By: Oliver Leistert
The advent of the blockchain as a protocological internet layer for values corresponds to a continuing monetization pressure and ongoing expansion of identification strategies. Notwithstanding these trajectories, behind this prospected killer application resides first of all a sovereign chronological regime that has the capacities to proof and modulate the existence, identity and administration of data, assets, goods and services from a distance on micrological scales.
“As far as agency is concerned, the law holds that things and media are strictly passive.” Cornelia Vismann
Without doubt, one of the most common and important techniques since the advent of massified networked computing has been the basic computational operation to copy and paste. To copy the contents of an address space to another in (networked) computers seems to be the one fundamental operation a networked society is relying on – on the operational level of computing itself and on the individual and societal level of swapping clusters of large files. In the digital realm, scarcity up until today proved too counter-intuitive and technically non-viable or too expensive to implement on a general scope. This became manifest in fundamental attacks endemic and systemic to digital cultures on property regimes, whose operationability had formerly been intrinsically secured by the simple fact that consumers did not have the means to copy goods as they wished. If there is one single capturing method that blockchain technologies are aiming at it is to limit ubiquitous copy and paste in a broad sense, to migrate from copy&paste to cut&paste (if at all), to insert a digital proof of identity for data that may then be linked with appliances and other machines such as media player or access control via interfaces. “The business of embedding artificial scarcity into the digital asset is aligned with what appears to be an inevitable and continued enclosure of the mythos of online commons within colonial apparatus.”i The introduction of a time stamped proof of existence in a presumably tamper-proof distributed ledger yields the late introduction of scarcity on the protocol level, almost fifty years after the introduction of TCP/IP.
In the blockchain era, prospected to be in full bloom in ten years, goods and services – physical or digital, manual or automated – are bound to a time stamp in the blockchain that is cryptographically secured. This time stamp marks the beginning of what might be called the post-digital, signified at its most basic function by remote, blockchain-based controls of existence. Property regimes in a very general sense then may be executed automatically by machines through permissionless (open access), distributed, or permissioned, centralized ledgers.
This text describes the very real possibility of this new kind of sovereignty – the sovereignty of the post-digital that modulates ownership and use of its commodities new from scratch, and as an extension and update of the bourgeois operating system, designed by the vectorialist class.ii At its most radical trajectory, control shifts from external, non-digital, human-centered legal and administrative procedures, such as contracts, to internal, machine centered and executable qualities of the commodities, goods and services themselves. Test cases and applications are already deployed in a variety of fields. Even if they fail in their first testing phases, the stakes are too high for fine grained monetization schemes and profits on new frontiers to emerge to not continue intensive R&D.
‘Smart’ ≈ blind, ‘Contract’ ≈ Code
The originality and limitation by design of blockchain-based distributed databases is their append-only regime. All past elements are read-only and only the current block is a write operation. And furthermore, since the chain is secured in backward direction via hashes, its complete verification (or falsification) is viable at any time by any node.
Hashes are mappings of data objects, usually large, most-certainly unique hexadecimal numbers. Hashes themselves do not expose anything about the object (such as the block a hash refers to) except a one-way identification. By reproducing the hash with access to the hashed object, and checking it against the time-stamped hash in the blockchain, a proof of existence and identity is established that easily scales up to large numbers of objects. This is the basic mechanism referred to as ‘proof of existence’ in the blockchain idiom. It can be applied to all sorts of data, objects or processes. Blocks may contain hashes of a set of object, or of other blockchain’s blocks. Otherwise said, the blocks contain registries of identification anchors for anything computable.
