Bear with me as it may be the most important thing you read during this unspeakable administration.
Between 1997-2000 everyone was declaring the web was ushering in a “New Economy”. I never accepted the notion, but I also felt uncertain because it was referenced everywhere you turned. Bitcoin and blockchain feels this way to me now, but this time I’m a little more certain of where we’re heading.
When the Bitcoin decentralized blockchain code was unleashed on the web in 2008, it sounded doom for everything middleman, that parasitic space that brokers anything between two or more principle parties. This alone doesn’t fundamentally change anything or declare past economic models obsolete. It simply means people and businesses relying on brokering deals are no longer necessary and will find themselves unemployed or out of business in the immediate future if they don’t reinvent their place in the world. Innovation increases efficiency, and the world is fantastically better without obstacles in the middle.
At the same time, many things are going to be very different. Just as the web increased efficiency by altering the way we do business, communicate, trade securities, buy, sell, and pay for things, digitized decentralization is changing even more in a very profound way. This sounds the cautionary alarm because we can be easily lured into rushing to conclusions and staking our bets on incorrect assumptions based on the past.
For instance, the ad-revenue model will die a quick and well-deserved death, which is great for us –unless that’s your business- and bad for venture capitalists, most of whom have staked their future on the opposite and for whom I have very, very little sympathy. As I’m leading the process of advancing that certainty among other things, I’ll have to leave it at that for now, but I assure you whether I succeed or not, it is a fact that this will happen soon.
I use this to illustrate the point that we must think about innovation rather than look to what worked in the past and try to apply that to say a blockchain business going forward. Another example is the rather hilarious attempts of regulators, banks, central banks, and governments in general who are trying to fit their square peg of the past into the new round hole that has opened up under their feet. FCA, the SEC of the UK, recently put out a questionnaire seeking input into how to regulate in a decentralized world. The braindead thinking behind this document left me speechless. For example:
Q4: What technology resiliency advantages, if any, does DLT have over other types of systems currently available?
A: Well, duh? If you must ask, where should one begin?
Q9: What other examples are there of DLT providing direct and tangible benefits to consumers? What are the risks associated with these?
A: SEE answer to Q4
Q11: Does the use of digital currencies to provide financial services carry with it different or more benefits and risks than current systems available?
A: SEE answer to Q9
Q16: What legal and regulatory challenges do firms find in fitting initial coin offerings into our regulatory framework?
A: SEE answer to Q11
Q17: Are there other parts of regulation where DLT might offer a new market convention?
A: See answer to Q16
So did they hire a cave-dwelling Cro-Magnon adolescent child to investigate this, or did they assume anyone who knows these answers should waste their time on it? ARGH!
Then there are the poor piteous banks, scorned and devoid of societal sympathy, who will meet their well-deserved fate without anyone jerking a tear. Their attempts at blockchain are like the bloody headless chicken carcass running in circles in the dirt trying to figure out how to wield the hatchet, a tool designed to be the instrument of their demise. They can build all the consortiums like Hyperledger they want, or as an eloquent tweet put it, the “hypermarmot”, but innovation and human will are driving their inevitable obsolescence with immutable certainty.
And then there are the central banks, quaking in terror as cryptocurrencies sprout like cannabis weeds across their proper gardens, watching in some hidden defilade like a deer in the headlights. Oh no, what do we do, our debt-instrument fiat shit is being revealed for the dry-hard turd it is, and people don’t want it anymore. Boohoo. Yes. The fiat age is unwinding, or should I say unraveling? So does it go with a slow hissssss like so many nasty snakes slithering under the bed, or with an obliterating MOAB boom?
And governments? Well, they’re fucked. And it’s their own creation. I began following politics under Reagan, a former loser actor who conveniently became president in an age of television politics with former CIA Director Bush for VP. Then Bush 1, Clinton Redux, the Bush 2 nightmare era, impotent Obama, and now, He whom we shall not speak aloud lest we be struck down. I swore Bush 2 was the low water mark but man was I wrong! So is there incentive and do we need a change? Gee I wonder?
The real problem for governments is they have come to represent waste and inefficiency, and a centralization of power. Lucky for us, or perhaps unfortunately for us, decentralization offers an elegant remedy for these maladies. Their only recourse to stopping their downfall and the end of the fiat era is launching WWIII to disrupt progress and innovation, and it looks like they’re working hard to make it happen. And if you don’t know, now you know…that is, why WWIII started.
This is super-scary because, sadly I need to invoke it, to say it, I’m holding my nose, TRUMP! believes in a diabolically demented and irretrievably stupid mantra known as the Fourth Turning. If this is news, then you need to read this crazy shit: http://www.fourthturning.com/ - please don’t buy the book!
