<story><title>“In 2018 the blockchain/decentralization story fell apart”</title><url>https://twitter.com/random_walker/status/1079759096272818178</url></story><parent_chain><item><author>mathnmusic</author><text>&amp;gt; history doesn&amp;#x27;t favor distributed power&lt;p&gt;In that case, why do we have ~200 nations instead of a single world government? Clearly, sovereignty matters to groups of people.&lt;p&gt;&amp;quot;Sovereignty of &lt;i&gt;money&lt;/i&gt; does not matter to LARGE groups of people&amp;quot; - might be a more defensible argument.</text></item><item><author>AndrewKemendo</author><text>As I mentioned in the Twitter thread, my chief criticism of cryptocurrency since the beginning is it&amp;#x27;s naivete of the history and politics of money.&lt;p&gt;The discussions about economics applied here focus too much on microeconomic rather than macroeconomic arguments. So they end up missing the point entirely which is this:&lt;p&gt;Money isn&amp;#x27;t a neutral instrument and it&amp;#x27;s not something that can be decoupled from societal&amp;#x2F;political concepts and structures.&lt;p&gt;You can evaluate it as though it is neutral, but it has not ever been and will never be a neutral instrument because of the historical tendency for resources to pool and therefore become power centers, among other things.&lt;p&gt;Therefore if you view cryptocurrency as having the primary intention to de-couple commerce from coercive power structures [1], then you&amp;#x27;ll see immediately the historical problem. Namely, history doesn&amp;#x27;t favor distributed power, especially not when it can easily be co-opted by the powerful systems in which they rely.&lt;p&gt;In the best case scenario for crypto-utopians, millions of people transact and do commerce on a decentralized currency. In that case, whatever sovereign is most impacted, will then either outlaw commerce by crypto by force or require parity with the sovereign currency and control of the crypto currency through tax payments. This has happened multiple times over the centuries with alt-currencies and they are killed off by the most powerful (see: Most powerful economy&amp;#x2F;military) organization.&lt;p&gt;Politically, there is nothing different about Bitcoin than there was with the confederate states dollar for example.&lt;p&gt;[1] From the original whitepaper: &amp;quot;What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.&amp;quot; &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;bitcoin.org&amp;#x2F;bitcoin.pdf&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;bitcoin.org&amp;#x2F;bitcoin.pdf&lt;/a&gt;</text></item><item><author>randomwalker</author><text>OP here. A small clarification: there are some legitimate criticisms of the Register piece that I cited in the first tweet, but I merely cited it as an example of why I think the hype is calming down. The arguments I make are independent of that piece; the limitations I point out have always been there, rather than something new that happened in 2018.&lt;p&gt;I also wanted to add a couple of points that I didn&amp;#x27;t get to in the Twitter thread.&lt;p&gt;&lt;i&gt;Economics.&lt;/i&gt; Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the &amp;quot;cryptoeconomics&amp;quot; hype is misplaced.&lt;p&gt;&lt;i&gt;Privacy.&lt;/i&gt; It&amp;#x27;s often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we&amp;#x27;ve learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the &amp;quot;decentralization ==&amp;gt; privacy&amp;quot; story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain&amp;#x2F;dApps that are being built today.&lt;p&gt;[1] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;faculty.chicagobooth.edu&amp;#x2F;eric.budish&amp;#x2F;research&amp;#x2F;Economic-Limits-Bitcoin-Blockchain.pdf&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;faculty.chicagobooth.edu&amp;#x2F;eric.budish&amp;#x2F;research&amp;#x2F;Economi...&lt;/a&gt;&lt;p&gt;[2] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;bfi.uchicago.edu&amp;#x2F;events&amp;#x2F;cryptocurrencies-and-blockchains&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;bfi.uchicago.edu&amp;#x2F;events&amp;#x2F;cryptocurrencies-and-blockch...&lt;/a&gt;&lt;p&gt;[3] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;randomwalker.info&amp;#x2F;publications&amp;#x2F;critical-look-at-decentralization-v1.pdf&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;randomwalker.info&amp;#x2F;publications&amp;#x2F;critical-look-at-decen...&lt;/a&gt;</text></item></parent_chain><comment><author>michaelchisari</author><text>&lt;i&gt;In that case, why do we have ~200 nations instead of a single world government? Clearly, sovereignty matters to groups of people.&lt;/i&gt;&lt;p&gt;Italy alone used to be a dozen+ independent city states.  Divided the world 200 ways seems like a lot unless you look at how much it&amp;#x27;s been divided historically.  And in comparison, that&amp;#x27;s extremely centralized.</text></comment>