One way to unleash the automation powers of blockchains are so called ‘smart contracts’: code that runs ‘on top’ (more precisely: in specialized virtual machines) of a blockchain to govern the execution of conditions with sovereign access to assets and values registered in the chain. The idea to execute the terms of a contract with a transaction protocol dates back to 1994, when Nick Szabo, a prominent figure in the crypto-libertarian community, wrote down a first conceptual paper by the same name, where he foresaw a reality that currently starts to unfold: “Smart contracts will replace, and even protect against, lawyers, politicians, and violent enforcement in many business and social interactions. They will also be used to design lucrative new free-market institutions.”iii
The Ethereum network, dubbed to be the first “world computer” by its inceptor Vitalik Buterin in late 2013, was the first manifestation of a technology that enabled to combine the time-stamping regime of secured hashes with a Turing-complete programming language on a distributed computing platformiv and has since attracted billions of funding for projects running on its chain. The overwhelming majority is itself issuing tokens that can be traded and it is most often exploited as funding mechanism for a start-ups. Up until today, the Ethereum ‘world computer’ remains “[t]otally unregulated and experimental in the extreme, Ethereum represents the true pirate utopia, equivalent to those of the corsair enclaves of the 16th century.”v
Land registries, real estate or royalty payments are typical playgrounds for Ethereum based take overs of markets that rely on middle-men authorities. Such attacks on established control instances are basically proxying identification processes with cryptographically secured trust automatically. Smart contracts may be rather simple, such as Non-Disclosure Agreements, but may also gain opaque complexity and rather obfuscated accountability since one may be nested into another, resulting in autonomous machines governing automated trades or act themselves as trading platforms, such as EtherDelta.vi They are exceptionally well fitting for all kinds of notary tasks that mainly relied on the authority and agency to calculate and less on semantical skills of an agent. Smart contracts rationalize administrative tasks and by way of their immutable powers of execution one may agree that they are less prone to corruption or dysfunctional human-centered administrative structures. But this argument remains flawed, since software and coding itself rests an a myriad of decisions, implicit assumptions and error prone coding by their producers. The neutrality of code is a well maintained myth. Code thus functions discursively as a prolongation of instrumental reason, false objectivity and obfuscation of power relations,vii a fueling mechanism for the (ir)rationality that is driving capital expansion ever since.viii All the more this is true for blockchain technologies, as Adam Greenfield, among many others, points out: “in its design, important questions about human interaction, collaboration and conviviality are being legislated at the level of technological infrastructure.”ix
Smart contracts offer intriguing games with time regimes. Since the execution of a smart contract is guaranteed (or better said: immanent to its existence), the possible futures after the contract becomes a calculable, hedged present and thus executable itself, paving the way for a new contract working on the present future captured. Smart contracts, in other words, naturally trigger more smart contracts by setting in the present executable loops from a captured future, juggling with different time loops that again may have executable passages into new foldings. Of course, this is nothing new per se, since derivatives, futures, bonds or securities all gain their powers from the manipulation and foldings of time or, otherwise said, from an antagonistic relation towards the real and its state at some point in time.x But if smart contracts “render decisions in the present on situations that were conceptualized at some arbitrary point in the past”xi without any interference interfaces to update or correct them according to the present real, then smart contract run the risk of becoming agnostic, detached from the chaotic unfolding of this real and thus brutal, unstoppable executioners of value passages. Perceptionless but actionful, they are having considerable impact on this unknown real, and as such they are gaining massive ontological powers, or ontopowers, to lend a term from Brian Massumi.xii
Then again, whatever the “Nerd Reich”xiii may develop into, there are powerful organizations and administrations in the way of its full, frictionless bloom. Ethereum as “a Bretton Woods for our time” (ibid.) might never become true in this totalitarian sense.
Beyond these speculations on the coming right-wing libertarian antisocial technologist insurrection, already today exit vast differences between the complex social practices that are part of contracting practices and the antisocial form proposed by smart contracts. Contracts are – broadly said – social resources to manage relations among people and not technical artifacts. Karen Levy reminds us that “contractual obligations are enforced through all kinds of social mechanisms other than the legal system proper; concomitantly, contracts serve many functions that are not explicitly legal in nature, or even designed to be formally enforced.”xiv Considering the many aspects of common contracts that are (up until today) non-intelligible to and (by design) excluded from smart contracts, one may question if smart contracts do really “allow us to construct contracts that mimic other contracts”xv – this mimicry has at least a profound bias.
