Decentralized Woo Hoo

Yup, because if shit hits the fan and you're up against a tyrannical government you have a lot more problems to worry about than exchanging goods for money via a physical crypto wallet (because they'll have already blocked communications by the time they're after you on the ground).

> However some people interested in and working on blockchain and related technologies are pursuing ambitious goals that could reshape the economy and politics in ways that makes them more open to participation

I hear this all of the time, but the people and projects “reshaping the economy and politics” are rarely ever named. When it comes to blockchain and cryptocurrency, we’re supposed to believe the “good ones” are out there, somewhere, while ignoring the fact that the blockchain/crypto space is absolutely drowning in meme tokens and obvious cash grabs.

The superiority of blockchain solutions seems to be assumed for many believers, so it’s natural to assume that superior solutions will eventually arise from this superior blockchain technology.

But the superiority of blockchain isn’t obvious for most problems. Moreover, if someone does build a superior solution on top of a blockchain, what’s stopping a centralized player from duplicating the benefits of that superior solution at a lower cost in a centralized platform?

This is the conundrum of blockchain and token projects: For them to be superior to the consumer they must eventually have lower fees and costs. Yet blockchain is inherently more expensive than equivalent centralized solutions and, even worse, the token investors expect astronomical (to the moon) returns on their investments, which necessitates extracting a lot of money from the users after the speculative frenzy has died off. At least currently, most blockchain/crypto/token schemes are built with the assumption that the consumer is the person they will sell the tokens to as a speculative investment, not the person who will actually use the service itself.

Decentralized solutions actually have a lot of problems that proponents avoid talking about. For example, DAOs are promoted as ways of decentralizing ownership, but we're supposed to ignore the fact that a well-capitalized player could simply spend their way into controlling a DAO by purchasing up enough tokens. And unlike with real-world companies, the ownership can be purchased anonymously in a way that makes it appear to come from a lot of organic traction. A well-funded company could simply spend their way into controlling a DAO and neither regulators, users, nor consumers would even know. We're supposed to believe this model is a boon for decentralization, but it's a dream come true for surreptitious takeovers.

> ... But crypto assets come with an attached narrative economics that tries to rationalize their existence by appeals to either libertarian politics or technology. If we venture down the technology arguments, at this point the discussion of intrinsic value of crypto assets reduces down to a rhetorical word salad of decentralized woo making all manner of appeals to alleged ideals of decentralization and networks, yet like with quantum woo, without a reference to a mechanism.

Decentralization by itself has no value. In fact, it has negative value because decentralized systems by their nature tend to be less efficient and more complicated than their centralized counterparts.

Bitcoin's value proposition rests not on decentralization, but on censorship resistance. Censorship resistance means that in Bitcoin, it's difficult to impose rules designed to prevent specific groups or individuals from transacting. This approach is the polar opposite of the one taken by most of the world's governments.

This is the point that zooms over the heads of just about every Bitcoin critic. They either don't grasp the value of censorship resistance or reject it because they've lived a life of financial and/or political privilege. Their world view tells them that censorship only happens to those who deserve it. By definition, only criminals and evil-doers seek censorship resistance.

Financial repression and censorship are on the rise. The worlds governments now have not only the motive but the means for large-scale control by selectively shutting off access to financial services. Those who don't subscribe to this view are some of the harshest critics of Bitcoin.

I have been participating in the Ethereum community for many years and I agree that there is a widespread belief that decentralized tech and economies run on smart contracts can substantively address social problems. Additionally, in the wider crypto community there is a widespread belief that these networks are a way to restore fair money.

In most cases I don't think that these beliefs are post-hoc rationalization. Rather, it is simply motivating to think this way. "woo" is a longstanding feature of any new human endeavor because most of us are psychologically wired to think that what we work on is going to be helpful, and we build a little religion with each other in order to cohere and quickly get the work done.

Regarding the question whether decentralized tech will make the world "better": it can and will in some cases -- for very specific reasons -- but IMO widespread adoption of platforms like Bitcoin and Ethereum will also lead to many new and terrible social problems.

As is the case for every major technology unleashed on our world.

Focusing on the over-positive views of enthusiasts won't stop them, and certainly won't stop the progression of the tech. People will keep building on something new when it can be built, when it is wildly interesting, and when the endeavor is sustainable.

What we need to put more attention on is what to do with the outcomes. It is our responsibility to do so! How to replace the services the tech will disrupt with options that have qualities we desire: more fair, less expensive, more secure, less arbitrarily alterable, etc.

And we need to put more attention on the ways it could all go wrong and bring widespread harm.

In Kim Stanley Robinsons Ministry for the Future carbon coins seem to act in this way kinda sorta without depending on a complete decentralization of society or anything particularly revolutionary. They become popular as an investment opportunity because they act like 100 year high yield bonds and then they make tax avoision more difficult because of the record of the blockchain. Anyway its all dependent on the support of national banks in the book but it comes to mind reading this in any case. I just finished the book finally so Im still figuring out what I think of the whole thing...