How Cryptocurrencies and the Blockchain Will Change the World (And How it Changed My Life)
This might come as a surprise to some, but towards the beginning of this year, I was flat-out broke. After the startup I came to work for in San Francisco ran out of money, I tried to make ends meet by working at random jobs around town -- some of which barely paid above minimum wage. I lacked the levels of experience needed for a senior level job, but at the same time had too much to be considered for entry-level positions. I was stuck in limbo.
After several instances where I literally had less than 100 bucks in my checking account, I began to wonder if I was really cut out to be in Silicon Valley to begin with. The cost of living was too high, and the jobs I was getting wasn't paying me enough to get by -- I gave myself a few more months to try to figure it out, after which I would probably be forced to leave the city and go back home.
Fast-forwarding over to today:
- I have a good job that I love (and pays enough to stay in the area)
- I managed to pay off ALL my loans
- I'm in good enough financial shape now to actually consider homeownership
- I have enough to comfortably fund music and creative projects that I've been wanting to do for a while.
How did it all happen? Cryptocurrency. And I'm not even kidding.
I was fortunate enough to get in early on a few coins, and after the prices started to go crazy earlier this year, it gave me enough of a cushion to take care of my basic necessities while I continued looking for work. The second climb in price started almost exactly when I started my new job, in an odd coincidence of timing. The last few months have been mostly a blur since it feels like I'm starting everything over from scratch -- new job, new environments, new people, new opportunities and new possibilities.
So given my personal experience, you'll probably see me raving and ranting about various cryptocurrency related things, at least for a while. I do strongly believe in the technology's ability to change the world -- crypto gave me a second chance at life, and think that it can do the same for others as well. (I am super-biased of course, but hey now.)
People will, however, have to be smart about how to handle this new technology, because it is very easy to get distracted by the endless possibilities and temptations to get-rich-quick. When I put my initial stake in crypto some years ago, I wasn't thinking about money at all -- I just thought it was a cool idea that had a lot of potential. (I didn't even bother telling my family, friends, or girlfriend at the time since I didn't think it was all that important!) When the price started to rise I actually had to scramble to find my private key since it didn't even cross my mind that it was ever going to be a thing. A pleasant surprise, to say the least.
The cryptocurrency community has lost some of its purity since money started pouring into the ecosystem, and the atmosphere of it reminds me a lot back when startups were just starting to become the "cool thing" to do. It's important, however, for us to not forget that what's ultimately going to make or break the movement is the genuine excitement for the technology, not money as a thing-in-itself. If that can be done, then "changing the world" actually becomes a very real, tangible possibility.
There are lots of articles out there talking about "why" cryptocurrencies will change the world, but a lot of it tends to be very abstract and theoretical since much of it sounds like something straight out of a science fiction movie. Here I'd like to break it down on a nuts-and-bolts level so people can see how the blockchain might find its way into actual products we will end up using in everyday contexts.
Tech Startup Ecosystems are Starting to Stall
You'll probably see a lot of it being plastered in the news as of the late, but Silicon Valley is going through a very painful growth phase in its cultural development right now, as scandal after scandal continues to erode the prestige and trust of the institutions that have governed the process of startup-development up until now. The truth is that the startup community had lost its innocence a long time ago, when pleasing investors for short-term gains started taking priority over the quality of the technology itself. We're now just starting to see the fallout from its detrimental effects -- when personality trumps product, the ecosystem starts to falter as a whole.
Symptoms of this dysfunction can be seen in how startups' business models are designed -- many apps being released today have some sort of crowdsourcing element built into it, usually as a procedural short-cut towards the company's data acquisition needs. This approach worked well for a while, back when the act of "participating" in a newly built platform was still fresh and exciting. But with the sheer amount of apps out there now, getting people to do your data entry needs for free will increasingly become a hard sell. The question that people have been asking themselves lately is: "why should I be doing this work for free, when I'm getting nothing in return?"
Techies often talk about taking over the world (or making the world a "better place") out in the open, but it's not necessarily because they're exceptionally ambitious -- it's because crowdsourced models, in it of itself, necessitates a critical mass of user centralization before it becomes of any value. For many of these startups, NOT taking over the world will result in the whole system falling apart from the inside out, because without it there will be no one left to do the actual work. Predictably, because not every company has the capacity to take over the world, the vast majority of them end in failure.
