Tech people have a different sense of time than people outside of tech. Because their lives in tech are so dynamic and change (even if it is illusory) happens so fast, they apply this to history and think that an avalanche of big changes is about to sweep everything away. When it comes to institutions, history works slowly, and big changes in institutions, if rapid, often turn out not to have been as radical as they looked.
Intense belief in web3 doesn't reflect accurately the development of that technology, but rather disillusionment with the modern West.
I generally agree that web3 looks to me like a money grab scheme wrapped in a fancy marketing campaign, riding the crypto wave. But the closest I could think of to answering your question: “millions of active participants” What does that even mean? Is there a proof-of-concept anywhere?", was the Taiwan example Glen Weyl gave on econtalk, that the public digitally votes for their preferred solution, found here: https://www.econtalk.org/glen-weyl-on-antitrust-capitalism-and-radical-reform/. It still faces all the same political authority problems, but you now have the added benefit of ease of voting and experience, so participants can spend even less time considering the consequence of the voting outcome and more time feeling involved and informed, whatever that means.
You hit the nail on the head. To convince me of something like this, show me you understand what the “trade-off space” looks like, and why we ended up at the current point within that space. Then I’ll trust you when you explain how you plan to move within that space without making things worse on the other dimensions.
Given your support for competitive governance, I'm surprised at your skepticism, Arnold. Ultimately this is simply an argument for competitive governance, initially in the digital realm but eventually in the physical realm (Balaji is lead investor in Pronomos Capital, the leading VC fund investing in Startup Cities/Charter Cities).
There are entrepreneurs building various financial markets, prediction markets, secondary markets, insurance markets, etc. using the blockchain. There are others creating systems for incorporation, blockchain enable bylaws, diverse voting and governance systems, systems for tracking contributions of various kinds, metrics of various kinds, etc.
With respect to content moderation, you could design Arnold's FIT content moderation as a competing product vis-a-vis other content moderation systems. If media users prefer Arnold's FIT content moderation over others then you will gain market share. Would such a content moderation system be worse than that of FB? I would certainly trust your system over that of FB. Many of us would not want to be part of full on "unmoderated" networks dominated by Stormfront, Alex Jones, etc. thus there is a market for content moderation that doesn't censor the British Medical Journal (as FB recently did) but which does exclude a lot of nonsense. Why would a more competitive market in content curation be worse than the oligopoly we have at present?
Finally, we are likely to see a global market in new jurisdictions allowing meatspace correlates to the competitive governance in digital reality. Yes, the recent Honduran elections may have stalled or reversed progress in the Honduran ZEDEs, but there are dozens of other projects around the world moving forward. The fact is out of some 200 jurisdictions, most of which are poor, a growing number will welcome SEZs with distinctive law and governance, many of which will be crypto friendly.
Will the global elites try to limit what can go on there? For sure, and the OECD's global corporate tax "harmonization" is definitely pushing that way. But out of the 130 some signatories to the current tax harmonization proposal, how many will actually implement it? Will the OECD invade the remaining 70-100 jurisdictions which do not cooperate? Or simply try to sanction them? If there are big benefits for providing crypto havens for poor nations, some are likely to take advantage of these benefits. In November the crypto market cap was estimated at $3T, up from just a few hundred billion a year ago. For many poor nations, a small fraction of this counts as real money.
As fiat currencies continues to inflate, total crypto market cap is likely to continue to grow. If Bitcoin replaces the dollar as de facto reserve currency, then the total crypto market cap will become very significant.
The outcome is not certain either way, but Balaji's bet seems well worthwhile. Given the incompetence of nation states, I'm betting on Balaji's vision or something like it.
In other contexts, I used a phrase, "discourse in the shadow of the guillotine" and the term "pariah baiting" to make the point of how difficult and unfair it is to have an honest and public conversation about certain controversial topics when one side of a disagreement has no alternative but to step on a social landmine in order to make his case.
In such circumstances of compulsory light treading, it's not always easy to answer the question of what level of rigor it's fair to demand.
