When I first learned about the blockchain, I imagined a new world. A world where true decentralization of economic and political authority empowers the world to ascend beyond physical bureaucracy. “Radical Markets”, charging into an Utopian future. This is the dream of many cryptonauts like myself, but a serious issue is holding it back.
A Lack of Faith
Bitcoin was created in response to an economic system that failed to represent and provide for the vast majority of its people. Partisan tribalism makes reasoning through current economic tools an ideology of compromise, where no one agrees on how to fix our broken system. Government is core component of the unjust nature of our current reality, but Libertarian idealists forget a main function of the capitalist state: to enforce ownership of capital. At the current moment, enforcement requires a third party. You cannot own land without someone or something recognizing that ownership, and enforcing a legal claim in your name. Current crypto-economic systems are purely focused on decentralizing core economic and social functions within the current economy, but this cannot be the end goal. We must remain focused on creating a new economic system where individuals interact with capital and the state apparatus in a decentralized and democratic way.
Understanding the relationship between state and capital has made me increasingly cynical of the future of cryptocurrency. Between replacing the system and total anonymity, the community seems to want their cake and eat it too. Decentralizing economic and political systems while retaining the anonymous nature of crypto creates a multitude of serious issues.
Tying persons to capital on a decentralized blockchain has proved to be quite an undertaking. Current systems enable sockpuppeting (spamming fake accounts/addresses), malicious non-community voting, or an oligarchy of the whales. To quote the founder of Ethereum himself:
“ a system that formalizes only capital and not human individuality may inexorably serve wealth rather than humanity”.
This is crypto’s identity crisis.
Community sentiment feels almost empowered by this glaring flaw; many new and old investors think that everyone who bought ETH cheap is going to own some sort castle and rule upon the “nocoiners”… Crypto-feudalism is not a future I want to help build.
Solutions Aren’t Easy
The easiest way to solve the identity problem is to cooperate with current government and economic systems. Some of the most successful projects in the crypto community (Ripple, NEO) rely on centralized authorities to regulate and implement these technologies. Alignment with current regulatory and economic structures increases public trust, but puts power right back into a system we are trying so desperately to cut loose from. Loss of anonymity and decentralization run contrary to the main goals of crypto as a community. We aren’t just building a better dollar, we are building a new system, and while the blockchain can be a useful tool for current economies it should never be exclusively reliant on outdated political and economic machines.
Research in voting algorithms and consensus systems has existed since before crypto, but our main goal rests in proving the human identity in code. Currently, quantitative identity ecosystems are just starting to reach maturity. Projects like Kairos use facial recognition and bio-metrics to prove identity, a solution touted by many but utilized by few. In time, I am confident in the success of these solutions, given a couple caveats.
The first is privacy. These technologies must be controlled completely by their users. Full decentralization of human meta-data is necessary to prevent a real-life Minority Report. Private corporations, governments, and other users should never own or fully access our bio-metric and/or behavioral data. These “selfish ledgers” must remain under democratic, decentralized control.
The second problem is ubiquity. Crypto-tribalism is failing to unite these technologies organically. Competing projects can exist, but creating open source standards for solving the identity crisis is the only path toward real adoption. Collaboration and cohabitation is the only path towards creating sustainable growth and increasing public trust.
Crypto isn’t just an investment, it’s a revolution.
I’ll end this with some advice to new investors: Look toward projects that help create a useful environment. “Killer” DApps that replace current centralized applications with decentralized ones are inevitable and many are necessary. Multi-protocol eco-systems will be extremely important to adoption, so pay special attention to projects that prioritize blockchain inter-connectivity and true decentralization. Identity projects are still very young, but understanding how these upcoming technologies affect consumers is incredibly important to the future of crypto.
For additional reading on democratic economic and political systems I’d recommend “Radical Markets” by Eric A. Posner & E. Glen Weyl, and “Majority Judgement” by Michel Balinski and Rida Laraki.
https://medium.com/@zachdt/the-crypto-identity-crisis-896196eca677
https://twitter.com/ZacharyDavisT