Trust and fairness

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.

12 comments on “Trust and fairness”

nice photo. dreamy.

the irony of the crypto scene is that so many of the people in it do not trust each other, and that’s because they do not tell the truth to each other.

the irony of Ripple is that the founders are reported to control more than half of the ‘equity’ in the network. if true (as in truth) i don’t see how the value of fairness can bloom, in Amsterdam or anywhere else.

yeah I intentionally didn’t get into that and am aware of these issues / criticisms. i was actually quite impressed by david schwartz despite those issues. but fair point

they are the difficult conversations to have. they are the easiest to skirt around. the greatest understanding though comes after learning how to broach those issues. diplomacy.

You get an F on history, Nick. The US is not governed by a “decentralized” system of three co-equal branches.

In fact, the “several States” centralized the power of the Federal government in order to form a “more perfect union.” The combination of the states – post the American Revolution – was adrift as the Constitution was being drafted until Alexander Hamilton floated the idea of the states pushing their individual debts up to the fledgling Federal government.

When the US Treasury assumed all state war debt, it became the glue which held the several States together. It was not just the assumption of the debt but a central financial capability (the US Treasury) which could conduct the financial business of this new Union which made it work.

A good read is Ron Chernow’s books on Washington and Hamilton – 1,000 pages each in small type – which describe this painful and painstaking ordeal in infinite detail. They are the best explanations I have ever read of where the US came from and how men like Washington and Hamilton did it.

BTW, we were funded by a series of tariffs, customs fees, and war fundings until 1913 when the income tax was enacted.

One big flaw in the “all crypt all the time” view of things is the notion that real people don’t trust their intermediaries. I, personally, totally trust WFB, USAA, Schwab to name a few. I not only don’t “mistrust” them, but I trust them and want them in the deal.

Good thoughts. Keep it up, but check your history “6.”


The US Constitution is the document by which the states empower the Federal government to undertake certain things they cannot do for themselves – such as national defense. It also empowers the Feds to regulate interstate commerce.

Powers not specifically given to the Feds are reserved to the “several States” which has been the bone of contention in the growth of the Federal gov’t.

We are the “United States” which is a reflection of geography, culture, laws (as an example the State of Louisiana has its own body of law based on Napoleonic Code), and ethnic mix.

The USA is a huge landmass and the notion of governing it from a single point of power is not workable.

State government overseas counties, which oversee cities/townships/freeholds. There is a logical hierarchy of governance. Much of it was determined by how far a man could travel on a horse and how tough it was to cross a natural barrier like rivers and mountains. [And, in places like Texas, how fierce the Indians enroute were.]

We fought a bloody war to maintain that union and suffered a 50 year period of Reconstruction thereafter. In many ways, we have still not recovered from the Civil War.

It is a very difficult undertaking to understand how the original yearnings of the Founding Fathers became the country we are today. This is why the Constitution – which took almost a decade to write – is such an important document and why the SCOTUS is such an important institution.

Things might have been very different if Geo NMI Washington has just agreed to be King.


it was an admittedly hand-wavy statement – just trying to point out the historical context of not having 100% centralized control – point taken

One big flaw in the “all crypto all the time” view of things is the notion that real people don’t trust their intermediaries.

Similar to what I wrote (prior to reading what you wrote).

The original bitcoiners were escaping what they saw as unfair depreciation of fiat currency due to inflation

Inflation is necessary and can be good as it drives the economy and forces people to spend money on goods and services. Not going to get into economics (not my area even though my degree is in economics) but honestly it seems very busy body for a regular person off the street (‘bitcoiners’) to be concerned with ‘depreciation of fiat currency’. That to me sounds like some kind of a bs cover story (have to use those words it’s what I think). Being older than you and having lived and started several businesses and always making money I don’t ever think about any of that. All I think about is making as much as I can doing what I do. I focus on that. I don’t even focus on moving money around to different bank accounts to gain marginal increases in interest. Time better spent on what you can make real money on.

I have been around long enough to remember when my Dad told me that Nixon froze wages.

So my Dad couldn’t give raises. How did he work around it? He just gave people a new job title which came with a higher wage.

So there are plenty of reasons to be cynical and distrusting, both of traditional finance, technology and government.

I think in this day and age (and it has always been the case and more so now) you have to worry about doing things that are a benefit to you and not about the group or some higher purpose or goal. Once again perspective from having been around many years and see many things. Nobody is going to clean up the mess for you, bail you out, or pay your health insurance bill or your rent. Might feel nice to do good but not going to pay bills or for your kids college education. (You are not saying this just my commentary on how some people spend their time trying to change their world and not thinking about themselves survival wise).

This last paragraph which lacks empathy for other parties and a world where everyone only cares for their own well-being is not one I want to be a part of. You choose the future you want to live with…

Comments are closed.