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11 assertions about blockchain

  1. Proof-of-work is a disaster. There’s no way to couch it; arguments about it providing economic incentives for renewable energy are cognitive dissonance at best. Proof-of-work blockchains have the environmental footprint of a small country. Bitcoin could raise global temperatures by two degrees over the next decade all on its own. There is no valid argument for that being acceptable - or necessary.

  2. Not all blockchains are terrible. Algorand could be considered to be carbon-negative if you accept that carbon offsets are effective (I don’t). Still, it’s got a very low footprint. Proof-of-stake chains have a much lower impact; Ethereum is a high profile example of one that’s making the change. But, of course, it should have happened faster.

  3. The financialization of everything sucks. The instinct to put everything on-chain is a horrible idea that undermines social contracts in favor of free markets. In its worst embodiments, it’s a hardcore conservative libertarian’s wet dream. To have value, something doesn’t need to have financial value. Social contracts, representative democracy, social programs, and welfare all have immeasurable social value that should not be replaced with a Decentralized Autonomous Organization or anything else. Not to mention creating art for the sake of art, or community spaces for the sake of community. We don’t have to - and shouldn’t - make everything into a market.

  4. But putting some resources on-chain isn’t bad. A rough rule of thumb for me: if the current gatekeeper for a resource is a wealth silo (giant corporation, wealthy individual) then it’s a prime candidate for replacement by a decentralized mechanism. Once again for the conservative libertarians: our democratically-elected government represents us and our interests, so government-run programs are not candidates for this.

  5. Too many projects use an “if we built it they will come” mentality. I once saw a crypto investor tell an audience that he likes crypto projects to find an audience for their work in year two or three. That’s bonkers. As with every other software project - or every project - you need to validate the need and the users on day one. Otherwise you’re playing a very risky game, probably with other people’s money. It’s fun to pretend that you’re smarter than everyone else and can make something amazing without outside input, but it’s also highly unlikely.

  6. And most of them are near-impossible to use. Using web3 projects is a horrible, archaic user experience. Centralized exchanges like Coinbase are far easier to use than decentralized exchanges for almost everyone, and unless someone comes up with the equivalent of Netscape Navigator (the first truly usable web browser), centralized services will always be the gateway to blockchain tech for most people.

  7. Crypto may threaten to replace reserve currencies. The dollar has been used as a reserve currency for decades, but the ease of cross-border trade with cryptocurrencies may unseat it. Countries like China and El Salvador seem to be betting on this. It’s not obvious to me that a truly-decentralized currency replacing the dollar is a bad thing; but of course, not every cryptocurrency is truly decentralized. Even the likes of Bitcoin aren’t if a single entity controls enough of the miners.

  8. Crypto is transforming global trade on a local level (which is great). I’m personally aware of freelancers in countries like Colombia being paid in crypto rather than USD or local currency. Vietnam, India, and Pakistan lead global adoption. I think this is a really positive change that could have a major impact on traditional global power hierarchies.

  9. Some incumbents wont go down without a fight. Both the empowerment of individuals in the global south and the upending of reserve currency structures will be major issues over the next decade or so. It’s the kind of change that has the potential to start wars. And at the very least, there are plenty of interests locked up in the traditional financial system that will do what they can to preserve their wealth.

  10. Free markets tend not to protect the vulnerable - and we can’t afford to not. We need mechanisms to mitigate climate change, to empower people who live in poverty, to support social goods like education and public health, and to ensure that everyone has the opportunity to lead a prosperous, good life in health and safety. Those things need to be dealt with intentionally.

  11. We need to be wary of crypto-libertarians. We need to beware of people who want to replace representative democracy with a financialized system, and who want to replace social safety nets with markets. Markets and society can happily live hand in hand; one does not need to replace the other. There are lots of opportunities that come with decentralization; conservative libertarians see opportunities to remove these social protections. We should continue to build for progress, and not tear down important protections that were hard-won over generations.

 

Photo by NASA on Unsplash