On the other hand, the term smart contract itself maybe should not be taken too literal, neither ‘smart’ nor ‘contract’. The novelty of this automatically effectuated code in the realms of values might overall still lack a conceptually full determination. Being “book smart”, as Levy sees them, points towards a genealogy of book keeping, not contractual law. Nonetheless, there are kinships to be excavated. Cornelia Vismann in her genealogical discussion of the operational status of files for the legal apparatus states that “[t]he inquiry into the origin of the law leads […] to administrative record keeping”xvi. And files became the self processing medium that automated order up to guiding their own performance through users, “instructing users where they should be brought next literally get files on their way.”xvii The sovereignty of media starts in administration, is her argument.
But administrative book keeping does not nearly cover the complexities that smart contracts can handle. Since computational powers and distributed data processing are native to smart contracts, their alliance is much more with databased targeting and discrimination. What Louis Amoore described as data derivativesxviii– risk trades by inferences about who we might be, derived from of all kinds of data – becomes in conjunction with smart contracts an automated fully data driven speculation machine with access to wealth and values.
The attack vector of smart contrasts on the established legal and economic practices through their utterly antisocial design and human- and institutional-decentric trajectories is a weapon and a vehicle for the vectorialist class to tap wealth and assets directly, bypassing stock markets or banks, since “[t]heir power lies in monopolizing intellectual property—patents, copyrights and trademarks—and the means of reproducing their value—the vectors of communication. The privatization of information becomes the dominant, rather than a subsidiary, aspect of commodified life”xix. Smart contracts are a solution to automate this hyper-commodification process and redistribution of wealth into new class subformations. It is the market and private property that are targeted and effectuated at once. This comes with a fine but important difference to the stratified system. “Lex Cryptographia”xx – as this emerging regime might be dubbed – are “almost always those of capital, of property. From financial restrictions, through shares and deeds, into contracts and ‘intellectual property’. But this law is set free from its bourgeois state shackles – and checks and balances.”xxi
What is more, by way of smart contracts and proofs of existence laid down in blockchains, the gap between symbolic orders and the real diminishes further and opens up the possibility of automated governance of physical spaces and things, too. Smart contracts as codified truth work “flush with the real”, to take up a seminal notion by Bruno Bosteels in the context of his discussion of a-signifying semiotics proposed by Félix Guattari.xxii
Micro-administration of goods and services from a distance as an upcoming control paradigm
As long as smart contracts operate in the realm of cryptographic tokens alone, their grip on everyday life remains negligible. Automated, distributed DIY betting machines on the performance of cryptocurrencies, futures or stock trades might shake the financial markets one day – but not yet. And there are powerful regulating bodies guarding the interfaces between the two spheres.
The picture changes significantly once the links towards physical objects, especially those that provide access or modulate it, are taken into consideration. And this is not too far fledged since the distribution of items deemed to belong to the so-called Internet of Things, or more generally the installation of networking capacities into everyday objects, is in full swing and might become the new normal for large parts of the urban classes and their management of social relations. Nick Szabo called this ‘smart property’, which “might be created by embedding smart contracts in physical objects”.xxiii The smart phone as the general access device has been integrated into all prospected customers’ agency already. From renting bikes to paying lunch – cash is on the retreat and we are in a kind of testing phase about which financial protocol to implement for our most mundane commercial activities.
Blockchains answer to a problem that transforms all individual addressability from the ground, or better, they for the first time unfold it to the level of a permanent management of control. For a better understanding of this emerging order of things, it suffices to take into consideration the historical unfolding of the current property regime, which needed to be flanked by moral modulating laws in order to gain full traction when for the first time the distribution of wealth became too uneven and too visible to be left to its own devices.