This topic has a similar problem. When someone starts talking seriously about ways to use these powerful new tools to get around the bad governance of nation-states, well, there's nothing inherently self-limiting in those tools that wouldn't allow those methods to also be useful to cross what are some very seriously intolerable red lines for any regime.
Because, if you really can replace 'governance', then you can replace *governments*.
Suddenly, it's a much more dangerous kind of conversation, especially now that throwing serious national security resources into rooting out domestic subversives is back in fashion.
Anyone think nation-states are just going to sit around and let that happen? "You come at the king, you best not miss." What Omar meant was: you only get one shot, and if you blow that opportunity, you're done.
And if you can't replace governments, then to the extent you replace governance for anything, it is only by the 'grace' (tolerance and revokable license) of current regimes. For example, there is a private and popular alternative to the judiciary in the arbitration system, but only because and to the extent of the state's permission. The implication of needing permission is that in terms of the grandest, state-substituting ambitions, the tools are good for nothing. They could only pay off when things are important enough that the state will certainly forbid the competition.
It's not clear to me whether Khanna and Srinivasan have gone all the way down the road in terms of seriously contemplating the logical implications of these ideas, though naturally, if they have, they would be wise in trying hard to make that unclear for everyone.
All that being said, and (hopefully) without exposing my own neck to the chopping block (any more than I already have in the past), I think the blockchain bros are indeed on to something and that there may indeed be a narrow window of opportunity to use these tools to take that one shot at government replacement, before the king gets wise enough to get ahead of the situation and prevent it from happening. The Chinese seem to grasp the issue and what they must do about it and are meeting it with the requisite degree of determination, but we do not and are not, yet.
Probably KS do not actually expect or want that to happen, but if it's possible, some people are going to try it, and if they try, whatever the final outcome, getting there is going to be unavoidably messy. The ultimate in "high risk, high reward"-level stakes.
Also, as if this wasn't obvious, but whatever emerges on the other side of that mess is *never* going to allow that kind of thing to ever happen again. So, if there's anything to the new hope of web3 in this regard, it'll be short-lived. Not as a substitute for current, bad nation-states, but crushed by the new and better nations-states it will have helped shepherd into existence.
"What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure."
"To answer the question of whether the blockchain is needed, ask yourself: Does the blockchain change the system of trust in any meaningful way, or just shift it around? Does it just try to replace trust with verification? Does it strengthen existing trust relationships, or try to go against them? How can trust be abused in the new system, and is this better or worse than the potential abuses in the old system? And lastly: What would your system look like if you didn’t use blockchain at all?"
Arnold, you ask: “ Is there a proof-of-concept anywhere?”
Yes, Bitcoin. It is a transnational store of value governed by the nodes that determine the Nakamoto Consensus. It is regulated by the NC. Those regulations are stronger and more consumer friendly than the Fed’s independence or any other rules the Fed abides by.
Bitcoin only gets stronger every year in its security and also with respect to the incentives governing the system.
Ethereum and other blockchain systems are now experimenting with using different forms of decision procedures for how nodes will govern. Some of their use cases may supplant current government services just as email replaced mail. It’s early days but we will see digital registries supplant meat space registries soon.
The optimistic case for web3 seems like a channeling/stabilizing of populist pressures. Rather than spasms of Gurrian revolt and reaction, we could tilt toward protocol-based collective action, where disparate publics could "agree" on protocols, not just rejection of the status quo. Governments and corporations would be forced to adapt and compete with this more robust form of populism.
But housing supply constraints are local and physical. Food prices seemed to play a role in the Arab Spring. And social issues like increased sorting and matching, polarization by education level, loss of community and of intermediating institutions, probably won't be helped by web protocols.
Maybe web3 efficiencies can help with health care and education costs. And maybe they will foster better funding of science and innovation.
Like Arnold indicated, lots of tradeoffs and it's really hard to predict how it might play out.
Tech people have a different sense of time than people outside of tech. Because their lives in tech are so dynamic and change (even if it is illusory) happens so fast, they apply this to history and think that an avalanche of big changes is about to sweep everything away. When it comes to institutions, history works slowly, and big changes in institutions, if rapid, often turn out not to have been as radical as they looked.
