I was at an event last night, where the moderator, Preeti Varathan from QZ observed that there seemed to be a lot of cynicism in the blockchain / crypto space — in other words, that the whole thing was essentially premised on a distrust of existing systems (fiat currencies, large internet companies, etc).
It’s an interesting and I would say correct observation, but it’s also not the whole story. In addition to the distrust angle, there is also an innovation angle (though it is related to the distrust angle), which I’ll get to at the end.
But to focus on this question of distrust: a few weeks ago, I was in Amsterdam for the TNW conference, doing a number of things on their “hard fork” track for crypto/blockchain projects. Two conversations stood out:
First was David Schwartz from Ripple, who gave what I thought was a fantastic and clear introduction to cryptosystems — David’s main point was that cryptonetworks are about fairness. You set the rules (in code) and once they are set, everyone plays by them on even footing. No one has the ability to rig the system once it is up and running.
If this sounds a lot like a description of democracy and the rule of law, I think that’s intentional. The framers of the United States had very similar goals — escaping a system that felt “rigged” and set up a rules-based system that had decentralization (3 branches of government, federal vs states, house vs senate, etc) and checks and balances built in.
So why is there a pressing need for fairness (in money, in tech platforms) today? The original bitcoiners were escaping what they saw as unfair depreciation of fiat currency due to inflation — they were digital gold bugs who wanted a real store of value. Beyond that, there is a generation of application developers who don’t trust the platforms they are building on — developers have a keen appreciation of power dynamics and know when they are getting screwed. And beyond that, there is an even larger macro distrust and erosion of institutions brewing — for example I hope that the US can hold on to its own (relatively) fair, rules-based system of governance, but that seems as threatened as ever. So there are plenty of reasons to be cynical and distrusting, both of traditional finance, technology and government.
On to the second conversation was that same day, at dinner with a number of Dutch citizens. One gentleman made the point that “life is pretty good here, and we like our centralized institutions”. Anyone who’s been to Amsterdam can probably relate. Here is a picture from near where we were staying:
It’s ridiculously beautiful and every time I’m there I am struck by how happy the Dutch seem to be — cruising canals by boat, riding bikes everywhere, healthy chubby babies in tow. Even their teenagers are happy. I am obviously being flip here, but the point is — when things are good, or seem to be good, there’s little perceived need to change the system.
To the last point about innovation: the thing that I am most excited about here (and I think I speak for most of us at USV) is what a decentralized asset/contract/data layer means for innovation. Because cryptosystems are open source, extensible and forkable by default, and because they operate on rules-based systems without arbitrary centralized control, we now have a wide open environment for innovation, both at the infrastructure and the application layers. We are still so early in seeing what that will actually mean in terms of services that business and consumers can actually use, but we are building a very exciting foundation.