Tuesday, January 4, 2022

Blockchain Gaslighting

In Web3/Crypto: Why Bother? Albert Wenger draws an analogy between the PC and "web3" as platforms for innovation:
The late Clayton Christensen characterized this type of innovation as being worse at everything except for one dimension, but where that dimension really winds up mattering a lot (and then over time everything else gets better also as the innovation is widely adopted).

The canonical example here is the personal computer (PC). The first PCs were worse computers than every existing machine. They had less memory, less storage, slower CPUs, less software, couldn’t multitask, etc. But they were better at one dimension: they were cheap. And for those people who didn’t have a computer at all that mattered a great deal.
A blockchain is a worse database. It is slower, requires way more storage and compute, doesn’t have customer support, etc. And yet it has one dimension along which it is radically different. No single entity or small group of entities controls it – something people try to convey, albeit poorly, by saying it is “decentralized.”
Below the fold I explain why this is typical blockchain gaslighting.

The cheapness of the PC was something users experienced directly, but the "decentralized" nature of blockchains and cryoptocurrencies is an abstract quality. The experience of using them is just like using conventional centralized systems, only worse. Promoters of these technologies thus need a constant propaganda marketing campaign explaining that they're better because they're "decentralized" and thus not controlled by big corporations and governments that you can't trust. They can then fantasize, as Wenger does, about the golden future of innovation that awaits because they are "decentralized" and thus aren't controlled by big corporations:
And if widely adopted Web3/crypto technology will also start to improve along other dimensions. It will become faster and more efficient. It will become easier and safer to use. And much like the PC was a platform for innovation that never happened on mainframes or mini computers, Web3 will be a platform for innovation that would never come from Facebook, Amazon, Google, etc.
The infrastructure of the Internet (IP/DNS/HTTP and so on) is decentralized, but that hasn't stopped the actual Internet that everyone uses being centralized — the problem "web3" claims it will solve precisely because its infrastructure is decentralized. Wikipedia defines gaslighting as:
The term may also be used to describe a person (a "gaslighter") who presents a false narrative to another group or person which leads them to doubt their perceptions and become misled
The reason I tag authors like Wenger as gaslighters is that, at every level, blockchains and cryptocurrencies are not actually decentralized. I've been pointing this out since 2014's Economies of Scale in Peer-to-Peer Networks, most recently in my Talk at TTI/Vanguard Conference. Here are a few examples:
Blockchain-based technologies promise liberation from control by big corporations. But what they actually deliver is control by a different set of as yet somewhat smaller corporations, which are much less accountable, transparent, or regulated than the FAANGs. Thus the need for continual gaslighting.

Update 5th January: I should have made it explicit that the systems Wenger and I are discussing are based on permissionless blockchains. Permissioned systems are necessarily centralized.

One final thought. If a system is to be decentralized, it has to have a low barrier to entry. If it has a low barrier to entry, competition will ensure it has low margins. Low margin businesses don't attract venture capital. VCs are pouring money into cryptocurrency and "web3" companies. This money is not going to build systems with low barriers to entry and thus low margins. Thus the systems that will result from this flood of money will not be decentralized, no matter what the sales pitch says.


David. said...

Ann Wiener nails it in Money in the Metaverse:

"Some vocal proponents of “web3”—an as-yet unrealized idea for the Internet’s next phase, based on visions for a decentralized, blockchain-based digital substrate—have fixed their gaze on the metaverse, seeing it as an opportunity for epochal transformation. (Arguments in favor of web3 are frequently made using utopian rhetoric—democratization, decentralization, transformation, freedom, revolution, and so on—that elevates, or obscures, what would otherwise be a financial conversation.)"

Tip of the hat to Ted Nelson.

David. said...

David Gerard's latest news post is full of gems, including:

- Bennett Tomlin on why Craig Wright isn't Satoshi Nakamoto.

- Trolly McTrollface on how regulation will affect Bitcoin.

- Jamie Zawinski, co-founder of Mozilla, on the libertarian cypherpunk roots of cryptocurrencies.

- Koos Looijesteijn with A not so gentle intro to web3.

- Donald King on How NFTs Will Save Video Games By Making No One Want to Play Them Anymore.

David. said...

In It's not still the early days Molly White asks a set of good questions:

"How long can it possibly be “early days”? How long do we need to wait before someone comes up with an actual application of blockchain technologies that isn’t a transparent attempt to retroactively justify a technology that is inefficient in every sense of the word? How much pollution must we justify pumping into our atmosphere while we wait to get out of the “early days” of proof-of-work blockchains? How many people must be scammed for all they’re worth while technologists talk about just beginning to think about building safeguards into their platforms? How long must the laymen, who are so eagerly hustled into blockchain-based projects that promise to make them millionaires, be scolded as though it is their fault when they are scammed as if they should be capable of auditing smart contracts themselves?

The more you think about it, the more “it’s early days!” begins to sound like the desperate protestations of people with too much money sunk into a pyramid scheme, hoping they can bag a few more suckers and get out with their cash before the whole thing comes crashing down."

David. said...

Claire Jones and Izabella Kaminska write The regulatory threats to crypto are mounting:

"Crypto might not be as decentralised and global as its advocates like to make out. But the way in which the technology is set up does present complications for regulators hell bent on reining it in.

Unless states manage to address the privacy problem — which may in fact be insurmountable — then you don’t have to be Yoda to work out that someone, somewhere in a galaxy not so far away will find a way to get around the rules and use technology to enable people — for reasons legitimate and otherwise — to make payments quickly, cheaply and anonymously.

And that sort of competition, overall, is probably a good thing for keeping any government alternatives honest and private."