Kevin Werbach's Reading List

"It’s the best clear, basic introduction I’ve found that doesn’t dumb things down too much. Other books say, ‘We’re going to just ignore the technology entirely; wouldn’t it be great if this would happen, or that would happen.’ I don’t think that’s very helpful. This is the best book I’ve found that doesn’t shrink from talking about the technology and getting into some of the detail, but does it in a very clear and structured way, so that someone without any kind of background can understand it. He has a financial services background. He’s based in Singapore and works for R3, which is one of the enterprise blockchain software systems. It’s a group of companies—initially it was a group of banks, but they’ve broadened out—that have a blockchain-like platform for doing distributed transactions. They’re in a different part of the blockchain world than, say, Bitcoin—but in the book, he’s writing about much more than just the part he’s involved in. Some who are gluttons for punishment (like me) get excited by its level of intellectual complexity. Others get excited for ideological reasons; for example, blockchain strikes them as a way to do money without governments, which they think is a good thing. For others, it’s because they think they’re going to get rich. Those are the three main reasons why people fall in love with this technology. I think the fact that it is so multidisciplinary is actually more of a challenge for people than what gets them into it. Almost no one brings the requisite expertise in all these different areas, so it leads to a lot of misunderstandings where people think they understand what’s going on, but only see one part of it."

"Adam Greenfield is a brilliant guy who has spent most of his time in industry working for companies like Nokia and actually designing systems. But he’s always been a critic and warned about the larger societal implications of the technological decisions we make. There’s now widespread discussion about the downside of everyone being connected in this new world, but he’s focused on this issue for a while. This book discusses the politics embedded in these technologies. He talks about blockchain as a two-sided technology: on the one hand, it’s a decentralizing technology; it’s largely open source systems that have the potential to break down all these points of central control. But it can also be used as a technology of control. He’s not ignoring the potential of blockchain, but rather articulating some of its challenges and downsides, such as the fact that the public blockchains like Bitcoin use fantastic amounts of energy to power these mining pools and so forth. So I think it’s a really helpful book in terms of putting blockchain in the context of this larger debate we’re having about the social value and dangers of network technology. Yes, the environmental issue, but also the consolidation of it. These miners are deliberate, intentionally self-motivated entities. There’s much more consolidation than people realize in terms of who’s in control of the system. It’s a controversial statement. I don’t entirely agree with it; in my opinion, we don’t really know. But it’s not unsupported. As with most of these books, I recommended it not because I agree with it 100 per cent, but because for those of us excited about the potential of blockchain, nothing is more important than engaging very seriously with the criticisms. We’ll go into this more with the next book on the list, but I don’t think we need more trumping up and excitement about what blockchain could change. We need very thoughtful responses to skepticism. It’s not trivial to understand and it behoves people to go a little bit below the surface. You can say: ‘Bitcoin is like money. Do you understand money? Okay. So it’s another kind of money without the government.’ But that doesn’t tell you anything about how it works. If you actually want to understand how it works, it is explainable and the Antony Lewis book goes through these mechanisms of proof of work and so forth. But it’s challenging. What Greenfield points out very well is that the discourse within the cryptocurrency community tends to be really esoteric for the general public. That’s in part because of what we discussed before, that it’s building upon a whole variety of assumptions in several different domains. And if you don’t know the prehistory of those, you can quickly get lost. But there is an extent to which the conversation within the blockchain community gets far removed from something that even most fairly sophisticated people, who understand finance and business and law, can grapple with and that’s really a problem. It’s a problem when people who can contribute to this debate don’t feel like they understand what’s going on. So I think it’s a healthy corrective to point that out. Still, if you ask me, I probably wouldn’t be quite as skeptical as he is, that an ordinary person can get a sufficient level of understanding to appreciate the potential and the dangers. You just need to read things, but it can be helpful: I taught a class on blockchain last semester, and we did give all of our students some money to buy Bitcoin or another cryptocurrency. Then we gave them a set of assignments to do various things with it. We did feel there’s a level of understanding that you only get by experiencing it. It’s valuable but it’s only a piece of the understanding. For example, it doesn’t give you an understanding of how the consensus system of proof of work works on Bitcoin. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . It’s also a useful corrective. You read that this is a global, frictionless, magical currency that eliminates all the problems of traditional currencies, but when you try to actually buy some Bitcoin today and use it, it’s incredibly cumbersome. There are good questions about why that is and whether it’ll change, but it’s important to know that and not just to take the representations of the Bitcoin promoters as what’s actually happening. No. I have some I bought to experiment with, but I don’t buy them as investments. I wouldn’t be surprised if the price of cryptocurrencies went up again. I think there is real value there, but they’re so volatile and there’s so much fraud and manipulation going on that it’s impossible to have any confidence in the price. And today, there are very few things that ordinary people need to do or want to do which require cryptocurrency."

