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Will crypto-currency driven insurance replace the concept of objective truth?

published Aug 14, 2018 11:35   by admin ( last modified Aug 14, 2018 11:43 )

Imagine a future where everybody believes in their own subjective "truth" and people cannot agree on facts. Some say that is where we are heading. Without facts, words don't mean much, whether in parliament or in law.

How would such a world be ruled? I can think of two ways. One is violence. Whatever you believe in, if you are threatened with violence you have no choice but to comply. It does not matter what you believe in. A kind of mafia driven governance. Probably in a hierarchy since otherwise it would be hard to channel.

But there is another way I think that a world could operate without people being able to agree on truth. And that is markets. First there needs to be a currency for the market. Even if people want to believe in let's say different currencies, some currencies will be clearly better than others. In fact with the aid of blockchains and crypto currencies we may get close to consensus on what currency to use, since believing in the "wrong" currency will be punished as that currency falls in value. So we have step one in consensus: We believe in the same currency.

Secondly, on a blockchain you can have a kind of insurance system, where money is staked, and vouched for something. And if that something misbehaves, the insurance may be triggered and that money being sent to someone else. This is essentially what is called a Third-party insurance.  Imagine for example if every person travelling needs to have a terrorist insurance, so that if they do something bad, their insurance company needs to pay out possibly on the order of billions of dollars to victims and next of kin of victims. This would mean that an insurance company would need to do due diligence assessing the risk of an individual before they give that person an insurance cover.

For a high-risk individual insurance premium might run in the vicinity of millions of dollars per week. And you can't travel without it. So such a person would be unable to move.

So truth comes from if someone is willing to vouch for you, and entities who have bad judgment about vouching will run out of money.

I'm not saying this is a desirable future scenario, but it may be a way to work around the fact that the future may not believe in facts.