Re: Technobabble, Libertarian Derp and Bitcoin

# Re: Technobabble, Libertarian Derp and Bitcoin Dear Editors, Always keen to consider a diversity of viewpoints on complex topics, I was excited to read Paul Krugman's [perspective](https://www.nytimes.com/2021/05/20/opinion/cryptocurrency-bitcoin.html) on Bitcoin and other digital currencies underpinned by open blockchains. I do not know Dr Krugman's work well, but I understand that he is a very strong establishmentarian, deeply embedded in the prevailing economic mindframe. And so I was disappointed, but not surprised, at his flippant and condescending disregard for the nascent technology that we are early in the process of discovering. Dr Krugman can be forgiven. Why fix what isn't broken? Why overcomplicate things? Why waste effort understanding what is fundamentally a new way to trust people? Why explore a digitally native form of one of the most precious things that make us human - money? I am a millennial - I do not have a strong economics background, and only have a basic grasp of how the global financial system functions. But more and more I tend to think that what we have is not working. Despite our ability to produce [more than enough](https://news.un.org/en/story/2019/10/1048452), human suffering persists on vast scales. Legions of the most intelligent people on Earth spend their time designing better ways to capture value, rather than create it - whether that's by finding minute inefficiencies in markets or conceiving more effective ways to exploit our attention. And while I do value financial stability (which is the raison d'etat for most central banks), something about the idea of the ["an infinite amount of cash at the Federal Reserve"](https://www.bloomberg.com/opinion/articles/2020-03-23/coronavirus-fed-s-infinite-cash-tested-in-world-of-leverage) seems to undermine the entire premise of what money is. The spaces we occupy affect the quality and tone of our interactions. This is true of digital spaces as much as physical ones. It is becoming clear that money and finance are primarily information technologies - Dr Krugman's dismissal of cryptocurrencies shows that he fails to grasp that they are part and parcel of a [potent new computing paradigm](https://www.youtube.com/watch?v=l44z35vabvA) that is consciously re-architecting our digital spaces so they can better support people and society. Your newspaper, and Dr Krugman himself, very often criticizes a system optimized for the elite at the expense of the many. How can you so casually write off the first true alternative to the incumbent financial system, which plays an outsized role in perpetuating these inequalities, that we have seen emerge in generations, perhaps in history? As for the value propositions of open blockchains (as opposed to closed, permissioned ledgers), Dr Krugman is looking in the wrong place. Bitcoin is very interesting - it is a digital asset that purely exists in the informational domain, a unit of digital currency that I can hold without a counterparty owing me anything, money (with a verifiably fixed supply) controlled by the private key that only I possess. But Bitcoin was the first blockchain and consensus network, its design deliberately restricted to securely serve the function of money. Ethereum allows developers to write [smart contracts](https://ethereum.org/en/developers/docs/smart-contracts/) - permanent, pay-per-use computer programs that can own money and therefore underpin a wide range of financial applications. This is the true innovation that is emerging to show radical improvements over incumbent systems. Smart contracts are an even younger technology than Bitcoin - the comparison I heard last week is that consensus technologies are a bit like electricity in the 1800s. For someone to claim "The fundamental principles of electricity were discovered 8 years ago - but it hasn't been adopted at scale so it's obviously useless" is at least a bit shortsighted. This is especially true given the inertia of the global financial system and entrenched interests, along with the natural, healthy conservatism with which people approach their systems of money. Still, to write off open blockchains without even mentioning smart contracts shows that Dr Krugman has not done his homework. --- Dr Krugman - in my view, only once you have explored the true value of Web3 for yourself will you have a leg to stand on in writing it all off. It might take an afternoon, and due to network demand may cost a few hundred dollars (which is a problem a dedicated number of the most intelligent cryptographers, computer scientists, game theoreticians and designers in the world are actively solving). Give it a whirl. Learn by doing. Create your own accounts by installing the [Metamask](https://metamask.io/) wallet on your browser and generating a seed phrase. Write this seed phrase down and store it safely! This encodes your private keys, and there is no one to call if you lose this information. With this seed phrase you can generate [any number of