In this article I’d like to share some thoughts on this new tsunami that’s everywhere now: Cryptocurrencies, Tokens, Decentralization & Blockchain. These forces are growing tremendously fast and might be the next big thing, next to Virtual Reality, Artificial Intelligence etc (or maybe even bigger).
I wanted to write a brief article on the positive and negative aspects of these trends, and overall, whether this new ecosystem makes sense or not (or which aspects of it should stay at least!).
Why are these trends cool?
1.- More efficient way of ruling the world. We’re living in a world dominated by an a significant amount of incompetent leaders and institutions, who keep on proving them wrong on almost every decision they take. Although they’ve not done it completely wrong, there certainly is a more efficient way of ruling the world. Decentralization makes sense because we don’t let incompetents or abusers dominate the world the way they’ve been doing till now. With decentralzation we remove the power from the few and give it to ourselves. In the current system, we let less competent people have the same voting power as those who are more able. This is right, but it leaves us in mercy of people like Donald Trump (the voice of a majority apparently), which isn’t too efficient. With decentralization, this is not an issue, as there’s no need for someone to rule us all. Thanks to blockchain, we’re able to remove many bureocratic layers and institutions, for instance. Decentralized currencies also provice a more efficient way of transacting with money, without the need of banks. It’s significantly more efficient. We rule ourselves.
2.- Give privacy back to the people. Take decentralization from the perspective of privacy. It gives people the right to keep their data to themselves, as the data is now encrypted and split into pieces & distributed in various machines. Big corporations wouldn’t be able to do business with your data. Additionally, it provides a more secure way to store files, as these are now much harder to hack, since these are decentralized.
3.- Faster way of rising funds. Thanks to tokens and the big awareness of these new trends, it’s now very simple for startups involved in these to rise funds. These can just issue their own token or cryptocurrency and get money in exchange for it. Startups use that money to develop their product, and once it’s ready, people can exchange these tokens for the product or service. It’s a more simple way of rising funds. As these trends are new, most of these practices aren’t regulated yet. However, who needs regulation afterall? ;)
The other side of the coin
1.- Can we really make it without Governments? We still need regulation to avoid scams and give the World some order. We also need proper tax systems to help those fellow citizens who need it and maintain cities in good state. So yes, decentralization is good, but where’s the limit? What can and can’t be decenralized? There’s probably many tasks that can be performed better by decentralizing them, so those will probably succeed (decentralized currencies, smart contracts etc). However, we should bear in mind that not everything can be decentralized. Bringing it to the very basics, if everyone takes care of him or herself, no one will take care of those who need someone to help them out. We need to find a balance, and need to understand that decentralization can be more efficient, but it also needs some legal boundaries to be optimally applied.
2.- Give privacy back to people. But how much is enough? Again, having more privacy sounds cool. But shouldn’t we control those who use privacy for the bad? To be more specific, what would be of the World if there would be no control whatsoever over terrorists? Again, we need to find a balance here. I believe that there isn’t such a big need for more privacy, specially because of the immediate tradeoffs that this would bring. Decentralization can help us increase the security of our files, but it shoudn’t bilnd them completely. Blockchain transactions are trazable by nature, and organizations that provide decentralized services should stick to stric regulations on gathering the necessary user data before providing a service. If we leave room for a completely annonymous internet and annonymous transactions, the World can be chaotic.
3.- Finally, are ICOs (Initial Coin Offerings) sustainable in the long run? How ICOs usually work, as I explained, is by issuing some currency or token that can after be traded by a product or service that a company offers. So let’s say I want to provide a decentralized way of storing files (with all the ethical matters that this rises). I can create my own currency, build a product and then people can only buy my product with my currency. The thing is that this will become highly impractical, due to the amount of different currencies and conequently exchange rates that we’d have. Imagine needing a different kind of currency for each different company. Doesn’t sound very attractive I think.
We now need to think which aspects of these new trends make sense to be implemented, and in how much depth.