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How Blockchain Is ‘Disintermediating’ Government

— James West

One of the top-prize buzzwords to survive the Dot Com era is the fabulous “disintermediate”. It was originally bandied hither and thither to express the internet’s imminent role as a replacement for agents in transactions — the so-called middle-man — when buying a book online or voting for a new governor.

While brick and mortar vendors of books, music, video and almost everything else under the sun have been successfully disintermediated from their traditional roles as the go-to transactional locations for commerce, it would be more apt to suggest the internet re-intermediated brick and mortar stores.

As far as its promise to create instant and total democracy … well, that never materialized, mostly because the features required to make a reliable, trusted and, most importantly, verifiable voting mechanism were not yet developed.

But now they are, and it’s called blockchain, and it is poised to reintermediate the internet with new features that will allow it to disintermediate government.

Besides providing the software platform that makes cryptocurrencies like BitCoin almost tangible, blockchain has emerged as a platform that can disintermediate agents in any transactional flow that requires decentralized, rules-driven transactions, where every process is visible to every other node of a blockchain with privacy and auditing.

Interestingly, blockchain, for the most part, provides both total transparency and total privacy. The transactions and their values are visible to all, which renders the identity of the parties unimportant, as it is the transaction that is most important to the collective participants.

In the case of a democratic electoral blockchain (DEB), candidates are values and votes are inputs for outcomes. Every participant in a DEB gets a vote, and rules-based qualification determines who gets to be a candidate.

Any candidate who receives a minimum of 5% of the total membership’s nomination can be a candidate, and every voter can nominate as many candidates as they want. But when the election phase is activated, every member gets one vote for only one candidate, and predetermined rules determine who is the winner.

The quality of this democratic process is dramatically enhanced by the automated and transparent processing of votes and voters, while the rules, such as who qualifies as a nominee, how the winner of the final election is determined, and aspects like ward sizes, can be developed and voted on by the membership ahead of any election.

Furthermore, candidates’ election promises could be kept track through the block, and a rules-based tracking system could stipulate features such as, “if a candidate is found to leave x percent of promises unfulfilled after y timeframe, then a new election is triggered.”

It is arguable that this is the most terrifying aspect of blockchain to the political class, both because the machinations and influence of marketing will be substantially diminished when accomplishments and track records are reconciled and archived for everyone in the blockchain membership to see, and because “closed door” special interest meetings will no longer be possible.

In fact, the ability of elected officials to fulfill campaign funders’ backroom promises is the most attractive and compelling feature of such an electoral system.

China, whose leadership fear democratic processes more than any other nation on Earth thanks to the profoundly opaque and elite-only governing system, saw the awful potential of blockchain in BitCoin and moved to immediately shut down all exchanges and outlaw cryptocurrencies.

For what is the adoption of non-government controlled money if not the very embryo of disintermediated centralized government?

And most unappealing of all to despotic governments and corrupt democracies is this simple fact: Once you have stripped away all the contrived financial qualifications, relationships and fraudulent promises of such systems that claim to represent the interests of all but which actually only ever represent the interests of an elite few, it becomes apparent that the only way to maintain the old system is through the threat of violence that underpins such societies’ laws.

The political fallout, more than the advent of cryptocurrencies, is the biggest reason to be excited about blockchain. And with the realization that we can collectively resort to blockchain to stamp out corrupt, self-interested and despotic government – and their financial supporters, the large banks – the future of blockchain is assured.

Disintermediating the Dollar

One of the most thrilling aspects of BitCoin and other cryptocurrencies (and also the reason for its widespread appeal to youth) is the fact that they can be used as an alternative to the Dollar in financial transactions

At present, the range of items for which BitCoin is an accepted payment method remains relatively small in relation to the U.S. Dollar, but, nevertheless, real estate, automobiles and just about every other big-ticket item imaginable have been traded for BitCoin. It is generally small ticket items, such as groceries and staples, that are not yet readily available using BitCoin.

But that, too, will change. An entire industry of fiat-to-crypto-to-fiat machines, platforms, cards and apps is in development around the world. There is an entire segment of the world population, primarily under 40, who will gladly abandon the Dollar once and for all when it becomes realistically possible. The Dollar is the representative currency of the old way of doing business and it hoards value for elite interests, while cryptocurrencies are a truly democratic way to exchange value and transact commerce.

The disintermediation of the Dollar is underway, and government will likely find itself powerless to stop, slow or even participate in its emergence.

And just as the dollar is representative of an unfair and largely inaccessible financial system for a new generation, so, too, will the old form of government find itself in the crosshairs.

The ersatz democratic systems that facilitate travesties of democracy, such as the ongoing dominance of despotic governments in the eastern hemisphere and hijacked elections in the United States, are poised to become casualties of blockchain.

For, at the end of the day, blockchain empowers governance by the community that would be governed, and now, more than ever, this is the new model of government emerging, and the only one that will be acceptable to this new generation.

As Sir Winston Churchill famously pontificated in the House of Commons in London in 1947:

            “Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…” 

Unfortunately for Winston Churchill, and fortunately for us, the new form that is better has arrived, and its name is blockchain.

James West

James West

Editor and Publisher

I employ a Capital Efficiency Model that dictates money should never be exposed for longer than is absolutely necessary to the possibility of being lost. Thus, I routinely sell half my position when a stock doubles from my entry price, and I sell stocks that lose 20%, unless there are...
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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

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