Intense belief in web3 doesn't reflect accurately the development of that technology, but rather disillusionment with the modern West.
"Your password to your e-wallet, or a bullet in the head- you choose."
I generally agree that web3 looks to me like a money grab scheme wrapped in a fancy marketing campaign, riding the crypto wave. But the closest I could think of to answering your question: “millions of active participants” What does that even mean? Is there a proof-of-concept anywhere?", was the Taiwan example Glen Weyl gave on econtalk, that the public digitally votes for their preferred solution, found here: https://www.econtalk.org/glen-weyl-on-antitrust-capitalism-and-radical-reform/. It still faces all the same political authority problems, but you now have the added benefit of ease of voting and experience, so participants can spend even less time considering the consequence of the voting outcome and more time feeling involved and informed, whatever that means.
You hit the nail on the head. To convince me of something like this, show me you understand what the “trade-off space” looks like, and why we ended up at the current point within that space. Then I’ll trust you when you explain how you plan to move within that space without making things worse on the other dimensions.
Given your support for competitive governance, I'm surprised at your skepticism, Arnold. Ultimately this is simply an argument for competitive governance, initially in the digital realm but eventually in the physical realm (Balaji is lead investor in Pronomos Capital, the leading VC fund investing in Startup Cities/Charter Cities).
There are entrepreneurs building various financial markets, prediction markets, secondary markets, insurance markets, etc. using the blockchain. There are others creating systems for incorporation, blockchain enable bylaws, diverse voting and governance systems, systems for tracking contributions of various kinds, metrics of various kinds, etc.
With respect to content moderation, you could design Arnold's FIT content moderation as a competing product vis-a-vis other content moderation systems. If media users prefer Arnold's FIT content moderation over others then you will gain market share. Would such a content moderation system be worse than that of FB? I would certainly trust your system over that of FB. Many of us would not want to be part of full on "unmoderated" networks dominated by Stormfront, Alex Jones, etc. thus there is a market for content moderation that doesn't censor the British Medical Journal (as FB recently did) but which does exclude a lot of nonsense. Why would a more competitive market in content curation be worse than the oligopoly we have at present?
Finally, we are likely to see a global market in new jurisdictions allowing meatspace correlates to the competitive governance in digital reality. Yes, the recent Honduran elections may have stalled or reversed progress in the Honduran ZEDEs, but there are dozens of other projects around the world moving forward. The fact is out of some 200 jurisdictions, most of which are poor, a growing number will welcome SEZs with distinctive law and governance, many of which will be crypto friendly.
Will the global elites try to limit what can go on there? For sure, and the OECD's global corporate tax "harmonization" is definitely pushing that way. But out of the 130 some signatories to the current tax harmonization proposal, how many will actually implement it? Will the OECD invade the remaining 70-100 jurisdictions which do not cooperate? Or simply try to sanction them? If there are big benefits for providing crypto havens for poor nations, some are likely to take advantage of these benefits. In November the crypto market cap was estimated at $3T, up from just a few hundred billion a year ago. For many poor nations, a small fraction of this counts as real money.
https://coinmarketcap.com/charts/
As fiat currencies continues to inflate, total crypto market cap is likely to continue to grow. If Bitcoin replaces the dollar as de facto reserve currency, then the total crypto market cap will become very significant.
The outcome is not certain either way, but Balaji's bet seems well worthwhile. Given the incompetence of nation states, I'm betting on Balaji's vision or something like it.
In other contexts, I used a phrase, "discourse in the shadow of the guillotine" and the term "pariah baiting" to make the point of how difficult and unfair it is to have an honest and public conversation about certain controversial topics when one side of a disagreement has no alternative but to step on a social landmine in order to make his case.
In such circumstances of compulsory light treading, it's not always easy to answer the question of what level of rigor it's fair to demand.
This topic has a similar problem. When someone starts talking seriously about ways to use these powerful new tools to get around the bad governance of nation-states, well, there's nothing inherently self-limiting in those tools that wouldn't allow those methods to also be useful to cross what are some very seriously intolerable red lines for any regime.
