Principles
Trust has a cost. Money paid to a stranger brings the goods as agreed; a dispute reaches an end; other people acknowledge who owns what. Behind these things, which seem to go without saying, a whole apparatus is at work under the system of sovereign states: contracts, courts, registries, and, standing at the very back, the police and the army.
This apparatus is order, and maintaining it comes at a high price. Today the state collects that price as a single bundle and sets it on its own; the power to set the price is called sovereignty.
The arrival of blockchains makes it possible, for the first time, to split sovereignty into separate parts, which each person can choose and price for themselves, voting with their feet in a free market for order.
Nearly 3,800 years ago, the Code of Hammurabi in ancient Babylon contained this provision: whoever gives silver, gold or anything else to another for safekeeping should first show everything to witnesses and draw up a contract, and only then hand it over; lacking witnesses and a contract, when the keeper flatly denies it, the one who handed the things over can only bear the loss.
For a thing to pass from one person’s hands to another’s, witnesses had to stand in between, a clay tablet had to be impressed with the contract, and behind the tablet stood a code of law and the royal power that enforced it. Nearly four thousand years later the list has grown longer: contracts, lawyers, notaries, banks, insurance, declared value on a parcel, the guarantees of platforms, registries and courts, and, standing at the very back, the police and the army.
The richer a society, the finer its division of labour and the more dealings between strangers, the more it spends on trust: between a parcel sent from one place and its arrival at another lies a whole apparatus that guarantees it will get there.
