Hi everyone! Earlier this week I had a brief escape to a city in the clouds…
(Canary Wharf in London, if you’re wondering)
…and came home to find half the trees being cut down on the street my apartment looks out over. Why? Apparently they’re “not safe” and the powers-that-be are worried that, in a rough storm, they might fall over. I’m not sure what’s more disconcerting: that they’re preparing for “rough storms”, or that beloved trees that have been struggling to grow for 40 years are not even being given a chance to show their sturdiness. Safety is important. But so are trees. And Madrid is poorer for their loss.
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This article by Rachel Rose O’Leary highlights a fundamental tenet of capitalism: it is naturally monopolistic.
Apparently crypto communities are up in arms over the arrival of ASIC (Application-Specific Integrated Circuit) chips, which give their owners an advantage in mining certain cryptocurrencies. Developers and users of ethereum, zcash and monero fear that the advantage that the new chips can give miners of these cryptocurrencies will upset the delicate balance in their decentralized ecosystems.
And they’re right, it’s likely that the result will be increased centralisation, as those with money (to spend on the chips) end up producing a greater number of tokens and thus making more money, which means they can buy more chips, and so on.
This freedom – to spend money on making more money – is capitalism’s centralizing force. And while factories and transportation networks have certain physical barriers that could slow the centralisation down, the digital world moves faster. Network effects are realised in a shorter time frame.
Yet this is antithetical to the crypto spirit of decentralized finance. Hence the existential conflict. To stop it from happening, strict rules will be needed. But rules decided by whom? Invariably, those that make the rules end up controlling the system. Not exactly decentralised.
It’s not often we get to watch capitalism at work in a petri dish. And the accelerant of networks and social media will make this expected plot twist particularly edifying to watch.
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The reveal that several projects are contemplating launching an ICO on codebases incubated within the Hyperledger consortium is further evidence of the spread of non-ethereum ICOs…
The Sovrin Foundation, creator of the Hyperledger Indy codebase for digital identity management, is planning a crypto token launch this summer.
And PokitDok, a healthcare API platform exploring blockchains, is looking into launching an ERC20-based token on top of Sawtooth, another Hyperledger codebase. ERC20 is a template designed to simplify the issuance of digital tokens on ethereum – this is the first I’ve heard of it potentially being used on other blockchains.
While that in itself is fascinating, taking this forward, I’m intrigued as to what it could do for interconnectivity…
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by Christian Nagel, via Google Arts
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JP Koning sets out an excellent description of what a digital central bank currency could look like…
“Like banknotes, these digital tokens are anonymous and untraceable. To make use of them, people don’t have to register for an account. Rather, the tokens are held independently on one’s device, sort of like how paper money is held in one’s wallet without requiring any sort of registration with the issuing central bank.”
… why it wouldn’t destabilize the system…
“…imagine a world with digital currency. In the event of a panic, customer redemption requests will be instantaneously granted by the bank facing the run. But that same speed also works in favor of the bank, since a request to the central bank for a top-up of digital currency could be filled in just a few seconds.”
… and why it probably wouldn’t work.
“…what if there just aren’t that many people who care about online privacy? Countries like Sweden, where banknote usage is plummeting, give credence to this concern while surveys of cash users in the eurozone show that anonymity is not terribly important to them.”
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I’m far from a cryptocurrency maximalist, and am more interested in what blockchain’s can’t do than what they can, so it would be fair to think that I’m enjoying the growing chorus debunking the hype of both.
To some extent, yes, but I am now getting increasingly irritated by a new kind of hype: articles that decry blockchain’s futility and crypto’s lack of fundamentals, without understanding either. There are many smart realists out there (you’ll see me retweeting their stuff in approval). But as the hype cycle moves into the trough of disillusionment, others are jumping on the negative bandwagon without having the credentials or depth of knowledge to present arguments that hold up to either fact-checking or logical scrutiny. I’m not naming names because they don’t deserve the publicity – and that, more than reasoned debate, seems to be more what they’re interested in.
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Dramatic interior shots by Spanish artist Lino Lago – via Colossal