CREATe is happy to present the fifth entry in our series of working papers released in 2023: “Recordism: A social-scientific prospect of blockchain from social, legal, financial, and technical perspectives”. This working paper by Zihao Li (CREATe, University of Glasgow), Hao Xu (University of Glasgow), Yang Fang (University of Westminster), Boyuan Zhao (The Shanghai Cooperation Organization), Yinuo Liu (Shanghai Customs College) and Lei Zhang (University of Glasgow) is a pre-print version of an article forthcoming in the IEEE Transactions on Technology and Society.
While surrounded by hype, blockchain continues to demonstrate its immense potential to revolutionize the foundation of our future cyberspace. By transforming the storage, circulation, and exchange of information, blockchain could boost the development of the new generation of internet, pushing it towards decentralization, transparency, and de-identification. This research primarily explores the societal impact of this information transformation empowered by blockchain. To achieve this, the study investigates four key aspects of potential blockchain implications, specifically in methodological, legal, financial, and technical fields.
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The theoretical framework of this paper is grounded in Foucault’s concept of panopticism, which posits that the power dynamics in modern society are shaped by centralized surveillance and control mechanisms aimed at achieving a communal goal. Despite criticism regarding privacy sacrifice and the chilling effect on individual behaviour causing self- repression, panopticism can bolster efficiency when required. Online platforms could serve as practical examples of panopticism, where they act as overseers monitoring all activities on the platform. This centralised oversight could contribute to increased efficiency, safety, and accountability. However, the public has demonstrated significant privacy concerns.
With the rise of blockchain, the limitations of panopticism could potentially be offset. Through encryption, sensitive information can be protected. Blockchain platforms can only utilize pseudonym or cryptographic identifiers, rather than revealing users’ actual identities. Additionally decentralized network and consensus algorithm guarantee that there is no single central authority with complete control over all the data, making it more challenging for any one entity to surveil or manipulate information. As such, every participant in a blockchain network can reap the benefits of efficiency, safety and security provided by the “panopticon tower” while preserving their privacy. This evolution towards encryption-enabled privacy protection prompts reflections on power structures within decentralized systems and governance. Such a new encryption-enabled architecture also boosts the new development of panopticism. This new form of panopticism, namely recordism, involves creating a transparent and auditable network where information is openly available to all participants, but the identities and specific details of the participants are pseudonymous or encrypted. Therefore, within this panoptic-like system, participants can have visibility into network activities, thereby ensuring integrity and security while preserving privacy.
From a legal perspective, blockchain effectively supplements legal regulation of cyberspace through decentralization, transparency, and pseudonymization. It protects user identity, transaction content, and marketplace order, thereby acting as a foundational element of trust and implementing existing legislative principles. However, these advantages are contingent upon several underlying premises. Otherwise, the blockchain-enabled transformation could challenge the existing legal system and order in cyberspace. These risks are particularly demonstrated in financial industry, where issues such as money laundering, cyber-attacks, tax evasion and fraud are significant concerns. Meanwhile, decentralised architecture poses new threats to the implementations of existing legislations. This paper also explores how blockchain can offer new opportunities from a technological perspective, and how technology can help tackle the challenges raised by blockchain applications. For example, it explores the potential of utilizing functional consensus and revolutionary protein-based storage to establish a more sustainable blockchain ecosystem, instead of only relying on the Proof-of-Work (PoW) consensus algorithm. Furthermore, it argues for the necessity of implementing guidelines for the utilization of renewable energies and the imposition of carbon tax on specific types of cryptocurrencies.
This paper establishes that blockchain is not just an innovative method of cognition but also a community representative, serving as a source of trust, a governance watchdog, an enforcer of cyber laws, and an incubator for future technologies. Despite the challenges in integrating blockchain within existing social structures, the paper concludes that blockchain holds considerable potential in shaping the future of the cyberspace.
Abstract
Blockchain technology has the potential to revolutionize the architecture of cyberspace by transforming the way information is stored, circulated, and exchanged in cyberspace through decentralization, transparency, and de-identification. This means that ordinary participants can simultaneously become traders, miners, retailers, and customers, thus breaking down barriers, reducing the information gap between participants in the community, and contributing to the futuristic metaverse with an open, progressive, and equal ideology. The impact of this information transformation empowered by blockchain extends to our understanding of methodology, legal governance in cyberspace, and financial and technological development. This study asks: what are the implications of the blockchain-driven information revolution for society and social sciences? In order to answer this main question, the paper focuses on four key perspectives: methodological, legal, financial, and technical. Through the analysis of these four perspectives, the paper provides a comprehensive understanding of the impact of blockchain on society, the social sciences, and technology, making a contribution to current scholarship. It finds that blockchain is not only an innovative cognition method, but also a community representative, serving as a source of trust, a governance watchdog, an enforcer of cyber laws, and an incubator for future technologies. Despite some challenges in integrating blockchain with existing social structures, this paper concludes that blockchain has the potential to play a significant role in shaping the future.
Full paper can be downloaded here.