Thoughts from Eugene Volokh on implications for financial privacy.
It’s frightening to think that a moron like Sotomayor might be making a decision on a topic like this.
[Bumped]
5 thoughts on “Web3”
The jury is still out, but as with most things it appears that centralization and efficiency are a tradeoff. Most blockchains give lip service to decentralization and spin good stories about hash or stake distribution, but then they do pre-mines for insiders and force regular hard forks.
The real question you have to ask is “whose throat can you choak?” Can your blockchain resist a demand from a major investor or founding coder? A leveraged corporate or sovereign takeover? A cease and decist letter from a state AG? A reasonable number of FISA warrants? A major nation-state ban? An international treaty? And are its incentives pushing it to be more or less centralized over time? Is hash or staking power likely to concentrate or disperse? It’s very difficult (maybe impossible) to engineer a global system whose Nash equilibrium is not eventually “both prisoners sing.” Doesn’t mean some options arr way better than what we have (the act of attaching value directly to data is a big step forward) but do your homework.
Blockchain isn’t the only way to do decentralized. It isn’t even really a good way unless the application requires consensus among a large number of independent parties. The other way involves people running independent servers, each doing their own thing. Which introduces other complications with existing current ‘Net access arrangements.
peterh, I agree. There’s an argument in the space that store and transfer of monetary value is the only legitimate use of a blockchain. If that is the case then the Schelling point is to end up with one or at most a handful of cryptocurrencies with large market share. Everything else can be done in TOR/bitorrent styled distributed apps, and you just use one of the major currencies to pay for the subservices (ie, a distributed video app might stream satoshis in exchange for content, hard drive space, or bandwidth). The proprietary tokens used by a lot of these services now is more akin to a casino chip, or airline miles. Which, sure, you can cash them out to the real thing, but why add the extra step at all unless you’re trying to screw your users at the margin?
Years ago, I did some research and figured out bitorrent users owe me $20mln. Now I’m in favor of making the Internet pay-to-play.
Regarding the privacy angle – popular blockchains range from questionable to scary… but central bank digital currencies are absolutely terrifying. Best description I’ve heard for them is “panopticoins”. Think personalized interest rates and expiring cash based on your wealth or spending habits, restricted purchasing based on your lifestyle or political profile, and data mining with access to every single purchase you make. If we weren’t living through an extended worldwide Milgram experiment, I might be inclined to think the obvious horror of CBDCs will drive people into mass adoption of more anonymous options, but I suspect this is not the case.
The jury is still out, but as with most things it appears that centralization and efficiency are a tradeoff. Most blockchains give lip service to decentralization and spin good stories about hash or stake distribution, but then they do pre-mines for insiders and force regular hard forks.
The real question you have to ask is “whose throat can you choak?” Can your blockchain resist a demand from a major investor or founding coder? A leveraged corporate or sovereign takeover? A cease and decist letter from a state AG? A reasonable number of FISA warrants? A major nation-state ban? An international treaty? And are its incentives pushing it to be more or less centralized over time? Is hash or staking power likely to concentrate or disperse? It’s very difficult (maybe impossible) to engineer a global system whose Nash equilibrium is not eventually “both prisoners sing.” Doesn’t mean some options arr way better than what we have (the act of attaching value directly to data is a big step forward) but do your homework.
Blockchain isn’t the only way to do decentralized. It isn’t even really a good way unless the application requires consensus among a large number of independent parties. The other way involves people running independent servers, each doing their own thing. Which introduces other complications with existing current ‘Net access arrangements.
peterh, I agree. There’s an argument in the space that store and transfer of monetary value is the only legitimate use of a blockchain. If that is the case then the Schelling point is to end up with one or at most a handful of cryptocurrencies with large market share. Everything else can be done in TOR/bitorrent styled distributed apps, and you just use one of the major currencies to pay for the subservices (ie, a distributed video app might stream satoshis in exchange for content, hard drive space, or bandwidth). The proprietary tokens used by a lot of these services now is more akin to a casino chip, or airline miles. Which, sure, you can cash them out to the real thing, but why add the extra step at all unless you’re trying to screw your users at the margin?
Years ago, I did some research and figured out bitorrent users owe me $20mln. Now I’m in favor of making the Internet pay-to-play.
Regarding the privacy angle – popular blockchains range from questionable to scary… but central bank digital currencies are absolutely terrifying. Best description I’ve heard for them is “panopticoins”. Think personalized interest rates and expiring cash based on your wealth or spending habits, restricted purchasing based on your lifestyle or political profile, and data mining with access to every single purchase you make. If we weren’t living through an extended worldwide Milgram experiment, I might be inclined to think the obvious horror of CBDCs will drive people into mass adoption of more anonymous options, but I suspect this is not the case.