Elly Zhang suggests that one of the biggest barriers to the growth and acceptance of both the cryptoeconomy and decentralized ledger technology is that the blockchain is forever stuck on a pedestal, more ideal form than actual practical, sustainable, or scalable financial and logistics panacea, in her recent article Saying Goodbye to the Blockchain Romantics.
Elly’s angle of attack on the Blockchain Romantics was thorough and detailed and rather compelling—and a lot of what she says is, indeed, barriers to blockchain’s success; however, she limited her criticism to decentralization.
While being decentralized is one of the more interesting aspects of the blockchain, it’s a pretty small part of what makes Blockchain Romantics romanticize Bitcoin and the blockchain. To Elly, Bitcoin created an ideology; actually, ideology makes Bitcoin.
Satoshi Nakamoto, the name behind the creation of Bitcoin and its ledger technology, Blockchain, was supposedly influenced by the cypherpunk movement. According to Wikipedia, “a cypherpunk is any activist advocating widespread use of strong cryptography and privacy-enhancing technologies as a route to social and political change.”
This is surely an ideology that dovetails perfectly with the ethos of the Blockchain Romantics and indeed influenced the Blockchain apostles. So, which came first? The ideology or the blockchain? And then there the connection associated between the global recession and the development of Bitcoin as a way of circumventing international banking hegemony.
Like any True Religion, Blockchain has a creed. It’s not a belief in a single thing. While the Nicene Creed believes in four things—God, Christ, Holy Spirit, and Church—the True Believers of Bitcoin, Blockchain, and all the Alts believe in more than just decentralization.
While blockchain is, indeed, decentralized, that’s just a secondary effect of being peer-to-peer, of being devoid of middlemen or brokers. Decentralization is a secondary effect of avoiding intermediaries. So-called centralization and privatization can be a choice that a blockchain project, but it isn’t designed that way at its core, at its ethos. I mean, you really don’t ever need to think that much about the decentralized nature of Bitcoin: a Bitcoin wallet and an Internet connection are all you need for Bitcoin as it’s only powered by its users with no central authority or middlemen: when two parties agree to a Bitcoin transaction—effectively peer-to-peer—it is done instantly.
When it comes down to it, there must be something well more important than simply monetary gain that drives Bitcoin, of course, but also the other thousand alt- and shitcoins that sparkle and glitter like the vapor trail of a comet. A peer-to-peer network like BitTorrent needs both lots of partial and full nodes and a volume of active users (temporary nodes) to make the network truly effective.
While BitTorrent surely demands “the network effect” to be healthy, responsive, usable, and quick; so do other emergent networks such as cryptocurrencies as well as blockchain-based software, organizations, and everything else. Another technology that demands decentralization and quick, reliable, decentralization that benefits from not being hacked is DNS. In order for domain names to actually resolve, globally, on every system worldwide, every node on the Internet needs a way to help everything else on the internet to know where newconomy.media actually points, which is actually to an associated IP address.
The thing all of these examples have in common is how much they benefit from the network effect, the phenomenon whereby a product or service gains additional value as more people use it. This phenomenon applies to Bitcoin, the blockchain, and all the altcoins as well. The slower the stream, the more people are hodling and the fewer people who are actively mining and trading, the less responsive and less efficient the entire decentralized network becomes—and possibly more vulnerable.
In much the same way, the ethos of Bitcoin’s blockchain is coins are mined according to Hal Finney’s 2004 concept of reusable proof of work, which was adopted as proof of work in Satoshi Nakamoto’s development of Bitcoin in 2009. According to Investopedia,
“Proof of work makes it extremely difficult to alter any aspect of the blockchain since such an alteration would require re-mining all subsequent blocks.”
It’s like when I was rowing in an 8-man sweep in college: when you’re on a boat that requires the hardest work imaginable to even be in that race boat, you’re always expecting that those rowers before and behind you are exerting the same amount of work, of struggle; otherwise, the value of that Bronze, that Silver, or the Gold might not feel as well-earned or worthwhile—valued; while, on the other hand, if someone in the boat isn’t putting in the work, there are issues of fairness—or the lack thereof—and character (of course, all one really needs is money, at the end of the day—to be rich—thanks to exchanges.
Check back tomorrow for part 2 of “Still a Blockchain Romantic into 2019 and Beyond.”