Codes and Tokens - The web as the New "Belief" 3 【From God to Codes. An Evolutionary History of Belief and Trust: Part 2】
On web3's ideological revolution
Good morning.
I am mitsui, a web3 researcher.
Every Saturday and Sunday at noon, we update the web3 foundation report. This week's report, "From God to Code. An Evolutionary History of Faith and Trust," which is a bit abstract, but explains what mankind has believed in. Please take a look at it until the end!
1. review of the first part
2. trust in the platform and its limitations
3. code is law - blockchain philosophy
4. tokens and joint illusions
5. the future of what we believe in - the direction web3 is taking
6. conclusion
1. review of the first part
In the first part, we traced how the object of "trust," which is essential for the maintenance of a large human society, has shifted over the course of history.
Review of the first part
In prehistoric times, our ancestors maintained communal order through faith in an absolute authority called "God. In modern times, the object of trust shifted from "God" to "law. The "rule of law," which guarantees trust through rules set by human beings and the institutional apparatus of the state, was established. In the modern era, with the advance of globalization and capitalism, trust in the "market" has become the foundation of society.
God, law, and the market. These may differ in form, but they were all "devices of trust" created by humankind to maintain society, and they were "common illusions" that we all share.
So what do people believe in the 21st century Internet age?
And now we are living in the Internet age of the 21st century. In this new era, what do we believe and how do we build trust?
In our digitalized society, a new form of "trust intermediary" has emerged. This is the giant platform company represented by GAFAM.
We use the services they provide on a daily basis and take for granted the order of the digital space they have created. However, this new form of "trust" is more fragile and dangerous than ever before.
In the second part, we will first clarify the trust in platforms on which modern society relies and its limitations, and then discuss the emergence of "codes" and "tokens" as the new "things to believe," or web3 ideas and their potential.
2. trust in platforms and its limitations
The spread of the Internet, especially in the "Web 2.0" era from the mid-2000s onward, was a time when the Internet became an integral part of the social infrastructure. However, this Web 2.0 world had a centralized structure dominated by a few giant platform companies.
Web2 order: reliance on "services guaranteed by Google and Amazon".
In our daily lives, we unconsciously trust platform companies deeply.
For example, when we want to know something, we search for it on Google and trust that the information that appears at the top of the search results is correct, because we believe that Google's algorithms have sorted out reliable sources of information.
When we shop online, we use Amazon because we trust that our goods will arrive reliably and that our payments will be secure, and we trust that the Amazon platform guarantees the security of our transactions.
Thus, in the Web 2.0 world, platform companies function as "trust intermediaries. By trusting the centralized administrator, the platform company, we indirectly trust the order and security of the entire digital space.
This structure is very efficient and convenient. Platform companies manage the servers, develop and operate the services, and we are able to enjoy sophisticated services for free (or cheap). It is undoubtedly to their credit that the Internet has spread so rapidly.
However, this centralized trust model is fraught with serious problems.
Centralized problems: censorship, account freezes, risk of company bankruptcy.
Trust in platform companies is based on the assumption that they remain good and fair. However, this is not always the case in reality. When power is concentrated in one place, there is always a risk of abuse.
The first is the risk of censorship and information manipulation. Platform companies have tremendous power to control the distribution of information in the digital space. They can remove certain content or manipulate display rankings at their discretion.
Of course, it is necessary to crack down on illegal content and fake news, but the criteria for making such decisions tend to be arbitrary by companies. Platform companies' policies and algorithms are opaque, and their judgments are not always fair. The danger of a few private companies acting as gatekeepers of information can be a threat to democracy.
Second is the risk of "account freezing and loss of digital identity". If it is determined that you have violated the terms and conditions of the platform company, you risk having your account suddenly frozen (banned) or deleted.
Today, our social networking accounts and email addresses are our very digital identities. All the relationships and data we have built up over the years can be lost overnight due to a unilateral decision by a platform company.
Third is the risk of corporate bankruptcy and service outages (single point of failure). Platform companies are also not eternal. There is a risk of sudden service outages due to corporate bankruptcy or changes in management policy. A centralized system has the structural vulnerability that if the central point collapses, the entire system will malfunction.
The fragility of believing in "what is not supposed to be believed."
The fundamental problem with trust in platforms is that it is an "imputed trust". We have no choice but to trust the management and employees of the platform companies, or the opaque algorithms they have designed.