Because, if you really can replace 'governance', then you can replace *governments*.
Suddenly, it's a much more dangerous kind of conversation, especially now that throwing serious national security resources into rooting out domestic subversives is back in fashion.
Anyone think nation-states are just going to sit around and let that happen? "You come at the king, you best not miss." What Omar meant was: you only get one shot, and if you blow that opportunity, you're done.
And if you can't replace governments, then to the extent you replace governance for anything, it is only by the 'grace' (tolerance and revokable license) of current regimes. For example, there is a private and popular alternative to the judiciary in the arbitration system, but only because and to the extent of the state's permission. The implication of needing permission is that in terms of the grandest, state-substituting ambitions, the tools are good for nothing. They could only pay off when things are important enough that the state will certainly forbid the competition.
It's not clear to me whether Khanna and Srinivasan have gone all the way down the road in terms of seriously contemplating the logical implications of these ideas, though naturally, if they have, they would be wise in trying hard to make that unclear for everyone.
All that being said, and (hopefully) without exposing my own neck to the chopping block (any more than I already have in the past), I think the blockchain bros are indeed on to something and that there may indeed be a narrow window of opportunity to use these tools to take that one shot at government replacement, before the king gets wise enough to get ahead of the situation and prevent it from happening. The Chinese seem to grasp the issue and what they must do about it and are meeting it with the requisite degree of determination, but we do not and are not, yet.
Probably KS do not actually expect or want that to happen, but if it's possible, some people are going to try it, and if they try, whatever the final outcome, getting there is going to be unavoidably messy. The ultimate in "high risk, high reward"-level stakes.
Also, as if this wasn't obvious, but whatever emerges on the other side of that mess is *never* going to allow that kind of thing to ever happen again. So, if there's anything to the new hope of web3 in this regard, it'll be short-lived. Not as a substitute for current, bad nation-states, but crushed by the new and better nations-states it will have helped shepherd into existence.
Bruce Schneier on Blockchain and Trust:
"What blockchain does is shift some of the trust in people and institutions to trust in technology. You need to trust the cryptography, the protocols, the software, the computers and the network. And you need to trust them absolutely, because they’re often single points of failure."
"To answer the question of whether the blockchain is needed, ask yourself: Does the blockchain change the system of trust in any meaningful way, or just shift it around? Does it just try to replace trust with verification? Does it strengthen existing trust relationships, or try to go against them? How can trust be abused in the new system, and is this better or worse than the potential abuses in the old system? And lastly: What would your system look like if you didn’t use blockchain at all?"
https://www.schneier.com/blog/archives/2019/02/blockchain_and_.html
Arnold, you ask: “ Is there a proof-of-concept anywhere?”
Yes, Bitcoin. It is a transnational store of value governed by the nodes that determine the Nakamoto Consensus. It is regulated by the NC. Those regulations are stronger and more consumer friendly than the Fed’s independence or any other rules the Fed abides by.
Bitcoin only gets stronger every year in its security and also with respect to the incentives governing the system.
Ethereum and other blockchain systems are now experimenting with using different forms of decision procedures for how nodes will govern. Some of their use cases may supplant current government services just as email replaced mail. It’s early days but we will see digital registries supplant meat space registries soon.
The optimistic case for web3 seems like a channeling/stabilizing of populist pressures. Rather than spasms of Gurrian revolt and reaction, we could tilt toward protocol-based collective action, where disparate publics could "agree" on protocols, not just rejection of the status quo. Governments and corporations would be forced to adapt and compete with this more robust form of populism.
But housing supply constraints are local and physical. Food prices seemed to play a role in the Arab Spring. And social issues like increased sorting and matching, polarization by education level, loss of community and of intermediating institutions, probably won't be helped by web protocols.
Maybe web3 efficiencies can help with health care and education costs. And maybe they will foster better funding of science and innovation.
Like Arnold indicated, lots of tradeoffs and it's really hard to predict how it might play out.