Of Delusionists and Blochaters

For every popular phenomenon there is an equal and opposite group of detractors. This creates a positive feedback loop where the promoters become more fervent in their support as the detractors become more fervent in the opposite, and vice versa. This leaves us with two irrational groups.

Blockchain is no different. The delusionists on one side frothing at the mouth that blockchain will change everything, can be used for everything, and oh, many of them are financially invested so they are less concerned with the truth and more concerned with pumping their portfolio. On the other side are the blochaters, who have been pushed so far into the detractor camp by the delusionists that they dismiss the technology all together. Kai Stinchcombe is one of these blochaters, and he has written two excellent posts that many are rallying around because they are sick and tired of hearing the buzzword bullshit. I mostly agree with Kai but his second post makes two points that I’d like to respectfully attack. Kai writes:

“Blockchain systems are supposed to be more trustworthy, but in fact they are the least trustworthy systems in the world. Today, in less than a decade, three successive top bitcoin exchanges have been hacked, another is accused of insider trading, the demonstration-project DAO smart contract got drained.”

This isn’t fair. It’s not the blockchain systems that have been compromised, it’s the infrastructure built around them that have been compromised, i.e. the non blockchain parts. Bitcoin has existed for almost a decade and it has not been directly compromised once. That is a fantastic feat for a system that exists on the internet and is owned collectively by people all over the world. Yes, keys have been stolen, wallets have been drained, but the protection of private keys is outside the scope of the Bitcoin network. As for the DAO smart contract bug, that wasn’t an issue with Ethereum itself, that was an issue with the contract written on top of Ethereum. Companies worth billions of dollars are getting hacked on a regular basis, but that isn’t a problem with the internet, that’s a problem with the company’s security practices.

As for the second point I take issue with, Kai writes:

“A lawless and mistrustful world where self-interest is the only principle and paranoia is the only source of safety is not a paradise but a crypto-medieval hellhole.”

Brother, this is the world we already live in. Don’t let the shower twice a day and nifty technology fool you, humans are running on caveman software and we are all one week of no food away from destroying each other. 75 years of peace without a major war is not the result of a global morality boost, it is the result of mutually assured destruction. What has kept the peace is not that we trust each other more as a species, it’s that nations have guns pointed at each others collective heads. What an irony that the greatest weapon ever created has made war obsolete. Nations have a self interest to avoid war at all costs and miners have a self interest to follow the rules of the network or face financial loss. It is this very threat of loss that keeps both nations and blockchain networks well behaved.

The great innovation of blockchain technology is that consensus can be reached among parties that don’t trust each other individually, but are able to trust each other collectively- without an overseer. This is not only a huge technological feat, but a social one. The only previous technology that has come close to this is the BitTorrent protocol. Blockchain is in its infancy. It is a solution looking for a problem. I can’t tell you exactly what problems it will find, only that I’m optimistic it will find them. And no, IBM hasn’t found the problem either. Besides the fact that blockchain only complicates supply chain management, a company pushing its own blockchain system is backwards and removes its main selling point- decentralization. I’ll leave you with this from Benedict Evans (whose newsletter I recommend):

“You can believe both that crypto is full of delusional utopian lunatics saying stuff that’ll never happen and that it’s a profound technology that will change the world. That’s what talking about the internet was like in 1994.”