Cryptocosm refers to the network of organizations, systems, companies and individuals powered by blockchain technologies in which security and decentralization are primary features.
The term cryptocosm was coined by technologist, futurist, author George Gilder from his book Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy. He’s also used the phrase in some of his interviews and talks. As Gilder explains in his excellent book, “Some thousands of companies you’ve never heard of are investing billions right now in that effort. Collectively they will give birth to a new network whose most powerful architectural imperative will be security of transactions as a property of the system rather than an afterthought. So fundamental will security be to this new system that its very name will be derived from it. It will be the cryptocosm.”
While much of the mainstream public sees with respect to blockchain is not much more than the speculative boom and bust cycles of the price of bitcoin, the reality is that bitcoin and blockchain technology is a much broader and more important subject than most realize. What bitcoin birthed back in 2009 when Satoshi Nakamoto released his white paper, Bitcoin: A Peer-to-Peer Electronic Cash System, was a revolutionary platform that has the power to dramatically alter everything we currently know about the economy including but not limited to finance, information transfer, contracts, public records and more.
Blockchain is the platform, inter-connected with the digital currency known as bitcoin, that is essentially a decentralized database distributed across thousands of computers in a network in which a chain of records or transactions are recorded and chained together. Since each block on the chain is built utilizing the previous block, it’s impossible to change previous records without the network knowing. Also, due to how its constructed, the entire record of all previous transactions is visible and accessible to the entire network. A full history of all transactions is always available.
Why this is so meaningful is because bitcoin essentially solved the issue of having distributed data that can be trusted. It removed the need for a third party (think a bank, or a court or some other entity) to say that a certain transaction is valid or not. Trust is built into the actual blockchain.
But there’s a common misconception that can occur. You might hear many business or investor types say that they believe in blockchain but not bitcoin (or any other digital currency). But this is a false understanding of how it works. The reality is that you can’t have blockchain without the digital currency that underpins it. This system requires an incentive for it to be powered, and that incentive is bitcoin (or some other currency).
Ten Laws of Cryptocosm
George Gilder, in his book, essentially contrasts the future blockchain-based world against the world of big data dominated be a few big tech companies. Namely Google. In his works, he’s cited ten laws of cryptocosm as a contrast to ten laws of Google. They are as follows:
- Google’s first law is to focus on users. This is born out by Google providing free services such as search, email, maps and more to its users. Cryptocosm’s first law, in contrast, is to focus on security, and connected to this is the notion that nothing is free.
- Next, Google’s 2nd law is that it is best to do one thing very well. At one point this was likely search, but more broadly now it’s artificial intelligence technologies (that power its products such as search). And Google’s excellent at this, of course. In contract, cryptocosm says that it’s better to create a foundation that users can do many things really well.
- Thirdly, Google says that it is better to be fast than slow. In contrast, the third law of cryptocosm is that human growth is more important than computing advances. Blockchain focuses on a foundation where humans can flourish and humans matter more than the advancements in computer chips and iterative algorithms.
- Next, Google says democracy on the web is preferred. But it’s still within a hierarchical system. The cryptocosm emphasizes a distribution of power. Voting isn’t even necessary if power is distributed by default.
- Google’s fifth law is that you don’t need to be at your desk to need an answer. In contast, cryptocosm states that if your mobile phone is indeed smart, then it should at least suppress ads (as provided by Google and others).
- The 6th Google law says that you can make money without doing evil. The cryptocosm states that real money is good.
- Google’s next law states that there is always more information out there and we should pursue it (by giving away free services). Cryptocosm states that information belongs to its owners.
- Next, Google states that the need for information crosses borders. In contrast, cryptocosm respects the borders of your computer or device.
- The next law states that users give up information to receive information. In contrast, cryptocosm states that you should be able to use services and transact without having to give up information.
- Lastly, Google says that great isn’t good enough. In contrast, the cryptocosm provides an architecture and platform with an emphasis on security that allows users to be great.
The benefits of the cryptocosm
The economy of individuals and businesses built upon blockchain technology, or the cryptocosm, has immense ramifications and potential benefits.
First, privacy is paramount. While we went years without any public outcry surrounding the invasion of privacy and the lack of privacy with regards to data leakage, the user of our data or the tracking of our behavior, the tone has indeed shifted in recent years. Facebook, Google and others have faced increased scrutiny globally surrounding the lack of privacy and mishandling of sensitive information about individuals. Some of the largest companies in the world – namely Facebook and Google – dominate their markets much in part by collecting as much information about users as possible, then monetizing that information in the form of advertising targeting. While we use free products like Facebook, Instagram, Google Maps and more, these companies are gathering up everything they can about us. This is the cost of these free products.
In the cryptocosm, information is securely in the hands of its owners, and public/private key cryptography is the mechanism which keeps information secure. Private keys held by individuals result in power being transferred away from centralized authorities and companies and back into the hands of individuals.
Moreover, security is a major benefit of the cryptocosm. When centralized systems hold millions of sensitive pieces of informations, these are major security risks as we’ve seen over and over again. Whether it has been credit card companies getting hacked or Facebook handing over sensitive data to third parties, our information has been at risk again and again. Blockchain technology enables the cryptocosm to transact and use services in a way that protects our sensitive information.
Next, the elimination of trusted third parties can lower costs and improve efficiency. Trustees, exchanges and clearing houses are replaced by the protocol written by software. And as a result, third parties that take a cut of economic activity or are prone to security holes can be eliminated. Also, consider the elimination of endless security questions and dozens of passwords that can go away. This results in a more efficient process at the end-user level as well.
Lastly, fraudulent behavior and fraudulent transactions are avoided altogether. Because of how the blockchain works, the shared ledger maintains a complete record of all trusted transactions, and a single ill-intentioned party seeking to harm or defraud someone cannot modify or remove transactions. Preventing fraud at the protocol level means countless savings for customers, banks and businesses that spend exhorbinant amounts of money dealing with fraud protection.
The cryptocosm as we’ve outlined is essentially just the new economy built upon blockchain-based technologies. It’s a massive shift from the current economy that has been built upon the internet and the computer and information revolutions of recent decades. In many ways, blockchain potentially fixes some of the major flaws that are now incumbent in our digital world. A recent New York Times article explains, “The creator of the World Wide Web, Tim Berners-Lee, has said the blockchain could help reduce the big internet companies’ influence and return the web to his original vision. But he has also warned that it could come with some of the same problems as the web.”
Bitcoin and blockchain technologies aren’t perfect, but amazingly, they have the attention of some of the brightest minds and engineers around the world. While bitcoin was out of the news and dormant in 2018 (after its spike in 2017 which gained much public attention), billions of dollars continued to be invested in blockchain companies.
The space continues to grow and indeed seems to be the next evolution, the next step of our digital world. You might find it interesting that this emerging technology and growing ecosystem marches forward while many of the world’s politicians on both sides of the aisle aim their scorn at big tech. Have companies like Google and Facebook peaked? It seems like it is quite possible.
Bitcoin and blockchain technology are one of our three main trends that we’re tracking on a multiyear basis along with streaming media and autonomous vehicles. We believe these trends are some of the most important areas to watch as they will have a multi-decade impact and have profound impacts on many areas of the global economy. As investors seeking to build up our investable assets and generate major returns, familiarity with these trends and seeking ways to invest in them will continue to be a major focus of this website.
We strongly encourage you to check out George Gilder’s book Life After Google if you want to learn more. It’s an excellent book that will not only inform you about the blockchain trend, but challenge your way of viewing much of the economy and the world.