Making sense of web3 & crypto. Introduction to key concepts and ideas. Rigorous, constructive analysis of key claims pro and con. A look at the deeper hopes and aspirations.
See the codeAwesome rigorous evaluation of crypto/web3, etc. Contributions are welcome.
If you've spent much time around cryptocurrency people, you've probably heard a rant or two about "sound money" and the need to "depoliticize money." This is a foundation of blockchainism: the belief that money is born separate from states, and states invade on the private realm when they "meddle" in the money system.
There are at least two serious problems with this ideology. First, it's plain wrong on the historical facts. Money did not emerge from barter systems among people. Money was and is a product of state.
But even if you stipulate that money didn't originate among private markets there's another serious historical problem with "sound money." ... It's this: central banks didn't emerge to usurp the private sector's control over money. Central banks were created because without them, finance was subject to wild, terrifying, ruinous boom/bust cycles. What's more, without a central bank, money was subject to naked political meddling, which central banks (sometimes) moderated.
- That the externalities I describe don't exist. You'll have a hard time proving that the waste of electricity and hardware, and the crime wave, are imaginary.
- That although the externalities do exist, the benefits of decentralization outweigh them. The problem here is that since the systems are not actually decentralized, we get the externalities but don't get the benefits.
- That although the externalities do exist, and the systems aren't dencentralized, they're making so much money that we shouldn't worry. The problem here is that the amount of actual money you can get out of a cryptocurrency equals the amount of actual money that has been put in, minus the actual costs of mining. So the big picture is that although there may be winners, in aggregate the system loses money.
Once upon a time in Albania, a scrappy, alternative finance industry emerged to take on and eventually supplant a sclerotic, technologically-backward banking system. The lessons from its dramatic collapse remain relevant today.
Essentially, what was initially touted as a post-communist entrepreneurial success story proved to be pyramid schemes of breathtaking proportions. Slick marketing and lofty promises turned an informal, decentralised, crime-facilitating ecosystem into a mainstream mania that sucked in multitudes of people, unchecked by feeble and fitful regulatory warnings.
Fancy technology can obscure our assessment of what is really going on. The DAO solves a single problem: the corrupt trustee or administrator. It replaces voluntary compliance with a corporation’s charter under threat of lawsuit, with automated compliance with software defined rules. This subtle change may be enough to bypass regulatory hurdles facing traditional trustee’s and administrators, but it doesn’t solve most of the problems the regulations were attempting to address.
What The DAO doesn’t solve is all of the other problems inherent with any joint venture. These are people problems, economic problems, and political problems. In some sense, The DAO creates many new problems caused by its ridged rules and expensive machine-enforced process for change.
The DAO doesn’t solve the “group trap” where by losers subsidize winners. It disempowers the individual actor and forces him to submit to group decision making. It doesn’t make raising money cheaper for companies, it just adds blockchain-enforced bureaucratic and political processes.
Non-fungible tokens.
Whilst these users may not solely discuss crypto or web3, they do discuss it regularly, and have consistently provided well-written critique.
Best intros/overviews of blockchain, crypto, web3, etc.
Here we collect the best theses for why blockchain/crypto“currency”/web3 is supposedly important/interesting/world-changing.
From https://www.usv.com/writing/2016/08/fat-protocols/
The previous generation of shared protocols (TCP/IP, HTTP, SMTP, etc.) produced immeasurable amounts of value, but most of it got captured and re-aggregated on top at the applications layer, largely in the form of data (think Google, Facebook and so on). The Internet stack, in terms of how value is distributed, is composed of “thin” protocols and “fat” applications.
This relationship between protocols and applications is reversed in the blockchain application stack. Value concentrates at the shared protocol layer and only a fraction of that value is distributed along at the applications layer. It’s a stack with “fat” protocols and “thin” applications.
Can support more democratic, distributed governance, e.g. cooperatives (somehow). Can save Democracy.
History of speculation, manias, etc.
This is a section for links that haven't yet been reviewed and/or allocated to a particular section.
Pros
(top 24 of 25)
2,293 followers · starred Jan 2022
4,384 followers · starred Jan 2022
200 followers · starred Nov 2022
275 followers · starred Feb 2022
Making sense of web3 & crypto. Introduction to key concepts and ideas. Rigorous, constructive analysis of key claims pro and con. A look at the deeper hopes and aspirations.
