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What Blockchain Taught Me About Parenting and Economic Wisdom

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Imagine the following situation: you bring your twins out for a family dinner in a pizza restaurant. When the pizza arrived, the restaurant didn’t split it. Now, you must split it between your children. The trillion-dollar question is how will you do it?

For this exercise, I present two plausible options:

1. You, as the parent, will split for the children.

2. You let the children decide for themselves.

For the first scenario, being their parent, you may rightfully believe that you are bestowed the right (by social convention for example) to decide for them. Here’s the catch though, what happens if you have good intentions but are inept with logic (e.g. You can’t tell that a large pizza with 8 slices and a large pizza with 12 slices is the same)?

Or your method might not yield consistently good results due to some long held tradition (e.g. tiger parenting). When your children grow up, they might constantly defer to a “higher” authority while imposing their will rightly or wrongly on their children.

For the second scenario, you are laissez-faire, trusting your children to behave well towards each other. Let’s say one of your twins is epigenetically different from the other. So one has a growth spurt much earlier than another. Making a twin stronger, but also hungrier. Then, it is easy for one to bully the other to get a larger slice. This creates an unhealthy dynamic between the twins. They might grow up hating each other, causing a rift in the family.

The first method sounds tyrannical; while the second can turn into anarchy. Both scenarios presented above are not meant to predict what would happen definitively. It aims to jolt us into being more conscious of our methods, because they might lead to undesirable outcomes.

Okay, what would be a better approach? How can we split the pizza between the children in such a way where a parent’s authority is not needed in the future; at the same time, the children will learn imaginative ways to treat each other as fair as possible?

The Fairness Solution

There is a little game to play when splitting the pizza, it is called the “split and choose”. To play the game, one of the twins is given the right to split the pizza into two slices, then the other gets to choose the first slice. For example, twin A splits the pizza into two, then twin B gets to choose which slice to take first. If twin A cheats by splitting the pizza unevenly, twin B will naturally choose the larger slice first.

In such a game, only the cheater loses. You don’t have to use your parental authority, nor enforce any fairness values. The self-evident fairness of this game creates a naturally desirable result.

Such games are at the centre of blockchain protocol development. This “split and choose” game is commonly referred to as proposer-builder separation in the blockchain development. The proposer (i.e. pizza splitter) will propose a block for the blockchain, while the builder (i.e,. pizza chooser) will build the block for the blockchain. The exact details of how this works is too lengthy and technical to cover in this article.

Nonetheless, you can find out more in the Ethereum discussion forum here. The point of all these is to keep a balance of power by avoiding centralization, so that it is worthwhile to build meaningful use cases on it. Without which, the participant with the most power can corrupt the entire system.

Not Everyone Thinks Fair

For the astute reader, you might be able to detect a flaw in this game. This game only works if participants are willing to play the game. What if in the future, without parental supervision, the stronger twin decides not to play this game and resorts to brute strength for a larger share?

This abuse of power happens a lot in the real world and in blockchain. However, let’s not forget that with continuous abuse, the weaker twin can also decide not to play the game and find other players willing to follow the fairer rule. One example in the real world is the migration of a minority group from one country to another.

In blockchain speak however, we call it “forking”. Forking is a situation where a group of participants decide to create another version of a blockchain with a new set of rules. Participants fork a blockchain because of competing beliefs in a better system given the risks and rewards like utility, cost, convenience, scalability, security, transparency, decentralization etc.

The trillion dollar question here is that given more time, which of these factors will society value most?

Shade They will Never Sit

Blockchain protocol developers are building blockchain infrastructure primitives (i.e. rules, standards, systems, protocols etc) that they believe will naturally and legitimately benefit society. Good blockchain protocols are developed through pragmatic first principles approaches using science, maths, cryptography, extensive human behavioural research etc.

We are already reaping the rewards from these efforts. In 2014, disadvantaged groups torn by war and oppression found refuge and financial freedom through Bitcoin. In 2021, we see the rise of NFTs (through ERC-721 standard) which allows artists from all around the world to have another sustainable means of income.

People living in countries with hyperinflation and foreign exchange controls use stablecoins (created through the ERC-20 standard) to keep the value of their hard earned incomes from eroding. And of course, some of us trade or invest in cryptocurrencies as a new class of asset.

In the coming years, there will be a lot more innovation in this field (so don’t sleep on it). Only with hindsight, will we realise how these imaginative games played a pivotal role in solving difficult social, political and economic problems. With it, we may no longer require blind obedience to an authority, nor giving up to zero-sum anarchy.

Future generations will reap the rewards of these old men who planted trees whose shade they shall never sit. Isn’t that what any good parent would want for their children?

About the Author

Chia Sheng Yeong is the partner of Celebrus Advisory, a bespoke and industry-acclaimed consulting firm for digital assets with focus on regulatory compliance, technical delivery, and project outcomes.

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