This text summarises an article we submitted to a journal and is currently under review.

Introduction

Blockchain technology has been heralded as revolutionary in improving efficiency, transparency and sustainability. It promises new forms of large-scale coordination in settings where actors do not trust each other. This post analyses bitcoin and ethereum, the most popular blockchain applications which use proof-of-work consensus mechanisms. Our analysis focuses on imaginaries and metaphors, approached from the perspective of three primary principles: substantial, morphological, and structural. Imaginaries act as practice orienting principles since they reflect imagined social life – and metaphors allow us to think about and understand the unfamiliar. This conceptualization is based on the premise that technologies do not exist separately from social life and are shaped by political, economic and cultural contexts.

Satoshi Nakamoto, the unknown inventor of bitcoin, found inspiration in previous attempts to create a decentralised, cryptography-based digital currency. In 2008 “he” published a paper detailing an ingenious solution to the Byzantine Agreement Problem, inventing blockchain in the process (to know more about how blockchain works, see the link to our previous post). 

Blockchain relies on substantial metaphors like gold and gas to govern resource allocation, morphological metaphors like work and trust to generate consensus and structural metaphors like chain and transaction to establish shared knowledge. These principles shape technological development and place blockchain as infrastructure for governing economic, political, and epistemological practices.

Substantial principle

The substantial principle of blockchain imaginaries is supported by metaphors that redefine technological elements as familiar materials. Substantial metaphors underpin blockchain’s capacity to govern scarce resource allocation. One of these metaphors is digital gold. Nakamoto’s bitcoin digital currency mimics gold in several ways:

• It has no usage restrictions regarding who uses it, where, and for what purposes;
• It can store value, working as a hedge against inflation and currency devaluation;
• Its total amount steadily increases through bitcoin mining, just like gold production.

The second substantial metaphor is ethereum’s gas. Ethereum has in-built support for general-purpose computation using a Turing-complete language, enabling decentralised programs (known as smart contracts). Computational costs in ethereum are quoted in gas units, not in ether (although gas units are quoted in ether, their price varies). This strategy decouples computational costs from the volatility of ethereum’s market price. Gas’ function is to govern the decentralised allocation of computational power in ethereum. Digital gold points to the concept of digital metallism (also discussed in our previous post). The gas metaphor indicates how substantial blockchain imaginaries go beyond metallism. Both metaphors highlight how the substantial principle sustains digital value creation and governs resource allocation. It also supports the design of new markets, namely new market mechanisms based on computational automation.

Morphological principle

The morphological principle of blockchain imaginaries is related to peer-to-peer network shape and dynamics, supporting consensus generation. However, this principle bases itself on familiar metaphors. One of those metaphors is work, which supports the permissionless blockchain proof-of-work consensus protocol. Work, known as mining in both bitcoin and ethereum, is understood as the expenditure of computational power (hardware plus electricity). Mining consists of finding a number (nonce) part of each block’s header. The process repeatedly produces a cryptographic hash of the block’s header until the resulting hash satisfies the target hash. The network’s difficulty parameter, which is proportionate to the network’s overall computing power, defines the target hash. 

Another morphological metaphor is trust in the proof-of-work generated network consensus, based on the assumption that it is practically impossible (very costly) to gain enough computational power to game the protocol. The public status of blockchain records, which abide by transparency principles and are thus visible and shared by nodes (which constantly engage in horizontal surveillance), also supports this notion of trust. The automated trust in the blockchain thus represents trust in the protocol. As argued in our previous post, the morphological principles identified in blockchain imaginaries are structured around consensus generation, constituting socio-political dynamics referred to as infrastructural mutualism.

Structural principle

The structural principle of blockchain imaginaries refers directly to blockchain data structures. The linkage between blocks of records, achieved through integrating the cryptographic hash of the previous block’s header in each new block’s header, sustains proof-of-work chains. Blockchain also uses cryptographic signatures supported by (asymmetric) public-key cryptography based on public and private key pairs. Cryptographic signature systems allow verifying a message’s origin and integrity using only the sender’s public key. Blockchain addresses are a shortened version of the public key, giving everyone the ability to verify the source of a signed protocol message (e.g., a transaction). 

Addresses and transactions are examples of how metaphors make the usage of public-key cryptography intelligible. This structural principle refers to how blockchain supports traceability through verifiable and communicable “facts” about, and produced in, the processes of exchange supported by the protocol. This principle thus refers to the production and circulation of knowledge. We term the epistemological stance cryptological positivism.

Conclusion

We conclude by addressing how the principles we identified relate to sociological theories of differentiation (and integration) by turning to how the sociologist Niklas Luhmann approaches differentiated complex societies as sub-systems that use specific communication media. Different media define the inside and outside of those sub-systems. However, symbolically generalised media aspire to universality. Money, power and truth are, for Luhmann, three symbolically generalised media. Blockchain substances operate as forms of money, its morphology is an arena for power relations, and its structure enables the establishment of a common “truth”. We argue that blockchain technologies are built to operate as infrastructures for all three of these elements.

The paper summarised in this blog article reflects the ARTICONF sociological team’s efforts to create an epistemological framework that allows social scientists to approach blockchain technologies. It seeks to sparkle academic discussions and cross-pollination to promote better scholarly work about blockchain across disciplines. We hope it will also help social scientists inform blockchain technology design and development in more fruitful and overarching manners.

This blog post was written by the University of Edinburg team in March 2022.

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