"Again, I recommended it not because I completely agree, but because I think he’s a serious critic. He’s a very cheeky critic who is making fun of it, but he is an IT professional, a technically sophisticated guy. It’s not that he fails to understand the basic mechanics of it. These warnings are really important because the other thing is that we’re talking about money here. People have already lost a lot of money based on various problems with these systems. It’s so easy to get caught up in the excitement and the celebration of new technology that we really need people like him saying, ‘Whoa, whoa, whoa. Just think about what’s going on here.’ It’s a fun book, but it’s not a pure comedy routine. It’s a thoughtful criticism. Yes, it is a big issue. It’s a problem that too many people who are promoters of the technology just want to sweep under the rug. The question is, ‘What percentage of those who become attracted to these kinds of systems are people who are untrustworthy or who want to engage in illegal or fraudulent activity?’ It’s not zero, but it’s certainly not everyone, and in most of these cases it’s not even a substantial percentage. But it’s something we need to deal with. “It’s human nature: there are bad people out there who’ll take advantage, and it’s not the case that the problem can be solved with game theory” We’ve seen it time and time again. Especially in 2017, when the price of all these cryptocurrencies went into the stratosphere, we saw lots and lots of examples of fraud and illegal activities. I have a fairly balanced view of this, I think, which is that there’s a lot of good and a lot of bad. It’s mostly good, but the bad is serious enough that it needs conscious and direct countermeasures. It’s human nature: there are bad people out there who’ll take advantage, and it’s not the case that the problem can be solved with game theory, which is what some people in the cryptocurrency world think. You can solve some pieces of it, but nature abhors a vacuum and people will find other ways to attack. It was almost certainly not the actual person that stole it who wrote that, but that statement was an incredibly clever piece of performance art. The DAO is pretty much the touchstone for anyone talking about the potential and the risks of blockchain technology, because it puts all the pieces together. It’s something that was incredibly exciting: in just two weeks, a group of people contributed $150 million to this decentralized, self-operating, crowdfunding system. Then it blew up, which was tremendously scary, and the way the system was designed, no one could get the money back, except via a very confused process. The Ethereum leadership and the underlying blockchain community eventually agreed to fork the whole network. That’s an example everyone points to because in it, you’ll see a reflection of what you want to see. If you have a positive view of blockchain, you will see this as, in the end, a positive experience, but if you’re a skeptic, you’ll see it as a catastrophe heralding future catastrophes. There have been periods when there was more excitement about the cryptocurrencies themselves, the things that can be used as money, and periods when there was more excitement about the non-financial applications, like Walmart using blockchain for its supply chain. There’s been a swing back and forth based on financial speculation and the valuations of the currencies. But yes, there was an initial period where it was basically just Bitcoin and some derivatives of Bitcoin. Then things broadened out, with Ethereum being the starting gun for that process. Those are still the two dominant platforms, although there’s also these large enterprise platforms. There’s just a lot more going on. It was a year and a half ago now that I wrote my book. I really felt, looking out, that there weren’t enough books that provided a clear introduction both deep enough to give some understanding of the mechanics and yet accessible to a non-expert. I also thought that there wasn’t much material that really put blockchain in the context of the business value proposition—not just telling the story with a bunch of examples, but saying, ‘What is it that this does for people in the firms that use this technology above and beyond the surface things, like I’m using it to pay or I’m using it because I’m investing in something that I think will go up?’ I also felt there wasn’t enough of a conversation about the legal, regulatory and governance questions. There was basically a community saying that blockchain makes law irrelevant, because we can do—through encryption and cryptography and software code—what law has done badly in the past. Then, on the other side, there’s a community of people saying, ‘This is all just a community of scammers and lawbreakers and criminals.’ I think there’s a middle ground. As I said before, I really think we in the legal and policy community can learn a lot about other things from studying what is happening in the blockchain world. Yes, and also that it’s nuanced. What I talk about in my book is that there are situations where the legal system is operating just fine, and the blockchain just creates another kind of application. With the Walmart food safety system, for example, there aren’t really any particularly hard legal issues in doing this on a decentralized ledger. There’s also a set of situations were blockchain may actually fill in gaps, issues that the legal system is failing to address. There’s also a set of situations where the promise of blockchain is to supplant the law and go where law is not going effectively, and where there isn’t effective legal enforcement. In all those situations, it’s not a black-and-white case; we need to understand what’s going to happen with these different mechanisms."

