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I spent much of last week at blockchain conferences, and I’m about ready to never hear the word again. This despite the fact I’ve been supporting decentralized software, as a counterweight or at least alternative to the growing power of governments and megacorps, for years now. Do you think blockchains are no answer? Great, let’s discuss! I wholeheartedly support you skeptics with whom I cautiously disagree. What I can’t stand, it turns out, is an endless sea of true believers nominally on my side.
The believers are twofold, and the two groups grate differently. One group is there almost purely because there is money in the space: Wall Street types hoping to rule a new asset-tokenized world which may come to be; financial startups offering blockchain versions of existing financial tools; new marketplaces just like old marketplaces, except On The Blockchain, and therefore better.
It’s all too easy to envision a future in which the collective vampire squid that is the financial industry — which has gone from taking 14% of all US profits in 1985 to consistently raking in more like 25% over the last couple of decades — ironically turns blockchains into a tool for “financializing” the economy even more, routing every global transaction through even more middlepeople, each of them shaving off a basis point or two. I doubt this will ever happen — but it’s the clear goal of much of group one.
(And before you even think about blaming regulators for this continued attempt at creeping financialization, consider that the cryptocurrency casino is full of so much shadiness it serves as a superb object example of why regulators exist, even if a few of their rules are a bit hidebound and baffling in today’s world.)
Needless to say this was not the original vision. The original vision of Bitcoin was, quote, “A Peer-To-Peer Electronic Cash System.” How has that worked out? Well, as Tom Howard puts it, “It’s 2019. Where the fuck is our Global Peer-To-Peer Electronic Cash System?”1 His conclusion: still not here.
He has a point — but in many ways the Bitcoin community is among the most admirable in the space. Their vision may have pivoted, from “medium of exchange” to “decentralized store of value,” but it is clear, and it is succeeding, they are making both sacrifices and technical leaps to advance it. (And maybe one day Lightning will provide us all scalable peer-to-peer payments atop Bitcoin. Maybe. One day.) Furthermore, people actually use Bitcoin in sizable numbers … albeit mostly for speculation.
The other group of true believers is the technical group, for whom I should have more love, as an engineer myself. But so much blockchain engineering is built on the unexamined presumption that blockchains are inevitably going to become wildly important, rather than an attempt to actually make them important in any way … again, other than the decentralized global casino of unregulated speculation.
There are still projects I like. Ethereum offered us the breakthrough concept of decentralized applications, although it turns out their usage rate is flat. Cosmos is an important and scalable alternative to Ethereum’s approach, although it’s only just launched. Blockstack’s approach is even more interesting, although the most successful Blockstack app — by far — has only 8,000 installs, still basically a rounding error, albeit one with an impressive growth rate.
And yet most of the non-financial people I met or read about last week were building new blockchains, or new tools for blockchains, new governance or voting systems to run atop blockchains, new blockchain analytics platforms, new ways to scale blockchains to handle the inevitable immense demand for their capacity … which is not at all apparent. The industry has so much potential, everyone agrees. It’s so revolutionary. It’s going to change everything. It’s going to be so important for the unbanked, everyone agreed, while standing in rooms full of bankers.
Meanwhile the decentralized Internet, “Web 3.0,” is beginning to feel like nuclear fusion or superpower Brazil: perpetually 10 years away. The belief is that scaling must be solved first — but premature scaling is exactly the mistake which has killed many a startup. Almost everyone in the space, financial or technical, seems primarily focused on tooling, infrastructure, platforms, and scaling, and writes off the lack of any non-believer users as merely “a UX problem” to vaguely be solved somehow in the future.
Maybe. Or maybe, a decade on from the Bitcoin whitepaper, it’s past time to instead be building applications that unbelievers who don’t care one whit about blockchains actually want to use, in the course of their everyday existence, at home and/or at work. If there are any fundamental issues other than scaling which prevent that from happening, then maybe it’s past time to focus on them instead.
1 I feel compelled to note that Mr. Howard actually wrote “f*ck” to preserver his readers’ delicate sensibilities; TechCrunch, of course, has a long and proud history of not worrying about those.
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