In short He/they believe it is their mandate to lead us through the destructive cycle of history. Rather than thinking of awesome potential and positive futures, they’re focused and channeling energy into chaos and mayhem. The Fourth Turning (who comes up with this crap?) has some merit. It’s very loosely based on the i-Ching which uses 8, but to dumb it down to the level of their mathematically-challenged audience they reduce to 4-cycles. I can’t go into it as it’s already sucked enough of my time (you seriously need to read for yourself so you become aware of what is really driving the US), but its diabolically ominous.
Forgetting that lets return to a better future. The governmental trend has been to privatize state operations from toll roads to even military operations. In the future governments will become more corporate as profits are more evenly distributed among citizens. Thus they will become more brand-like and need to compete to attract innovators to drive their economies. Entrepreneurs and innovators will be attracted to the best designed and functional regions, and therefore regions with superior offers will thrive versus competitors who offer cheap or poorly conceived crap for their citizens (China?).
But why do we still need them? Many people in the community believe we don’t, and that consensus will reign supreme. Whoa, hold on, let’s talk about this, not so fast there speedster. This is only partially good, possible, or true. A good place to start is reading, “Blockchain Technology and Decentralized Governance: Is the State Still Necessary?” by Marcella Atzori. Free PDF: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2709713
Her whitepaper describes risks related to:
“a dominant position of private powers in distributed ecosystems, which may lead to a general disempowerment of citizens and to the emergence of a stateless global society. While technological utopians urge the demise of any centralized institution, this paper advocates the role of the State as a necessary central point of coordination in society, showing that decentralization through algorithm-based consensus is an organizational theory, not a stand-alone political theory.”
Bing! She’s right. I’ve never tweeted or registered with Facebook, and I switched from Google to duckduckgo (who comes up with this crap?) a few years ago to resist the collection of personal data. We can’t ultimately trust private entities, be they central or decentral. They’re here today and gone tomorrow, limited liability and no real accountability. Look at Bitcoin. Some 92% of mining has become centralized in the hands of 5-mega-nodes, mostly in China! It’s no longer truly decentralized.
It also happens to be v1.0 or 1st Gen tech. I’m not buying the hype around it. I’m not arguing Bitcoin won’t go up in value in the near term, but pause and think logically about its long-term potential. The proposition is that the last coin gets mined 100-years from now. Seriously? Maybe we should invest in the original Atari gaming console you know, Space Invaders, Missile Command, Frogger, all the classics. The argument that nothing superior will disrupt it is both childish and naïve. A lot of the hyped price prognostications are coming from people holding positions who are trying to push the price up, but their arguments are unsound.
Let’s not forget that any market is driven higher by liquidity, and that price goes down in the absence of liquidity. We can argue that an Atari console gains value because of present scarcity as a collector’s item, and maybe that means 100-years from now future American Pickers, or maybe the same two dudes are still rocking it thanks to life-extension technology or virtual avatars, will be flipping the occasional Bitcoin? Since Bitcoin is nothing more than an idea based on intangible code it becomes a real stretch of the imagination. Structurally and technologically superior alternatives to Bitcoin already exist, are now coming online, and others are in the works. Liquidity will flow to the best structure, and the Bitcoin music will stop and fortunes will be lost.
Ethereum, and boy this is going to piss people off, will also follow in the footsteps of the dinosaur and the dodo. Why? Because it’s v2.0 and there are unfixable flaws that I won’t go into but will be obvious in the near future. Its devs will leave for much greener pastures. Ethereum launched too early and made a huge tactical error in how it positioned itself, and one day fairly soon that cryptic statement will make a lot more sense.
This brings us back to government. Us bipeds require two legs to stand on, or rather, we need two pillars of trust to succeed because the decentralized utopia is functionally unsustainable. Government will improve and become more efficient with consensus-representation, more the way we wish it would be, unless we have to live through WWIII, in which case all this great technology is more likely to morph into our worst dystopian nightmare. Fuck that.
So I flip The Bird to TRUMP and his dystopian Fourth Turning crazy assholes for being the scourge of humanity. In the future I threaten to share my disruptive views on strategies, deployments, and implications of decentralized systems and distributed ledgers; on monetary theory, occasionally government, historic anecdotal indulgences, release a Kraken or two, invoke offending pagan idolatry, call bullshit, reveal many wild dreams and fantasies of a better world for my daughter and humanity’s next 7-generations while raising a great horn of ale to the Innovators...may they live long and prosper…Sköll.
Dream Big, Make it Happen, and May the Decentralized Force Be with You!
I can also be found at https://medium.com/@akau.tau