The Values and Sensibilities of the Blockchain
Cryptocurrencies, however, operate on a completely different value and growth system, which is why it might seem very weird and alien to our current sensibilities. If startups are about centralization through asymmetry (i.e. what the startup world calls "distruption"), the blockchain is about decentralization through symmetry. Discussions about the design of crypto-ecosystems involve topics such as: power distribution, incentive management, growth-over-time, voting -- things that we *should* be talking about all the time as citizens of democratic societies, but usually don't for one reason or another. Decentralized systems necessitate a deep understanding of balance and symmetry on both small and large scales, since the ecosystems they create have to be naturally self-sustaining.
The beauty of blockchain technology is that a well-balanced system doesn't necessarily need to massively scale for it to be useful. If an ecosystem fulfills the purpose of the people who use it, that's all it really needs. Balance, symmetry, fairness and sustenance -- cryptocurrencies represent the values that ought to be the mantras of societies that considers itself progressive and civilized, while providing the tools necessary for local and grassroots communities to thrive on its own.
If nothing else, after reading this article I'd like the reader to understand that cryptocurrency, the blockchain, and other related technologies did not suddenly come out of nowhere, out of the blue. It's both a rejection and continuation of developments that came directly prior, and must be seen in such a light for it to be properly understood. People who really believe in the crypto movement have been working at it for many years, after all.
At its core, the blockchain is about incentive management -- the idea that everyone and anyone can get their fair share of the pie. Everyone is now talking about ICOs as the model to replace venture capital, and it may actually stand a fighting chance now that it has spawned a number of successful ventures already. Unlike most crowdsourcing platforms out there, ICOs allow for the small-time investor to actually *own* a part of the company, giving them an actual voice and leverage in the process. And unlike the top-down process of venture capital, ICOs are quasi-democratic in the sense that the decision-making power comes from the bottom up -- if people get disillusioned with the company and decide to leave the platform, the worth of the coin will plummet to virtually nothing. Unlike most startup ventures out there, ICO-based companies aren't shielded from the market -- their product IS the market, in it of itself.
If you fill out a review on a restaurant-rating app, it's only right that you get at least *some* sort of compensation for your time, no matter how small it might be. You should get paid every time you post something interesting or worthy on any social media network or platform. Once a few sites perfect their economic models to make this feasible, there will be virtually no reason to go back to the old ways of doing things, because getting a little of something for what you do is better than getting absolutely nothing, as it is the case right now. If Web 1.0 was about engineering and Web 2.0 about design, Web 3.0 will be about economics, adding the layer of functionality that the internet has been missing up until this point.
Next, let's look at how the blockchain addresses (and potential solve) many of the "big issues" that our society is currently facing today:
A blockchain-enabled, universal content ID system will allow you to easily trace the origins and history of every news article out there, including all of the edits and revisions that were ever made to the article itself. Not sure about the scientific validity that an article makes in its claims? Well, just take a look at the checkbox that says "Approved by the FDA" or something similar. This won't be just a logo or a cheesy stamp that anyone can fabricate -- the approval will be issued by the institution itself while its authenticity verified by multiple parties all at once.
Building trust in the reader will still be an institutional problem, but there will no longer be any confusion regarding where the source of the information originated from since it will all be recorded on a public ledger. I do believe that a good portion of institutional distrust in today's society stems from bad actors abusing the reader's trust with false reports and false verifications, to the point where the public automatically rolls their eyes whenever they see a claim made by an "official" source. (Pseudo-scientific articles, anyone?) The blockchain has the ability to significantly clean up the noise of misinformation that exists in politics, science, culture, data, wiki definitions, discussions about the habits of cats, obscure reference information in comic books, etc. Everything, basically.
The blockchain will also allow for people to universally create a "verified status" on the internet itself, should they choose to do so. Twitter verifications mean very little outside of Twitter itself, since the process and label is privately owned. With this technology, you can check the history of individuals' public actions and records through their blockchain ID (both good and bad) and verify the identity of someone very quickly. (No more need to deal with randos, in other words.) Maybe some people might prefer the mystery and danger of the "unverified" classes, but there will no longer be any wolves in sheep's clothing -- when the distinction between the two is made clear, it succeeds in giving meaning to both.
