What the rise of Blockchain technology means for Government.

An analysis of the last few decades show that there is a cyclical nature to developments in technology. Each decade an epoch occurs where a technology consolidates itself and becomes the source for the next epoch.

The first of these epochs can be said to be Microsoft in the 1990’s. Microsoft wins the PC race, becoming the dominant player in the market.

As Microsoft succeeds in their stated mission of putting a computer on everyone’s desk, new markets emerge.

The next technological epoch is that of a ‘battle’ for the internet. In this realm (the 2000’s) ‘Google’ is the victor, positioning themselves as the operating system of the internet. The place where most users journey begins and where most content is indexed.

It is duly important to mention that Google’s success is only possible thanks to the achievements of Microsoft since now there are a large number of individuals with access to computers and internet at home, Google has stepped in to provide a vital service to them.

Another technological marvel established in the 2000’s is the rise of smartphones. Initially, there were doubts to the long-term prospect of smartphones and whether Apple or android would become leaders. As the market consolidates it is clear there will not be a single leader and now there are at least two major ecosystems.

The common theme between all these technological advances is that new technologies and business models are only possible due to the foundations of the preceding technology.

So how does this relate to the governments?

Simple, government is the main ‘base layer protocol’ to enable the creation of more productive industries on top. A strong and stable government is necessary for the emergence of new sectors of the economy. As we advance towards a sophisticated market based economy, the role of government ought to diminish as to not stifle innovation.

Most countries in the world are failing to realise the full potential of their economy by burdening their citizens with outdated, complicated and verbose laws and regulations that are often misconstrued.

Capital controls, attempts to control prices, employment laws, permits and licensing, taxation, among others combine to create an environment hostile to business and are counterintuitive to the progress they seek.

Arguably, the rapid growth of technological innovation can largely be attributed to its unconstrained nature. New companies have been able to escape the binding regulations and go on to create new worlds without limits.

Some technologies, like Google, do not need to threaten competitors like Microsoft but instead compliment them. Other technologies, such as smartphones are redefining our relationship with older technologies like PC’s and their significance. While computers were a necessary step for the development and proliferation of the Internet and smartphones, as technology advances those once core layers start fading away in relevance.

What role does this play in the progression of societies?

The next epoch is likely to involve Blockchain technology as it positions itself to become the governance of the Internet.

Governance enables people to communicate and collaborate in entirely new ways by replacing old forms of trust that were dependent on legacy institutions by trust generated by self-executing, immutable code (‘smart-contracts’).

Modern governments that embrace the technology will enjoy major efficiency gains and significant economic growth. Regimes that fail to understand the potential, oppose, or try to use it to oppress people will start to fade away as their citizens can now bypass them.

Blockchain itself may become the ‘base protocol layer’ that will redefine democracy and government.

Finally, the decentralised nature of Blockchain technology means that this epoch will not have just two ecosystems — like in the smartphone era — but potentially thousands of ecosystems operating independently of each other, all generating value in unique ways.

Progress cannot be stopped.