However, history shows that power will always corrupt, and people will always make mistakes. Corporations are profit-seeking entities, and it is only natural that they put their own interests ahead of the public interest.
Nevertheless, we have placed such an important social infrastructure in the hands of a few private companies. This may be said to be a state in which we are willing to believe in something that is inherently "too dangerous to believe in" in exchange for convenience.
An even more serious problem is that we are losing sovereignty over our own data (loss of data sovereignty): in the Web 2.0 world, the vast amount of data we generate is collected and analyzed by platform companies and used as a source of revenue for advertising and other businesses. We do not have complete control over how our data is used.
The centralized trust model brought about by Web 2.0 brought efficiency and convenience, but also created serious problems such as concentration of power, lack of transparency, and loss of data sovereignty.
That is why a movement is now emerging to redesign the very structure of trust. Rather than relying on a specific administrator, an attempt is being made to build a more transparent, fair, and decentralized system of trust through the power of technology. This is the idea of trusting "code," or the web3 challenge.
3. code is law - blockchain philosophy
The web3 philosophy emerged to overcome the limitations of Web 2.0. At its core is the idea that "code (programs)" rather than "people" or "organizations" are the basis of trust.
Lawrence Lessig's "Code is Law" concept.
An important concept for understanding the idea of "trust in code" is the phrase "Code is Law" proposed by American legal scholar Lawrence Lessig in 1999.
In addition to the conventional "laws," "norms," and "markets," Lessig pointed out the existence of a fourth force, "architecture (structure)," as a force that regulates people's behavior in society. In the digital space of the Internet, he argued that "code" plays the role of this "architecture.
Program code is the physical law of digital space, determining what we can and cannot do there. The phrase "Code is Law" suggests that code has as much or more regulatory power than law. Laws can be broken, but properly designed codes are difficult to break. The rules established by a code are automatically and forcefully enforced. There is no arbitrary human interpretation or exceptions.
Even in the Web 2.0 world, platform companies set the rules by code. However, the code was opaque and could be changed at any time by management.
web3 tries to use this "Code is Law" philosophy in a paradoxical way. In other words, by establishing rules with transparent, unalterable code, web3 seeks to eliminate centralized control and realize a truly free and fair digital society.
Smart Contracts = Unbreakable promises, transparent rules.
The technology that embodies "Code is Law" in web3 is "smart contracts. Smart contracts are programs that run on the blockchain and automatically execute contracts when predetermined conditions are met.
Traditional contracts are based on the law. If a contract is broken, it is necessary to sue in court to seek enforcement, which is time-consuming and costly.
Smart contracts, on the other hand, are described by code and their execution is guaranteed by the blockchain network.
For example, suppose that a smart contract states, "If Mr. A transfers 1 ETH to Mr. B, the ownership of the digital art (NFT) owned by Mr. B will be transferred to Mr. A." When Mr. A transfers the money, this fact is recorded in the blockchain and the smart contract is automatically The smart contract is executed. The ownership of the NFT is then transferred to Mr. A.
No third-party intermediary is required for this process. Execution of the contract is done automatically according to the code, without the risk of contractual default. Smart contracts are truly "unbreakable promise" technology.
Another important feature of smart contracts is their transparency and tamper-resistance.
In principle, the code of smart contracts deployed on the blockchain can be viewed by anyone. It is open to all to see what rules it operates according to.
In addition, once recorded on the blockchain, smart contracts are extremely difficult to tamper with later. Because the blockchain is a "distributed ledger" managed in a decentralized manner by many participants around the world, it is impossible for some administrators to commit fraud or arbitrarily change the rules.
This transparency and tamper-resistance allows smart contracts to achieve fair and trustworthy rules without a centralized administrator.
What does it mean to deposit "belief" in the code?
web3's goal is to realize a "trustless" system. This does not mean that trust is unnecessary. It means "there is no need to trust anyone (individual or organization) in particular.
In the web 2.0 world, we needed to trust the platform companies. In the web3 world, however, we only need to trust the "code" and the supporting "consensus algorithm" of the entire blockchain network.
In the web3 world, it is sometimes said "In Code We Trust", a play on "In God We Trust".
This does not mean blind faith in the technology. web3's key feature is verifiability. In principle, the data on the blockchain and the code of smart contracts can be viewed and verified by anyone.
We do not have to believe in the "agenda" of any particular company or administrator. Instead, we can read the publicly available code and verify for ourselves how the system works. Of course, not everyone can read the code, but audits by experts and the community ensure the transparency and reliability of the system.