The internet has long run on the naïve view that artists are "lone wolves", cooking up their greatest ideas in some cabin in the middle of the woods somewhere, for months at a time, fueled by divine inspiration. If you can afford to alienate yourself in such an expensive way more power to you I guess, but it's not how the industry actually works -- most great projects are a result of many different people doing many different things working in tandem. Even the composer we know as "John Williams" isn't a one-man operation: he has many people who work for and with him. He has orchestrators, agents, managers, accountants, lawyers, etc. to make sure that he delivers his product in a professional and timely manner. The name "John Williams" is really just a brand that masks the complex operations that happen behind the scenes. The failures of the music-tech and art-tech scenes in recent years can mostly be attributed to company's lack of ability or willingness to tackle the complexities behind the process of cultural production.
I remember an exchange few years ago I had with a well-known VC where he called me an "authoritarian" for daring to suggest that a professional musician with years of experience under their belt *probably* deserved to get paid more than an amateur fucking around on a guitar on his first YouTube upload. The exchange stuck in my mind for a long time because it was really emblematic of how Silicon Valley imagined cultural production to be -- which is to say, a playground for amateurs fueled with the suspicion towards the very idea of expertise.
At the same time, the same VC has said many times, on record, that the content of the internet has been racing towards the bottom for quite some time and that was a shame. Combined with his Twitter profile that had a quote about how happiness was impossible or some such, my outlook for the art-tech scene became very bleak, since his opinion was regarded very highly in the tech world at the time. Despite being a smart, fairly open guy, he somehow couldn't see the fact that his negativity was essentially a self-fulfilling prophecy waiting to happen.
For a while, no one believed that anything *really* bad would happen, though, and even if it did, they thought they would see it coming from a mile away. Then came the elections.
Even while click-bait and pseudo-scientific articles popped up all over the place, nobody really wanted to believe that society was really starting to spiral in a direction that probably wasn't a very good one. It started with sloppy research and poorly constructed rhetoric, but it was only a matter of time before the production of outright lies became the run-of-the-mill routine. What does it matter, after all, when expertise itself has no value?
This is a complex problem that won't be solved by technology alone, but the blockchain does allow for one important thing: automated, easy-to-implement split revenue systems. As mentioned above, high quality content is always a result of a lot of people from different backgrounds and skills working in tandem, but the amount of administrative, organizational, and legal work that goes into it can be prohibitively large for projects that's just getting started on its feet. The blockchain allows for complex projects to emerge spontaneously, where every party gets their share of ownership and revenue in a fair and organized way. And best of all, everything that ever happens to the project is tracked for everyone to see so there will be no misunderstandings about how the revenue is actually distributed among everyone. This is enough to raise the bar of content quality globally, in it of itself.
Example of it put into practice below:
Using the Musicoin platform, here I've set up a music track in such a way that allows me to split the ownership and revenue of a single music track among multiple parties at a time. If I find more people who might want to get involved with the project, I can adjust the share percentages in such a way that allows for more people to own a share of the pie. In electronic music, a few DJs have been known to give a small % to the artists they took samples from -- a shout-out of sorts, if you will -- but with actual money involved. This is a system that makes a lot of sense for the music industry, but the same system could be applied to virtually any project-related endeavor out there.
The blockchain naturally splits its ledger records into multiple locations, making it one of the most secure and transparent information distribution systems known up until this point. This technology is perfect for building voting systems because it is virtually immune to manipulation and tampering by outside forces, at least with current technology. Our current voting machines are supposedly "secure" but since a lot of the tech is encased in inaccessible black boxes, we don't have much choice but to take the word of the manufacturer at face value. With the blockchain, every transaction, every vote, every record, will be traced and recorded in plain view for everyone to see. If there was any sort of tampering, it would show up in obvious ways that allow the public to collectively decide how to respond.
A lot of the controversy behind Russian meddling stems from the fact that we just don't know who's really telling the truth. Had a blockchain based system been used, we would have known the answer to all of our questions moments after the election itself took place.
Elections in Online Communities
I wrote about this issue a while ago, but the social systems of the internet can generally be considered feudal or autocratic, due to its class-based, non-negotiable hierarchical systems. This might be a controversial thing to say, but I do really believe that the internet generally rewards authoritarians over diplomats, due to its skewed incentive structures.
When was the last time you voted on something on the internet where the results actually mattered? Do we vote for our moderators or representatives in our communities online? No, and this has never been true, in the entire history of the internet itself.