It is the invention of the liberal society and its securing mechanisms by a whole new set of laws that Michel Foucault, in his 1972-73 lectures on the punitive society, analyzed in terms of a bourgeois morality as a modulation of laws in the fields of ownership and property. He identified a betrayal at work, as property owners, once they had established their property regimes through theft (such as the theft of the commons and their transformation into private property), appropriated theft itself as a class dividing element in their penalty system. Thus, he brings together this bourgeois betrayal on the possibility of theft as a method to govern the labor force that owned nothing but their labor time. “It seems to me that until the end of the eighteenth century a certain lower-class illegalism [illégalisme populaire, OL] was not only compatible with, but useful to the development of the bourgeois economy; a point arrived when this illegalism functionally enmeshed in the development of the economy, became incompatible with it.”xxiv These illégalismes populaires included practices of stealing from the feudal classes and were in alliance with the bourgeois revolution. But once the revolution was over, they posed a threat to the bourgeois society itself, resulting in moral modulating laws instantiated thoroughly and exclusively against the have-nots. This resembles to large degrees the digitalization efforts and establishment of networking capacities for the masses in these last decades, since they were strongly supported by all kinds of “media piracy”-practices on a large scale and effectively establishing a new way to distribute cultural goods mainly for the working poor.xxv
Foucault describes the ‘hack’ that allowed the new bourgeois regime to install its new class divisional penalty system: “Thus, if the Code does not allow itself to punish in the name of the moral law, it provides for the possibility of punishing according to morality, which is thus a moral modulation of the law.“xxvi Today, the triad property, betrayal and theft extends its problematic beyond the then only physical distribution of goods into an area that until recently kept the quality of ownership and use in a permanent state of artificiality. The digital realm requires a quasi counter-intuitive mental operation of insight into the problem of theft, because the question of ownership and use here decouples itself from the concrete good. A digital good, whose exemplary identity is not related to production or consumption, challenges any moral modulating law system, which differentiates its own operations of betrayal positively, as Foucault remarked, by modulating theft negatively. The relation between an excess of goods here and their lack somewhere else had up until now found its most pressing problematic in the digital realm, where the political concept of scarcity remained mostly unknown: whereas rights violations have been a catalyst for the dissemination of the internet within large parts of the populations by way of illegal downloading, and as such has been a welcomed aspect in the establishment of a networked society, in the long run they are too problematic and care intensive for the current order of property and ownership. Digital goods lack exemplary identity and thus digital stolen goods require a different set of identity operations, otherwise they are not stolen, because stealing conceptually includes a loss somewhere else. Digital commodities in data formats might thus be called ontologically queer, neither here nor there, but dissolved in distribution. As such, they are damaged commodities, but not compromised as a product. Until now, the anonymous mass practice of unlawful (re-)distribution of digital goods profited from the fact that digital products are non-identifiable. The non-identity of the commodity as a produced single item and its unlimited distribution did not match the criteria established prior for the physical commodity.
The blockchain reworks these mismatches on the level of the condition of the commodity itself. Digital artifacts that have been made discriminable and identifiable by a cryptographic time-stamp of existence in a blockchain re-adjust the bourgeois order of betrayal and theft in favour of the bourgeois betrayal. By discriminating formerly non-discriminable data, a registration of digital objects is introduced that at the same establishes a new regime of control. With the introduction of the concept of digital existence a new parametric modulation of its ontological status has become operative. For instance, in this set up stolen digital goods would loose their functionality since their legal status is negative.
Within this trajectory, the use or consumption of a commodity is bound to conditions that do not have to be defined outside of the commodity, in a contract stating the acquisition and with it, the rights to use it, but they move, so to say, into the interior of a commodity through control over its functionality. The blockchain is the trusted ledger from which the conditions of use are defined and unlocked. With its object orientation, the blockchain can lock a stolen good from distance and render it (data) trash. ‘Smart’ in this context signifies an encroachment of exterior control beyond the acquisition of the commodity – into the time of its use. This resonates with the so called ‘sharing economy’, which is aiming at a commodification regime of use values.
Such an ‘acquisition until revocation’ or ‘acquisition under limited conditions’ establishes an operational extension of the initial bourgeois betrayal on property, as described by Foucault, into the time of consumption and eliminates the possibility of theft by non-legally acquiring parties.
It is this basic operation of use control that renders (digital) objects insusceptible to theft and illegal uses. By way of a historical entanglement of two fundamental axioms of the bourgeois order – negatively the impossibility to distinguish instances of digital objects and positively the masking of their historicity through the commodity form – that the question of ownership ‘retreats’ into the object itself via its hashed anchors in the blockchain and overwrites its ontological status. Blockchain technologies transfer proof of ownership and rights administration into the object itself. They ‘objectify’ the property regime by capturing things throughout their life-time.