"This is a book that’s focused purely on the legal questions. It fleshes out the idea that this technology is a new kind of law, that this is an opportunity to build structures that serve the same purpose as law but achieve the ends by means of technology. It fits into a long-standing debate in internet law. There’s the famous Lawrence Lessig phrase, ‘code is law’, this idea that software and the architecture of online systems can regulate behaviour the same way law does. So this book is really focusing on that alternative. It’s also something I talk about in my book. I think it’s important but I see it as only one part of it. Yes. What’s interesting is that the two authors posted a draft law review article a couple of years before the book, about the same topic. In a way, the book grew out of the article, but they actually became considerably less aggressive in their claims about the technology’s potential. In my book, I argue that the technology is one thing that can regulate; the law is another. Then, there are also other mechanisms, like economic incentives and social norms and communities. Again, this comes from the work of earlier scholars like Lessig. “The exercise is not just to say, ‘Can blockchain serve as a new kind of law-like mechanism?’ The real question is, ‘Should it? What are the benefits and what are the risks of that kind of system?’” The exercise is not just to say, ‘Can blockchain serve as a new kind of law-like mechanism?’ The real question is, ‘Should it? What are the benefits and what are the risks of that kind of system?’ I think, in most cases, starting with a code-based system is likely to be problematic because we’re going to get situations like the DAO, where there are so many potential failure states. What we really need is for these systems to operate in parallel. We need to start by thinking about out how to harmonize them and the set of public policy concerns. If we want to make sure that people who are buying investment products have the right information to make good decisions and appropriate recourse if they are cheated, then we can start to get into the kinds of mechanisms whereby a cryptocurrency-based token might be able to do that. So that’s my orientation—as opposed to starting with the idea that this thing is happening, here’s what it does and let’s start with understanding its law-like function. I’m concerned that that’s going to take us too far. These two authors are both legal scholars. They are very thoughtful. There are many people who, unlike this book, talk about the idea of code as law in the blockchain and completely ignore the downsides. They, to their credit, talk about the downsides and try to address them but I still think we need to start in a different place. Yes, and they wouldn’t disagree with that. I don’t want to overemphasize my critique. It’s more about the extent to which we are really thinking about these different mechanisms and trying, at the outset, to come up with hybrids. It depends what you’re looking to get out of it. If you’re interested in questions about law and how law relates to computerized network systems and look at blockchain from that perspective, then yes, Lessig’s work is absolutely foundational. There’s a whole lot of literature in that field, but that would definitely be the starting point. Get the weekly Five Books newsletter Then there is Fukuyama’s book, Trust . There are also other books I talk about, like Robert Putnam’s Bowling Alone . There are a number of people who have written about the concept of trust thoughtfully that are useful. They don’t talk about blockchain, but about the value of trust and what it means. The other set of literature that is really helpful is about governance, in particular Elinor Ostrom’s work . She looks at how communities and organizations can successfully govern themselves without formal legal enforcement at the base. There’s a lot of really interesting work and she won a Nobel prize in economics based on that work. Blockchain is something that purports to achieve the same goal, but in somewhat different ways. So I think we can learn a lot from those ideas."