<story><title>“In 2018 the blockchain/decentralization story fell apart”</title><url>https://twitter.com/random_walker/status/1079759096272818178</url></story><parent_chain><item><author>mathnmusic</author><text>&amp;gt; history doesn&amp;#x27;t favor distributed power&lt;p&gt;In that case, why do we have ~200 nations instead of a single world government? Clearly, sovereignty matters to groups of people.&lt;p&gt;&amp;quot;Sovereignty of &lt;i&gt;money&lt;/i&gt; does not matter to LARGE groups of people&amp;quot; - might be a more defensible argument.</text></item><item><author>AndrewKemendo</author><text>As I mentioned in the Twitter thread, my chief criticism of cryptocurrency since the beginning is it&amp;#x27;s naivete of the history and politics of money.&lt;p&gt;The discussions about economics applied here focus too much on microeconomic rather than macroeconomic arguments. So they end up missing the point entirely which is this:&lt;p&gt;Money isn&amp;#x27;t a neutral instrument and it&amp;#x27;s not something that can be decoupled from societal&amp;#x2F;political concepts and structures.&lt;p&gt;You can evaluate it as though it is neutral, but it has not ever been and will never be a neutral instrument because of the historical tendency for resources to pool and therefore become power centers, among other things.&lt;p&gt;Therefore if you view cryptocurrency as having the primary intention to de-couple commerce from coercive power structures [1], then you&amp;#x27;ll see immediately the historical problem. Namely, history doesn&amp;#x27;t favor distributed power, especially not when it can easily be co-opted by the powerful systems in which they rely.&lt;p&gt;In the best case scenario for crypto-utopians, millions of people transact and do commerce on a decentralized currency. In that case, whatever sovereign is most impacted, will then either outlaw commerce by crypto by force or require parity with the sovereign currency and control of the crypto currency through tax payments. This has happened multiple times over the centuries with alt-currencies and they are killed off by the most powerful (see: Most powerful economy&amp;#x2F;military) organization.&lt;p&gt;Politically, there is nothing different about Bitcoin than there was with the confederate states dollar for example.&lt;p&gt;[1] From the original whitepaper: &amp;quot;What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.&amp;quot; &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;bitcoin.org&amp;#x2F;bitcoin.pdf&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;bitcoin.org&amp;#x2F;bitcoin.pdf&lt;/a&gt;</text></item><item><author>randomwalker</author><text>OP here. A small clarification: there are some legitimate criticisms of the Register piece that I cited in the first tweet, but I merely cited it as an example of why I think the hype is calming down. The arguments I make are independent of that piece; the limitations I point out have always been there, rather than something new that happened in 2018.&lt;p&gt;I also wanted to add a couple of points that I didn&amp;#x27;t get to in the Twitter thread.&lt;p&gt;&lt;i&gt;Economics.&lt;/i&gt; Blockchain technologists seem to overestimate the extent to which new insights in economics are needed to understand cryptocurrencies and blockchains, as opposed to applying basic principles from economics and game theory. For example, a recent paper shows that thinking about miners and attackers in terms of stock and flow exposes important limitations of the security of Proof of Work. [1] I learnt of many other such examples at a recent conference on the economics of blockchains. [2] So I think a lot of the &amp;quot;cryptoeconomics&amp;quot; hype is misplaced.&lt;p&gt;&lt;i&gt;Privacy.&lt;/i&gt; It&amp;#x27;s often taken for granted that decentralized architectures will improve privacy. This seems obvious given everything we&amp;#x27;ve learnt about Facebook, but a better way to think about it is that decentralized systems exchange one set of privacy problems with another. I coauthored a paper a few years ago skeptical of the &amp;quot;decentralization ==&amp;gt; privacy&amp;quot; story in the context of social networks [3], but I think many of the arguments in that paper apply to blockchain&amp;#x2F;dApps that are being built today.&lt;p&gt;[1] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;faculty.chicagobooth.edu&amp;#x2F;eric.budish&amp;#x2F;research&amp;#x2F;Economic-Limits-Bitcoin-Blockchain.pdf&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;faculty.chicagobooth.edu&amp;#x2F;eric.budish&amp;#x2F;research&amp;#x2F;Economi...&lt;/a&gt;&lt;p&gt;[2] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;bfi.uchicago.edu&amp;#x2F;events&amp;#x2F;cryptocurrencies-and-blockchains&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;bfi.uchicago.edu&amp;#x2F;events&amp;#x2F;cryptocurrencies-and-blockch...&lt;/a&gt;&lt;p&gt;[3] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;randomwalker.info&amp;#x2F;publications&amp;#x2F;critical-look-at-decentralization-v1.pdf&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;randomwalker.info&amp;#x2F;publications&amp;#x2F;critical-look-at-decen...&lt;/a&gt;</text></item></parent_chain><comment><author>AndrewKemendo</author><text>&lt;i&gt;~200 nations instead of a single world government&lt;/i&gt;&lt;p&gt;The long run trend is very obviously toward a single government. Consider that until the Sumerians established cities less than 7000 years ago, humanity was just thousands small traveling groups of nomads with no defined borders.&lt;p&gt;Sovereignty gets a lot of lip service, but in practice most people don&amp;#x27;t really want it. It&amp;#x27;s a lot of work.</text></comment>