This described evolutionary path of a technologically controlled rights regime for objects, as the blockchain signals it, and which has its physical technological counterpart in the so called Internet of Things, contains management and logistics strategies which aim at an automated administration of things by distance. The blockchain secures the order of bourgeois property and ownership relations, and at the same time enhances it towards new modulations of control. Governing from a distance acquires new meaning in lights of blockchain based access and use regulation for things and services. In a sense, property relations are now becoming a functional aspect or dimension immanent to goods and services, integrated into the objects.
The powers of a multitude of blockchains governing objects are not only performative and prescriptive on the level of object administration, but at the same time constitute a hard and fixed time regime that contains and structures these objects and their possible use. By administering a chronicle regime against any open future of possibles, blockchains aim at becoming a technology of object “structurization” against incalculable events, a hedging technology against risks, excluding possible use values for unauthorized use ex ante, setting up a closed-circuit value capture system.
i Helen Kaplinsky, “Collections Management on the Blockchain: A Return to the Principles of the Museum,” in: Artists Re:Thinking the Blockchain, ed. Marc Garrett et al., England : London: Liverpool University Press, 2018, 269.
ii McKenzie Wark, A Hacker Manifesto. Cambridge, MA: Harvard University Press, 2004.
iii Nick Szabo, “Smart Contracts” 1994, https://web.archive.org/web/20011102030833/http://szabo.best.vwh.net:80/smart.contracts.html.
v Ben Vickers, “Immutability Mantra,” in: Artists Re:Thinking the Blockchain, 234.
vi See https://etherdelta.com/. See the operational code here: https://etherscan.io/address/0x8d12a197cb00d4747a1fe03395095ce2a5cc6819#code .
vii David Golumbia, The Cultural Logic of Computation. Cambridge, MA: Harvard University Press, 2009.
ix Adam Greenfield, Radical Technologies: The Design of Everyday Life. London ; New York: Verso, 2017, 117.
x Benjamin Lee and Randy Martin, Derivatives and the Wealth of Societies. Chicago: University of Chicago Press, 2016.
xi Greenfield, Radical Technologies, 172.
xii Brian Massumi, Ontopower: War, Powers, and the State of Perception. Durham: Duke University Press, 2015.
xiii Vickers, “Immutability Mantra”, 237.
xiv Karen E. C. Levy, “Book-Smart, Not Street-Smart: Blockchain-Based Smart Contracts and The Social Workings of Law,” Engaging Science, Technology, and Society 3 (February 17, 2017): 1–15.
xv Szabo, “Smart Contracts”.
xvi Cornelia Vismann, Files: Law and Media Technology. Stanford: Stanford University Press, 2008, 4.
xviiVismann, Files: Law and Media Technology, 138.
xviiiLouise Amoore, “Data Derivatives: On the Emergence of a Security Risk Calculus for Our Times” Theory, Culture & Society 28, no. 6 (November 1, 2011): 24–43.
xix Wark, A Hacker Manifesto, 32.
xx Aaron Wright and Primavera De Filippi, “Decentralized Blockchain Technology and the Rise of Lex Cryptographia,” 2015, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580664.
xxi Rob Myers, “Blockchain Poetics,” in: Artists Re:Thinking the Blockchain, 246.
xxii Bruno Bosteels, “From Text to Territory: Félix Guattari’s Cartographies of the Unconscious,” in: Deleuze and Guattari: Critical Assessments of Leading Philosophers, ed. Gary Genosko, London ;New York: Routledge, 2001, 899.
xxiii Szabo, “Smart Contracts”.
xxiv Michel Foucault, The Punitive Society: Lectures at the Collège de France 1972-1973, ed. Bernard E. Harcourt and Graham Burchell, Houndmills, Basingstoke ; New York, NY: Palgrave Macmillan, 2015, 140–41.
xxv Cf. Ravi Sundaram, Pirate Modernity: Delhi’s Media Urbanism. London; New York: Routledge, 2009.
xxvi Foucault, The Punitive Society, 177.