Understanding Cryptocurrencies with Stigmergy

The coordinated movement of flocks of birds, pulsing and spiraling in unison, often inspires awe in us. Though these groups may appear almost divine, they are governed by a set of underlying principles that determine how individuals in a swarm or social network behave. This concept is referred to as stigmergy. For example, the stigmergic principles of a flock of birds are:

  1. Separation - avoid crowding neighbors (short range repulsion).
  2. Alignment - steer towards average heading of neighbors.
  3. Cohesion - steer towards average position of neighbors (long range attraction).

These rules are basic, but the effects become powerful and can have emergent properties that one might not expect from the simplicity of the rules defining the system. They can also be quantified.

A similar phenomenon can be viewed with the creation of computer programs as well. This has been best exemplified by “Conway’s Game of Life.” In this case, humans define pre-set parameters for the behavior of squares on a plane, looking something like a checkerboard of infinite size. Each square can either be black or white (on or off). For example, perhaps any black square on the board touching two or more white squares will turn to white as well. This is best understood visually, see:

Again, the complex systems and coordination that emerges, much like a flock of birds, seems to speak to a collective intelligence. Many see metaphors here to our actual universe and the rise of intelligent life.

Now, as thousands of new companies launch ICOs, motivated by the influx of capital and the technological possibilities of blockchain technology, many have begun to wonder how to understand the value of each new cryptocurrency. It is critical to understand that each ICO organization has the capacity to, essentially, arrange their own economic system, defining the incentive structure of their network with their currency and its governing rules, to define its stigmergy.

For example, Steemit is a social network with its own cryptocurrency. It functions like a combination of youtube, twitter, and reddit. However, contributors and consumers of content on Steemit are rewarded for certain actions, like providing high-quality content that many people like or identifying high-quality content submissions early, with a greater amount of the Steemit cryptocurrency. As a result, at least in theory, the best content and best curators lead the outcomes of the entire network and are incentivized to continue. In practice, for this system to operate efficiently, the user-base and engagement of participants needs to mature further and reach markets outside of core blockchain and bitcoin enthusiasts.

In essence, what we see here is the ability for individual organizations to define stygmergic ecosystems with parameters of their choosing. This type of incentivization structure offers both exciting and dangerous possibilities for the future behavior of society. Technology is morally neutral; humans determine the outcomes technologies produce. What principles will we choose to organize networks, and networks of networks, around? Greed, desire, social good, creativity, some combination of all of them?

Additionally, up to now, we continue to view each new cryptocurrency as a static organization seeking to grow profits. However, I suspect that methods will arise for more short-term network development that can respond to the fast-evolving needs of our society. Imagine a technology that would allow for a plug-and-play blockchain cryptocurrency with easy to define incentivization parameters that adapt to the needs of the network that forms around it. After the completion of a project, the network would then dissipate and float back into the wider system like mandala sand being erased. I imagine there will be an app-type store of past model templates that served different purposes successfully and that can be improved over time.

The trajectory of human development can be seen through the lens of network growth and improved coordination. Tribes became villages became cities became nations became multi-national trading blocks. All along the way, humans have discovered new ways to coordinate behavior amongst increasingly large groups of actors. On a global scale, blockchain and cryptocurrencies offers the ability to better coordinate how we work as a global society. My hope is that we can discover stygmergic principles that promote shared benefit, growth, and peace.

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