The road to hell: misplaced optimism in the blockchain space
Simply transferring data & computation from "the cloud" to "the blockchain" doesn't inherently provide any additional protection or benefits.
I didn’t want to believe James Corbett at the time, but he warned us in 2018. The bitcoin psyop outlines the differences between central-bank digital currencies (CBDCs) & public permission-less blockchains. He also rightly outlines how smart contracts themselves could become tools of the technocracy.
This article isn’t intended to denounce every blockchain based system. Public blockchains can be used to create fantastic public goods. It’s still important to understand how they can be used for evil. There is a great deal of inherent danger in how they can be used to create digital prisons around us.
Yes, Bitcoin too.
Bitcoin is the linchpin of the entire cryptocurrency ecosystem. Its disruption or disappearance would cause near-existential risks for the rest of the blockchain space. While it is the most successful public blockchain to date, Bitcoin is not without it’s problems. The most significant challenge is scaling it to support more transactions. There are sophisticated systems layered on top of Bitcoin that attempt to solve this, but in many ways it starts to look like just building the tower of babel higher and higher.
The most significant difference between Bitcoin and other blockchain based systems is the consensus algorithms they use. If you simplify these systems down to a game, the consensus algorithm is essentially the rules of the game. Every round the participants compete to validate a block.
The two main consensus algorithms are Proof of Work (PoW) or Proof of Stake (PoS):
Proof of Work
Using an arms race of computing power to “mine” a block, this competition creates hard physical restraints on hostile entities ability to manipulate the outcome. This is the solution what makes the idea of counterfeiting Bitcoin a near impossibility.
Proof of Stake
Instead of ‘wasting’ so much energy you could ask participants of the game to “lock up” some tokens to proceed to the next round. This complicates matters significantly. How should initial tokens be distributed?
At first glance, both of these consensus algorithms have significant trade-offs depending on the system you want to build. There are other varieties and hybrids but it’s important to understand that the rules of the game are only the starting point. While Bitcoin’s PoW mechanism seems “fair” in hindsight, many are growing concerned about the concentration of mining power.
What blockchains do well
Storing information
Naturally you’d want to fill the blockchain blocks with something. Blockchains are fantastic for permanent records. Regardless of the consensus mechanism blockchains are effectively auctions for permanent storage. If the value of the token goes too low, the participants may leave for a more profitable game.
Bootstrapping systems
As long as cryptocurrency has value, systems can automatically transfer that value. This means that certain kind of bounty or reward systems are able to distribute that value within desired parameters. By defining a set of behavior we want and creating a market for a token that pays for that behavior, very complicated changes can be made quickly.
What they can’t do
Create
Blockchains don’t create or build anything, they simply administrate activities. This means that if you’re using a blockchain based system to use more storage than exists on your device, that storage has to be maintained by another party to keep the system functioning.
Solve human problems
Using blockchain to enforce social credit scores will be a tantalizing option for the technocracy, refusing to adopt digital ID is a pre-requisite for stopping this. It’s dangerous to pretend that this can be entirely escaped by simply adopting a new technology.
Despite what some may hope, these systems operate within human society not outside it. This means that many pre-existing problems (corruption, poverty, ect) are not automatically solved by adopting blockchain based technology. Tyranny is very much a human problem, one that can’t be simply prevented by escaping to yet another controlled virtual world.
Problems
Blockchain != decentralization
Because of the apparent success of decentralized blockchain systems there is a “cargo cult” mentality applied to blockchain-based solutions to various problems. This creates a very dangerous blind-spot. Just like any other useful tool blockchains can be used to useful purposes and malevolent ones. Many projects can very easily incorporate some benefits and harms in the same system.
It’s important to keep in mind that any blockchain based system runs on top of the existing physical reality. Imbalances in the primary resources of cyberspace (storage, bandwidth & computing power) still manifest in important ways. Simply transferring data & computation from “the cloud” to “the blockchain” doesn’t inherently provide any additional protection or benefits. There is an illusion that blockchains are inherently run by more trustworthy actors, but that is far from a guarantee.
Oversimplifying security & privacy
By giving users wallet software as a substitute for accounts on centralized services, people can in-theory gain some additional control over their data. These systems can even encrypt the users data so that the provider(s) have little-or-no access. This can be a significant improvement from the client-server model where the service operator has access to all the data in the system. While these are real possibilities, it is a mistake to assume a system operates this way simply because it uses a blockchain.
There’s a saying in the cryptocurrency community. “Not your keys, not your coins”
This applies to any privacy or security guarantees made by a blockchain based system. For most people, having someone hack into their e-mail or facebook would be a big problem, but at least the damage can be limited. If people integrate their entire online identity with a wallet, gaining control to that wallet is full-on digital identity theft.
Throwing data onto the blockchain (even when encrypted) violates the first rule of keeping data safe: The best way to protect data is never to record it.
NFTs
This article could only go so long without including the word “scam”. NFTs are effectively a mechanism to turn anything (property, jobs, or even you!) into a virtual commodity.
Instead of merely being overpriced novelties, in the hands of copyright owners NFTs could become the fuel for powerful information control systems. It’s hard to overstate the dystopian potential of tokenizing ideas.
Information land-grabs are one thing, but permission can also be tokenized. Instead of activities having a price the system can simply hand out vouchers and only allow the select few to use them.
Net3
The current state of the internet is too useful to humanity. All the current censorship and control is a mere atom compared to the ton of power the technocracy wants to have. The very foundation of the internet has to be destroyed and rebuilt for them to achieve their aims.
Web3 replaces separate, compartmentalized accounts with a “wallet” that holds the keys to your identity. Instead of signing in with a chosen username and password you are signing in with a universal and distinct identity. While current iterations allow for relatively anonymous use, it is a mistake to assume this will always be the case.
The web3 wallet operates eerily similarly to how a digital ID would operate online. I would be so bold as to suggest that the web3 space exists to beta-test such initiatives. While the vaccine passports were introduced to beta-test the physical and enforcement side, web3 is effectively the online prototype.
Call it “net3” because instead of an interconnected web they are building a net to trap us all into specific systems of control.
Automation
Throw robots in the mix and you’ve got the capability of building an entirely inhuman system.Instead of a person being responsible for decisions the blame can be placed on the amorphous “system”. Removing the human element can’t improve outcomes in situations where responsibility is paramount.
Doing it right
One of the largest problems with tokenized solutions is that their participants are financially pressured into pushing other people onto the platform. Many crucial downsides may be omitted by those evangelizing their particular solution. If there’s one thing you should leave this remembering it’s: Data in your control is much better than data in any blockchain.
Surely there’s a better way? How can we truly work for actual decentralization without embracing technological terror? Some important concepts have been (re)introduced to people through the blockchain ecosystem:
Self-hosting
Peer-to-peer connections
Encryption & Key management
Many of these things are doable without tokenizing and storing every interaction. It’s best not to throw all of these things into one basket, and use them intelligently where they work best.
New ways to log in
When trying to reduce the amount of sign-ins or eliminate passwords entirely there are interesting options that don’t require a cryptocurrency wallet. IndieAuth looks quite promising. It uses your own website to link to already existing systems to authenticate yourself.
Hate passwords all together? Webauthn is an interesting proposal to do that. It uses hardware authenticators to generate separate identities for every service. This allows passwordless login backed by strong encryption.
Federation
Both ActivityPub and Matrix use interoperable servers to connect communities together. You can run these servers yourself and have all the benefits of a fully-decentralized ecosystem without your data leaving your control. This is why PeerTube will likely be much more successful than any blockchain-based video-hosting service.