Blockchain enthusiasts often focus on the potential for smart contracts to replace biased and fallible humans with cut-and-dry computer code. But this emphasis on code over humans can confuse both the definition and true potential of smart contacts.
Bitcoin and Blockchain
This week, it was my pleasure to sit on a panel with Gavin Brennen of Macquarie University in Sydney, Australia, a physicist and one of the world experts on this topic. He presented a very nice paper that examined this question in some detail. He began with his frustration over the headlines that swept the tech world last October and November. They were as alarmist as they were misleading. He set the record straight.
The fact that about half of altcoins failed or came close to doing so over five years is a promising sign for that market, rather than an indictment of anything not named Bitcoin.
We love to prognosticate, but it’s impossible to do so without severely glossing over the complexities of the real world. That leads us to false dichotomies, like “Blockchain technology will change everything” versus “Blockchain is all hype.”
It is the great presumption of public policy that some people with power, resources, and status can know what is true, and therefore what must be better. This is in contrast to the lowly actors in the marketplace who must deal daily with the problem of not knowing. To navigate life, to find profitable investment opportunities, to discover what it is that society needs now and what can wait, is the great challenge of material life. But the state takes a different route. It declares what is true, attempts to freeze the process of life, and then impose it as a matter of law.
Dividing the world into “centralized” and “decentralized” obscures important features of the bitcoin protocol. A more sophisticated lexicon would leave scope for “distributed” processes.
The fact that Anderson’s theory of money seems to fail the Bitcoin test forces us to question our long tradition of issuing new coins that contain precious metals, or banknotes redeemable for some other, already valuable instrument.
Many people who are bullish on blockchain make grandiose claims that the technology will completely overhaul industries and institutions. But these claims often ignore the complexity of the real world and misunderstand what revolutionary technologies actually do.
There will be another winter. And another. To get the best sense of the potential here, it’s best to look at the price, not day to day, but on a logarithmic scale. Here is where we can see the potential of the technology. That has a much more meaningful significance than the fickle judgments of seasonal news hounds that make the difference on the daily margin.
By focusing almost exclusively on disruption, blockchain proponents can ignore the important role of adoption by existing players in finance and other industries.
Seemingly out of nowhere, we have now an entire suite of technology that could conceivably displace and even replace national money, traditional payment options, and even regulated capital markets, and bring us something new and much more wonderful.
With the stroke of a pen, President Donald Trump may have just accomplished what most observers thought impossible: he’s made the Petro relevant.
In the ideal world, you invent something wonderful, the world celebrates and starts using it. You get rich. We can dream, can’t we?
Wyoming has a thin population base, astonishing natural beauty, and a wonderful crew of politicians and regulators who believe in independence, innovation, and technological progress. Thanks to some wise activism from knowledgeable people in the space, the legislature just passed a series of bills that will make Wyoming something of a safe space for crypto.