 200 lines of Javascript or 50 lines of Python, although for practical reasons those computer programming languages are bad choices for production use. Several large companies have been falling all over themselves to develop and release libraries that provide basic blockchain infrastructure, the leading example being Hyperledger Fabric written by IBM and donated in 2016 to the Linux Foundation as open source available to anyone for free. The motive is not entirely altruistic, because IBM will happily allow anyone to sign up for a free hosting plan that allows developers to build and test blockchain projects that, when scaled up for production, would require purchasing services from IBM.

Blockchain works in the cryptocurrency world because it operates on math problems that are cryptographically useful due to inherent asymmetric difficulty: for example, multiplying big numbers together is very easy, but factoring the product of multiplication back into those two big factors is very hard. If parties who want to correspond each choose two secret factors (the “secret key”), multiply them together, and share the product (the “public key”) with each other, then they can both (a) encrypt messages addressed to one of the other parties using their public key that can only be decrypted by the party in possession of the matching secret key and (b) sign messages using their own secret key that can be verified by anyone using the matching public key to prove possession of the secret key. This is not at all new technology, and web browsers do this as a matter of course every time they connect to a secure site (“https”) such as GMail or Amazon. What was revolutionary about Bitcoin was that the actual units of currency value, the Bitcoins themselves, are essentially numbers that have similar properties, so transferring value was a matter of doing math problems to prove possession, and the blockchain is simply a ledger of all of those worked math problems.

The challenge of using blockchain technology in the real world is that most things are not themselves mere numbers like Bitcoins. Feroce cited examples where blockchain could be useful: land evidence recording deeds and mortgages, vital records such as birth certificates, common government records such as driving licenses and vehicle registrations, and medical records. Ultimately, he said blockchain could “eliminate” the registry of motor vehicles.

On the one hand, there is an argument to be made that a lot of physical paper could be eliminated. Why, Feroce speculated, can someone board an airplane using a ticket and boarding pass displayed on a cellular handset but is required to carry a little plastic card in order to drive a car? But, I replied, none of that requires – or has anything to do with – blockchain, as the purpose of blockchain is to decentralize authority over information where each contributor independently cryptographically signs their addition to the ledger; it might not be a good idea to allow people to make up their own driving licenses and vehicle registrations. There are, I pointed out, people who do that: a couple of years ago, I photographed a car “registration plate” on the East Side of Providence from the “Society of the Sojourner,” which I later found out could be purchased by mail order and is apparently popular with the sovereign citizen movement of far-right anarchists.

This at least theoretical and historical tie between blockchain and far-right politics has been noted by, among others, Will Weatherly of the RI Future blog (“Blockchain has a far-right past. Does it have a future in Rhode Island?”, July 27, 2018). Feroce, who repeatedly mentions the “cryptocosm,” a neologism coined by futurist George Gilder in his recent book Life After Google, openly admitted he had not read the book and seemed entirely unaware of Gilder’s use of it in a libertarian anarchist sense. The book only came out a month ago, and Town Hall published the key chapter, titled “The 10 Laws of the Cryptocosm,” on the web for free.

Gilder intends “cryptocosm” to echo his earlier speculations: the “microcosm” of his 1990 book that argued wealth would become increasingly untethered from physical things such as natural resources and move into virtual realms of information, and the “telecosm” of his 2000 book arguing that higher communication bandwidth would lead to hundreds or thousands of television channels watchable from anywhere – neither of which, at the time, were particularly original observations. But Gilder is a crackpot, most well known for his million-selling 1981 book Wealth and Poverty arguing that there is no poverty problem in the United States, that poor people have a relatively high standard of living, and that poverty is mostly a consequence of moral decay, loss of family values, and lack of Christian teaching by churches. Gilder’s 1973 book Sexual Suicide, later revised in 1986 as Men and Marriage, argues that erosion of traditional gender roles and acceptance of homosexuality would lead to a collapse of human reproduction and consequent extinction. Gilder is the co-founder of Discovery Institute, the largest and most well-funded organization devoted to denying the theory of evolution.

When the first Rhode Island Blockchain Conference was held July 26, organizer David Paolo invited incumbent governor Gina Raimondo and RI House speaker Nicholas Mattiello, but he did not invite Feroce. (Disclosure: In the internet business in the 1990s, I was the principal consultant to a main competitor of Paolo’s company and had offices next door to him.) A prominent attendee was reported to be Anthony Scaramucci, who was fired as communications director at the Trump White House last year before even beginning work as a result of an obscenity-laden interview with The New Yorker – “I’m not Steve Bannon, I’m not trying to suck my own cock” – ironically denying he was seeking media attention. Paolo was reported to have said that former RI House Speaker John Harwood, who spoke at the conference, was advising the blockchain group on legal strategy. (Disclosure: When I ran for state representative in 2002, I was publicly critical of Harwood over a scandal where a legislative aide 20 years his junior, Wendy Collins, said she was harassed and pressured into giving him oral sex in a State House closet twice a week for a year, after which to keep her quiet he engineered the creation of the first new job vacancy at Rhode Island College in 25 years.)

Blockchain is a perfectly legitimate technology, and it is disturbing that it is being co-opted by all of these unsavory characters such as Gilder, Scaramucci, and Harwood, not to mention the tin-foil-hat-wearing crowd, but what makes it attractive to con men is that it is mysteriously associated with other buzzwords not well understood by the public, including Bitcoin and the “dark web.” The problem with blockchain is that despite a nagging feeling that it should be useful for something, beyond the limited realm of cryptocurrency no one has figured out what.

Making fun of that fact and coinciding with the release of Gilder’s recent book that argues directly in its title that large data-driven companies such as Google will be rendered obsolete by blockchain technology, universally respected internet pioneer Vint Cerf posted on Twitter a joke “simple flowchart” with only two boxes, the first reading “Do I need a blockchain?” and the second reading “No.”

Gilder, who rarely posts on Twitter, replied (getting Cerf’s name wrong), noting that Cerf is a vice-president of Google – which from Gilder’s point of view is tantamount to accusing Cerf of being a Rothschild Illuminati Elder of Zion – saying, “Cerf… is a defender of the existing Internet architecture, a porous and perforated structure that allows all the money and power to be sucked up to the top where Google rules. That’s why I wrote Life After Google. He should read it.”

People might have laughed at Isaac Newton and Albert Einstein, but people also laughed at Bozo the Clown – and Gilder deserves to be grouped with the latter.

Despite some ill-chosen phrasing about Gilder and his “cryptocosm,” Feroce is certainly no far-right fringe lunatic, and it was clear to me that, to his credit, Feroce has no idea what Gilder is even talking about. Feroce has some laudable goals, such as reducing the reliance of government on physical paper and in-person transactions at the registry of motor vehicles, and he seems to have some vague idea that blockchain technology might somehow contribute to these goals. Ultimately, Feroce makes a case that he is a business visionary who worries more about missing an opportunity than making a bad bet – a reasonable risk profile in venture capital – and if he is right that blockchain technology turns out to be useful, then it might make sense for the state to make educational and other commitments to explore that. Expecting billions or even trillions of dollars to come from an as-yet totally unproven industry, however, is unrealistic and unsupportable.

[See also “Chain Gang“]