Don't Trust, Verify. This is the fundamental stance of web3.
The "believe in the code" attitude is based on a profound insight into human imperfection. Humans are fallible, driven by desire, and abusers of power. That is why important rules should be left to a transparent and enforceable code, out of human hands. This is the philosophy underlying web3.
4. tokens and joint illusions
Blockchain technology has provided the foundation for a trustless system. But that alone does not motivate people to participate and collaborate; for web3 to function as a new social system, a new "faith device" is needed to bring people together and share value. That is "tokens.
Tokens = a new faith device for sharing value.
A token is like a digital bill of rights or voucher issued on the blockchain. Crypto assets are a type of token, but they are not the only kind. Any "value" can be tokenized, including stocks, memberships, voting rights, and digital art (NFT).
The key role of tokens is to digitize value that has been difficult to visualize and transfer, and to allow it to be freely traded over the Internet. This creates a new economic sphere, the "token economy.
However, the essential function of tokens is to create a "common faith" that goes beyond that. Tokens are a powerful tool for expressing "faith" in particular values and goals and for encouraging action based on that faith.
The beauty of tokens is that they can be designed to provide appropriate incentives to those who contribute to the maintenance and development of the community.
Bitcoin mining is a prime example. Miners receive newly issued bitcoins as a reward for helping to maintain the security of the network. This is a very well-designed system in which the pursuit of individual profit (earning bitcoins) directly leads to overall profit (maintaining the network).
On Web 2.0 platforms, even though users contributed content to increase the value of the network, most of the profits were absorbed by the platform companies.
However, web3 projects can reward users who have contributed to the project from the beginning by distributing tokens to them. By holding a token, the user becomes a "co-owner" of the project, rather than just a customer. As the value of the tokens increase, you benefit, and you have an incentive to be actively involved in the growth of the project.
In this way, tokens serve as a powerful coordination mechanism, allowing strangers to work together for a common goal.
Like money and the state, tokens are supported by "joint illusions".
As mentioned in the previous section, money is a joint illusion that functions by "everyone believing in it as something of value. Legal tender issued by the state is secured in value by trust in the state.
So what guarantees the value of a token? When there is no clear issuing entity, as is the case with bitcoin, there is no central bank to guarantee its value.
The value of tokens is also supported by the "joint illusion" of those who believe in them. For example, in the case of Bitcoin, the price is formed because people believe in the "narrative" that the issuance limit is programmed to be 21 million, that it is decentralized and censorship-resistant, and that it is a means of storing value as digital gold.
These narratives are not mere assumptions. They are formed by a combination of objective facts (issuance limits and technical characteristics) backed up by code and expectations for the future (increased use and social implementation). And the more people who share and believe in that narrative, the more valuable the tokens become and the stronger that joint illusion becomes.
Of course, there are dangers associated with token-based joint illusions. Excessive expectations tend to precede bubbles that soar in price without any reality. There is no end to fraudulent projects and hacking incidents.
But this was also the case in the formation of myths and nations. After much trial and error, only the stronger and more reliable narratives survive. web3 has the potential to create this communal illusion in a more open, transparent, and democratic way.
A new form of community created by DAO.
By combining tokens and smart contracts, a completely new organizational form, the "DAO," was created.
DAOs are organizations that are jointly owned and controlled by the participants without a specific management or board of directors. The rules of operation of the organization are set by smart contracts (code), and decisions are made through voting by token holders (governance voting).
In a stock company, the hierarchical structure is such that the shareholders appoint the managers, and the managers in turn direct and order the employees. DAOs, however, have a flat structure and participants operate autonomously. Rewards for contributions are also automatically distributed according to the code.
DAOs offer the potential for more democratic and transparent organizational operations that differ from traditional communities such as nations and corporations. People from all over the world come together and cooperate with each other for a common purpose (e.g., specific protocol development, investment, philanthropy, etc.). This is a new form of "community" in the Internet age.
We could not automatically choose the nation to which we belong based on where we were born, but we may be able to choose the DAO to which we belong based on our own values. Tokens are a device of "faith" that supports this new "nation," and DAOs are a form of "community" for practicing that faith.
5. the future of what we believe in - the direction web3 is taking
From God to law, from law to market, and from market to code. The history of human "belief" has been a process of constant evolution. web3 presents a new form of trust, at the cutting edge of this history. But it is by no means a panacea.
Like God, law, and the market, web3 is "not absolute".
