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).Below the fold I explain why this is typical blockchain gaslighting.
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.”
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
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 misledThe 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:
- The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Source.
- Ever since 2014 no more than 5 mining pools have controlled more than 50% of Bitcoin mining power.
Last November TWO pools controlled more than 50% of Ethereum mining power.
- One exchange (Binance) controls the vast majority of trading in cryptocurrencies and their derivatives.
- The Gini coefficient of cryptocurrencies is extreme, just 0.01% of bitcoin holders controls 27% of the currency in circulation.
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.