See the codeAwesome rigorous evaluation of crypto/web3, etc. Contributions are welcome.
If you've spent much time around cryptocurrency people, you've probably heard a rant or two about "sound money" and the need to "depoliticize money." This is a foundation of blockchainism: the belief that money is born separate from states, and states invade on the private realm when they "meddle" in the money system.
There are at least two serious problems with this ideology. First, it's plain wrong on the historical facts. Money did not emerge from barter systems among people. Money was and is a product of state.
But even if you stipulate that money didn't originate among private markets there's another serious historical problem with "sound money." ... It's this: central banks didn't emerge to usurp the private sector's control over money. Central banks were created because without them, finance was subject to wild, terrifying, ruinous boom/bust cycles. What's more, without a central bank, money was subject to naked political meddling, which central banks (sometimes) moderated.
- That the externalities I describe don't exist. You'll have a hard time proving that the waste of electricity and hardware, and the crime wave, are imaginary.
- That although the externalities do exist, the benefits of decentralization outweigh them. The problem here is that since the systems are not actually decentralized, we get the externalities but don't get the benefits.
- That although the externalities do exist, and the systems aren't dencentralized, they're making so much money that we shouldn't worry. The problem here is that the amount of actual money you can get out of a cryptocurrency equals the amount of actual money that has been put in, minus the actual costs of mining. So the big picture is that although there may be winners, in aggregate the system loses money.
Once upon a time in Albania, a scrappy, alternative finance industry emerged to take on and eventually supplant a sclerotic, technologically-backward banking system. The lessons from its dramatic collapse remain relevant today.
Essentially, what was initially touted as a post-communist entrepreneurial success story proved to be pyramid schemes of breathtaking proportions. Slick marketing and lofty promises turned an informal, decentralised, crime-facilitating ecosystem into a mainstream mania that sucked in multitudes of people, unchecked by feeble and fitful regulatory warnings.
Fancy technology can obscure our assessment of what is really going on. The DAO solves a single problem: the corrupt trustee or administrator. It replaces voluntary compliance with a corporation’s charter under threat of lawsuit, with automated compliance with software defined rules. This subtle change may be enough to bypass regulatory hurdles facing traditional trustee’s and administrators, but it doesn’t solve most of the problems the regulations were attempting to address.
What The DAO doesn’t solve is all of the other problems inherent with any joint venture. These are people problems, economic problems, and political problems. In some sense, The DAO creates many new problems caused by its ridged rules and expensive machine-enforced process for change.
The DAO doesn’t solve the “group trap” where by losers subsidize winners. It disempowers the individual actor and forces him to submit to group decision making. It doesn’t make raising money cheaper for companies, it just adds blockchain-enforced bureaucratic and political processes.
Non-fungible tokens.
Whilst these users may not solely discuss crypto or web3, they do discuss it regularly, and have consistently provided well-written critique.
Best intros/overviews of blockchain, crypto, web3, etc.
Here we collect the best theses for why blockchain/crypto“currency”/web3 is supposedly important/interesting/world-changing.
From https://www.usv.com/writing/2016/08/fat-protocols/
The previous generation of shared protocols (TCP/IP, HTTP, SMTP, etc.) produced immeasurable amounts of value, but most of it got captured and re-aggregated on top at the applications layer, largely in the form of data (think Google, Facebook and so on). The Internet stack, in terms of how value is distributed, is composed of “thin” protocols and “fat” applications.
This relationship between protocols and applications is reversed in the blockchain application stack. Value concentrates at the shared protocol layer and only a fraction of that value is distributed along at the applications layer. It’s a stack with “fat” protocols and “thin” applications.
Can support more democratic, distributed governance, e.g. cooperatives (somehow). Can save Democracy.
History of speculation, manias, etc.
This is a section for links that haven't yet been reviewed and/or allocated to a particular section.
Pros
(top 24 of 25)
2,293 followers · starred Jan 2022
4,384 followers · starred Jan 2022
200 followers · starred Nov 2022
275 followers · starred Feb 2022
