I have no doubt that the future will be different. Whether we'll make it a utopian or dystopian future, however, is up to us. Either way, blockchain technology has a role to play. Photo by Jiroe on Unsplash.
I left a career in traditional finance because my work there was not making the world a better place. I later joined the blockchain industry because it really has potential to do enormous good. When I began contributing to Ethereum, I had a vision of what this could look like, and that vision became clearer over the following several years.
I’ve alluded to this vision in other places, but I thought it would be nice to post it here as one clear, concise list.
This is my vision for what blockchain, Web3, cryptography, and decentralized technology in general has the potential to become and the ways in which it has the potential to make the world a better place.
Better institutions. We live in a world where the companies we do business with, our leaders, and our institutions lie to us all the time. There are many reasons for this, but the biggest structural reasons are poor governance, misalignment of incentives, and a lack of transparency and accountability. Blockchain and cryptoeconomics offer a novel set of tools that can be used to address each of these. These tools can be used to build better institutions that are transparent and accountable by design, and that have governance mechanisms that are an order of magnitude more open and participatory than the institutions that exist today.
Concrete example: a DAO that fundraises, manages funds, and allocates resources. Its actions, resources, membership, and spending are all fully transparent, as are the rules for joining, voting, etc.
Verifiability. Blockchain is often referred to as a “trustless” technology because you don’t need to trust intermediaries or institutions such as banks and governments in order to trust the contents of the ledger. The term is somewhat misleading since, in practice, you are really just placing your trust elsewhere: in software, algorithms, and cryptography rather than in institutions. However, the point remains that you can, theoretically, independently verify every bit of data that comes your way in blockchain and Web3 applications. If you read and understand the code underlying the protocol, or are able to rely on someone else that does, you can have a high degree of confidence that what you see is the truth, and the whole truth, something that is impossible with legacy institutions such as firms, banks, and governments. This makes transparency and accountability much easier, and is a critical building block for the better institutions described in the previous bullet point.
Concrete example: a nonprofit organization that holds all of its funds in an on-chain wallet account that is publicly visible. All contributions flowing into the account and all expenses flowing out appear as on-chain transactions and can be reconciled against the organization’s official accounting statements. The same can be done for governance: all voting members hold a vote token, and all votes are recorded and verifiable on-chain.
More open data. The story of consumer apps and the consumer Internet over the past twenty years has been a story of walled gardens and of tech giants accumulating as much data as possible in proprietary data stores. These firms have made it extremely difficult to extricate and share data across apps and services. Since the firms with the most data have the biggest advantage in developing artificial intelligence and machine learning, this trend will only continue. By contrast, Web3 technologies are open by design. Data is structured and hosted in a self-sovereign, user-centric fashion, rather than in a corporate-centric fashion. It can be exchanged using open protocols and common APIs. As a result applications built on Web3 infrastructure are composable: each can permissionlessly build on top of, and access the data of, existing applications, making innovation much easier and rent seeking much harder. This will result in applications with far better functionality, usability, and privacy than their Web2 counterparts.
Concrete example: there will be no need to export your data from the apps and services that you regularly use. You’ll control all of your data by default. You’ll have an encrypted, personal data store with an OAUTH-like API for granting specific, discrete modes of access to specific applications for specific purposes for specific periods of time, revocable at any time.
Better privacy. As data becomes more and more valuable, the importance of giving users control of their data cannot be overstated. While most blockchain transactions are public today, Web3 offers the promise of a future where participants in the digital ecosystem will have full sovereignty over their data. We’ll be able to choose precisely what to share, how and when it’s shared, and which people, organizations, and applications we want to share with. This will enable novel social and economic ideas such as data unions and other forms of participatory value creation, and will help prevent exploitation of consumers and their data by firms and governments.
Concrete example: you’ll have multiple identities and use each for a different purpose. For instance, you’ll communicate with close friends and family using your legal name and actual photo, but you’ll participate in other online communities such as games, and communities that pay you for your work and data, using various identities and pseudonyms. Each of these identities will be totally indistinguishable from a unique, real person. You’ll use a piece of software, an “identity manager” application, to manage, secure, and back up these identities, to maintain a clean separation among them, and to share different sets of data with different applications for different purposes.
Easy entry and exit. Every day each of us participates and transacts as part of many networks, from the organizations we work for and the schools we attend to the places we shop, our financial institutions, and our local and national governments. Accessing and participating in these networks often requires identification, or that we live in a certain place, or that we pay high fees. Because of these and other barriers, it’s often difficult and expensive to join these networks, and as a result, many potential participants are excluded. What’s more, each of these networks is a hierarchy, with a small number of parties entrenched at the “root” of the network collecting rents from everyone else. By contrast, for the first time, cryptographic networks like blockchains and the applications built on them are open, allowing anyone, anywhere with an Internet-enabled device to participate and transact in networks of value creation and exchange as peers rather than as second-class citizens. In these networks, influential actors will be unable to extract unreasonable rents from other participants because, if they try, those participants will fork the network or exit it entirely, at little cost.
Concrete example: a blockchain and cryptocurrency-based financial institution that anyone, anywhere with access to a smartphone or PC can participate in without needing identification or special skills. Participants can not only open accounts and transfer funds, they can launch their own applications and sell services on the platform.