Most blockchain systems have voting mechanisms built into it by default, which is often used to make big decisions regarding major updates and upgrades to the platform overall. During a major crisis last year when a DAO related to Ethereum was hacked, the community was faced with a difficult decision: should they "revert" back to the old state before the money was stolen, or continue to press on in the interest of fairness and facing the consequences of neglect? A lot of conspiracy theories have floated around since then, but the story basically boils down to the fact that the Ethereum founders created a proposition and let the community itself decide how to respond to the event. In startups, leadership dictates the decision-making process entirely -- in the blockchain, leadership can be seen more as stewards or servants of the community itself.
Keep in mind that this is how things already work in corporate environments, so the idea of shareholders voting on company decisions itself isn't anything new. But it is a big deal that barriers of entry into this strange, quasi-democratic world has now suddenly disappeared, to the point where anyone with a few coins on hand can get involved whenever they want.
Behind the circus show that has become the political norm these days, is an underlying, deep seated problem that nobody wants to deal with: income inequality. Income inequality has slowly been on the rise since the 1970s -- people have warned about its repercussions for years but politicians have failed to reverse its trend even until this day. Unfortunately when the income gap gets too wide, people's education-levels start to diverge, increasing the likelihood of a populist revolt. For those of us lucky enough to live in first-world nations, we may have to endure the burden of having an idiot for a leader for a few years, but it does beat the alternative: had the populists not expressed their concerns through their vote, they would surely be doing it through violence and destruction by now. In the world of product management where I spent some time, we might call this useful "user feedback" on the state of society that we live in today.
The internet was supposed to be an all-encompassing, democratizing force, but ended up reinforcing the status-quo due to its crude, heiarchical social structures. The reason: Web 1.0-2.0 protocols were built with the idea of information transmission in mind, but not of money. We talk about ideas and sentiments, but not about how much they are worth in the overall scheme of things. Because of this, the internet implicity trains people to talk about culture, but not of economics, which is very much reflected in the type of discourse that is happening in the media today.
By giving software developers the ability to write financial transactions directly into code, we're paving a way towards a new kind of internet that's better reflective of how the world works in the broader sense of the word. It's the economy, stupid, in other words.
There are now millions of people -- many of whom with no investment experience prior -- getting into cryptocurrency as investors and miners. You might find it surprising that some of them seem to be confused by the fact that the market sometimes goes up, and sometimes goes down. You will also see others who lack the basic math skills needed to understand the difference between absolute and percentage values. It's easy to make fun of them if you come from a background with good education, but if you keep in mind that many of these folks are coming from poor neighborhoods and foreign countries, it starts to make a little more sense. This could be their first -- and perhaps only -- opportunity to play the role of an investor in their entire lives, so the fact that they might not know what they're doing should not be all that surprising.
There will no doubt be many mistakes made and a lot of people will end up losing a lot of money, but in the long run I'm confident that people will learn to become smarter and wiser with what they have. If there's anything humans are good at, its their ability to populate and milk a system dry for everything that it's worth. Sometimes, though, you have to learn the hard way for some life lessons to stick.
To make it worth all the while in the end, however, we need to make sure that the system itself is fair, just, and yields the desired outcome that we're all looking for in the end. That really should be the mission of the crypto-startups that are starting to bubble up today -- don't bother practicing telling investors what they want to hear -- just focus on building a good product. Your burn rate could literally go to infinite the moment you lose the trust of your supporters so there is no room for BS at any given point. That's how crypto works, for better or worse.
If the blockchain does even 10% of what it claims it does, it will already be successful in making major changes to how business practices operate worldwide. After reading this I'm hoping that people will understand that the excitement and hype behind the crypto movement isn't some unwashed dream -- it really does have the capability to change the world, with many (decentralized) legs to stand on. It may take a few years to maturate, but the fact that this will become part of the infrastructure layer for Web 3.0 seems almost inevitable to me, at this point.
Oh, and here's an epic 45 minute improv I did on the Musicoin network. Sort of a Keith-Jarrett style solo improv all done in one take on my Wurlitzer electric piano, with no cuts or edits. (Style is a mix of Bach, jazz, and minimalism, I'd say.) The good stuff comes around the 30-45 minute mark, if you can be patient enough to wait for the ideas to grow slowly over time. HODL, and give the technology the space and time for it to go where it needs to go. :)
Musicoin Track - Ethereum
(Will probably be periodically uploading tracks named after some of my favorite coins at my Musicoin page here.)