The first thing to recognize is that web3 is not a perfect system either. Just as God, law, and the market each had their limitations and challenges, web3 has many challenges to overcome.
First, there are technical challenges. Blockchain has a "scalability problem. Further technological innovation is needed for it to be widely used as a social infrastructure.
Second is the vulnerability of the code and the risk of hacking. The "Code is Law" philosophy assumes that code is perfect, but since it is written by humans, bugs and design errors can exist. We must also recognize the danger of placing absolute trust in the code.
Third, barriers to participation and the digital divide: using web3 services requires specialized knowledge, such as setting up a wallet and managing private keys. Improving the UX is essential for the general public to be able to use these services as a matter of course.
Fourth, there is friction with laws and regulations. Decentralized systems have aspects that do not fit within existing legal and regulatory frameworks. There is a search for an appropriate regulatory framework to protect users without stifling innovation.
Only by resolving these issues one by one will web3 be widely accepted by society. We need to calmly assess the possibilities and limitations of web3 without over-idealizing it.
However, it breaks new ground in terms of transparency, decentralization, and execution by code.
Despite the many challenges, the direction proposed by web3 has the potential to fundamentally change the way we have built trust. At its core, web3 is about three things: transparency, decentralization, and execution by code.
transparency: All transaction history and code is publicly available and can be verified by anyone. This prevents abuse of power and fraud; there can be no black boxing of algorithms like in Web 2.0 platforms. It is in the spirit of "Don't Trust, Verify".
dispersibility: The system is not dependent on a specific administrator, but is maintained by all participants. This increases censorship resistance and reduces the risk of system downtime. It also puts the sovereignty of the data back in the hands of the users (self-sovereignty).
Execution by Code: Smart contracts allow contracts to be executed automatically, without the need for third-party intervention. This eliminates human arbitrariness and allows for efficient and frictionless transactions.
These characteristics can be one effective solution to the challenges we face in modern society, especially the concentration of power and the crisis of trust.
The Challenge of Humanity in the "Age of Choosing What to Believe.
The advent of web3 means that the time has come when we can choose "what to believe".
Until now, we have had no choice but to accept the state to which we automatically belong according to our place of birth, or the socially defined laws and market system.
However, in the web3 world, there are a variety of parallel systems (protocols, DAOs, token economies, etc.) designed according to different values and rules. We are free to join or leave the system that best matches our values.
Of course, web3 will not completely replace the existing system. States, laws, and markets will continue to play an important role, and web3 will force changes in existing systems by complementing them and, at times, encouraging competition. We will live in an era of centralized and decentralized systems, depending on our goals.
This age of "choose what you believe in" gives each of us the autonomy to choose and create a society based on our own values. At the same time, however, it also places a heavy responsibility on us.
We must think for ourselves and make decisions about what to believe and which systems to participate in. We must increase our literacy, understand the risks, and take responsibility for the consequences of our choices.
web3 has given humanity a powerful tool to design our own society. How we use this tool is in our own hands. This is a new challenge for humanity.
6. conclusion
In this series, "From God to Code: An Evolutionary History of Belief and Trust," we have approached the essence of web3 by tracing the history of what humans have "believed.
web3 can be a "new belief system" comparable to religion and the state.
Human society has always been founded on the belief in a "common illusion" shared by people. Over time, the object of this belief has shifted from "God" to "law" and then to "the market. Each of these systems has functioned as an "operating system of trust" to maintain the social order, but they have also had their limitations.
Now, a new form of trust in the Internet age has emerged: code. Based on blockchain technology, web3 enables a trustless system that does not require a centralized administrator. Smart contracts embody "Code is Law" and tokens serve as a new "faith device" for sharing value.
web3 is not just a technological innovation. It is an ideological movement that seeks to redefine the very nature of trust in society. web3 has the potential to take root in society as a new "belief system" comparable to the Reformation and the establishment of the modern state.
From God to code - this is a turning point in history that can be called the "democratization of trust".
The "God to Code" trend represents a historical turning point in which the subject of trust shifts from centralized authority (God, the state, platform companies) to decentralized protocols (code, the community).
This is a change that can be called the "democratization of trust. We are entering an era in which we can verify for ourselves and choose what we believe, rather than blindly following a particular authority.
web3 is still in its infancy and faces many challenges. However, its underlying values of transparency, decentralization, and autonomy have the potential to bring about the freer and fairer society we have long sought.
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
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The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
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*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.