Permissionless innovation. Permissionless innovation means that we are free not only to transact passively, but to participate in a network in more active ways such as designing, building, and launching products, services, and businesses on the network. Because today’s networks of value creation and exchange aren’t open—because they’re controlled by firms, governments, and other closed organizations—building innovative things on top of them is difficult, expensive, and often outright impossible. When it is possible, we are subject to the whims of the organization in charge and have to play by their rules, which are generally one-sided and extractive. If we deviate from these rules, we are likely to be sanctioned or censored.1 The thing is, no matter how many smart, motivated people work for Apple, Google, or any other firm that controls such a network, there are by definition more smart, motivated people outside the firm, so opening up networks to innovation on the part of anyone, anywhere, without requiring registration or paperwork vastly increases the scope for innovation big and small. Open source, open data, and open, permissionless networks achieve this in a way that the traditional corporations and their shareholders cannot.
Concrete example: an open, permissionless network such as Ethereum where anyone is free to deploy any application at any time, without registration or permission, and all users and applications can interact with all other users, applications, and data.
Censorship resistance. In an era of cancel culture and arbitrary, unilateral censorship on the part of large, unaccountable tech firms, censorship resistance is more important than ever. It’s essential that we have base layer infrastructure that allows both data and value to flow unimpeded and that cannot be captured, controlled, or censored by any individual actor or cartel of colluding actors.2 One important effect of censorship resistance is that it prevents incumbents—be they firms, political parties, or simply powerful individuals—from controlling access to the network and what others can see and do. In theory, all humans should have equal access to the network; in practice guaranteeing this is quite hard.3 Web3 applications and networks like blockchains enable censorship resistance through decentralization.
Concrete example: A decentralized Twitter with no central operator with the power to censor or ban platform users. Rather than outright bans, communities build and offer robust tools for sorting and filtering content, with many sets of whitelists and blacklists that one can subscribe to in order to see content they wish to see, and to avoid content they wish to avoid.
More robust digital communities. Facebook boasts hundreds of millions of user groups and hundreds of millions of users in groups “that they find meaningful.”4 However, in practice, Facebook enables those groups to do very little beyond messaging, sharing images, and planning events. By contrast, the advent of blockchain, Web3, cryptocurrency, smart contracts, and DAOs enables communities to develop far more robust tools for marketing, communicating, transacting, and governing themselves. As a result, over time the lines between a “community” and a “firm” will begin to dissolve. Communities that form around games and hobbies will more readily evolve into networks that generate and share value, benefiting both their own members and consumers.
Concrete example: A community and discussion forum for rideshare drivers who, fed up with Uber and Lyft, develop a guild and ultimately their own rideshare service to compete with the incumbents.
Lower transaction fees. Many types of transactions today are expensive and cumbersome, such as negotiating legal contracts, establishing a corporate identity, and sending funds internationally. One of the most exciting and powerful things about blockchain and smart contracts is the degree to which they can reduce these transaction costs. Past technologies such as telegraph, telephone, the Internet, the automobile, the highway system, air travel, free trade, and containerization (the non-digital variety) massively reduced the costs associated with moving goods, people, capital, and information, enabling new sorts of businesses and leading to an explosion in value creation. In much the same fashion, Web3 and its enabling technologies will further reduce costs and lead to even greater value creation over time, making it far easier and cheaper to organize and scale human endeavor.
Concrete example: Several active members in a gaming community establish a DAO to fundraise from the community to launch a new product. They would not have been able to do this without blockchain, as they live in a variety of countries and it would have been too costly and cumbersome to establish a firm in one of them. What’s more, they can use a multisig wallet and don’t need to trust any one member with the gathered funds.
Better money. Bitcoin and other cryptocurrencies offer a radical departure from the monetary and fiscal policy regimes of the fiat currencies we use day to day. While most of the world’s central banks are in the midst of issuing an unprecedented amount of new money as a form of economic stimulus in the wake of the Covid-19 pandemic, and heterodox theories of monetary policy such as MMT are gaining currency, the Bitcoin school of thought posits that the world needs a form of “sound money” with rigid monetary policy that’s beyond the reach of any central bank. I remain personally unconvinced by this argument, but there is a case to be made for money that cannot be radically inflated and debased unilaterally by incompetent, corrupt, unaccountable regimes: ask any resident of Zimbabwe, Greece, Argentina, Venezuela, or North Korea if it’s not immediately clear why. Cryptocurrency is unlikely to replace fiat money anytime soon, but it offers a viable alternative, and choice is important, if only because it introduces competition, removes governmental monopoly on issuing currency, and keeps those in power honest.
Concrete example: Many DAOs and other communities choose to issue community currencies with many different forms of monetary and fiscal policy. Major, widely-accepted cryptocurrencies like bitcoin continue to function as a numeraire, but over time, as these communities mature and expand and trade with other communities, trading leagues and currency blocs form, catering to the needs and values of particular communities. Network users are free to store their assets in whichever currency they prefer, or whichever is most convenient for their use cases.
What’s missing from this list? Leave a comment and let me know.
[I’m very grateful to Shahar Sorek and Tomer Afek for invaluable pre-publication feedback.]
The most illustrative recent example is the feud that several developers, most notably Epic Games, have been having with Apple over the “substantial cut” that Apple takes when apps use its in-app purchase framework. Epic and other developers believe that Apple is exploiting its “monopoly” over the app store and payment processing. ↩
Note that this does not mean that everyone that uses the network needs to be exposed to everything it contains: individual communities are free to sort and filter base layer content however they like. But they should not be able to prevent others from generating, receiving, or accessing transactions and content. ↩
This is more of an ideal than something achievable in practice. It’s a bit like universal suffrage. In theory, everyone has the right to vote. In practice, disadvantaged communities always have trouble voting: they may not be able to take time off work, they may not have reliable transportation to the polling place, or they may be disenfranchised for a host of other reasons. Access to a network is no different. In some cases, passively guaranteeing access is not enough; we may need to take more active measures to ensure access. ↩