accounts](https://github.com/ethereumbook/ethereumbook/blob/develop/05wallets.asciidoc#hierarchical-deterministic-wallets-bip-32bip-44) on multiple blockchains, even if you lose the device you created it on. Consider the meaning of "permissionless": you did not have to request authorization to create these accounts. You have a right to participate just for being a living human. Transfer some ether to the address you created - you'll need to get some from a friend (I'll send you some if you like), or from a centralized exchange like [Coinbase](https://www.coinbase.com/%5C). Learn about automated market makers like [Uniswap](https://uniswap.org/), where you can swap one token for another without a counterparty or order book. Exchange some of your ETH for another currency - maybe [Dai](https://makerdao.com/en/whitepaper), a smart contract-based stablecoin pegged 1:1 with the US dollar. Deposit some Dai to [Compound](https://compound.finance/), a lending protocol, to start earning 3.05% APY (at the time of writing). Register an [ENS domain](https://ens.domains/) to create a human-friendly identity for your account. (paulkrugman.eth is currently available.) Browse the wild world of cryptoart and NFTs on [Zora](https://zora.co/) and [OpenSea](https://opensea.io/). Buy an option on [Hegic](https://www.hegic.co/) - I imagine you might go for a put option. Privately view your account using a DeFi interface like [Zerion](https://app.zerion.io/) - or, if you don't like it, switch to [Zapper](https://zapper.fi/) without needing to ask anyone or transfer your money anywhere. Donate to a [Gitcoin](https://gitcoin.co/) grant to help fund public goods that support the ecosystem. If you want to get really funky, peruse the growing array of decentralized autonomous organisations (DAOs) on [DAOhaus](https://daohaus.club/) and consider applying to join one like [LexDAO](https://www.lexdao.coop/), a non-profit association of legal engineering professionals. And beyond that - look a bit deeper. Notice that with most of these decentralized applications, all of the code they run on is open source, and can be inspected by anyone. See that most would continue to function even if the founding team were to disappear. Understand that the [Ethereum protocol](https://ethereum.github.io/yellowpaper/paper.pdf) is open by necessity, and that the numerous clients that run on the consensus network's validator nodes are open source as well. Many organizational treasuries are [transparently governed](https://gov.yearn.finance/t/yearn-retention-packages/9698); expenditures can be verified by anyone. Yes, there are many new technical terms, a necessity to accurately describe the multitude of new concepts that are being established - but just because they are confusing does not mean they don't make sense. If you'd like a resource that presents these ideas in terms that may be more familiar given your background, I recommend [a paper](https://research.stlouisfed.org/publications/review/2021/02/05/decentralized-finance-on-blockchain-and-smart-contract-based-financial-markets) released earlier this year by Fabian Schär at the Federal Reserve Bank of St Louis. As you are doing this, try to look past the sound and fury of speculation and scammers and fraudsters that turn up wherever they smell an opportunity - look past the volatile prices of cryptoassets to see the core - the kernel. At the center of the Web3 ecosystem a group of luminaries is tirelessly working to build a better Internet. They are learning from the mistakes we made building the first iterations of this global communications network, and designing an upgrade that is meant to be more just, fair and safe. This next generation of the Internet - Web3 - is designed to natively and irrevocably protect human rights that we are only just realizing we have: the right to privacy, the right to participate in finance, the right to own your personal information. --- Regarding the problems this technology solves - the answer is nuanced. Like Mr Krugman, I am very fortunate to have spent most of my life in a country with strong rule of law, where I didn't have to worry that I might not have access to my bank account due to my political views, where I could easily get a bank account. But even for me, the benefits of a transparent, unkillable, open, global substrate on which to build humanity's critical functions and data are not lost. And that's how I see it: public blockchains are a new form of public infrastructure. It's tricky, because we can't see it like we can see a highway or bridge, but we need to understand that the rickety, degrading legacy financial system we've inherited poses great risks to societal stability. I am not saying that open blockchains solve everything - but to ignore them and write them off as useless is a profound oversight. Fortunately some truly forward thinking public servants are coming to understand that this is a movement they should understand and harmonize with, [British MP Tom Tudenghat](https://twitter.com/TomTugendhat/status/1395472853991051265?s=20) being a recent example. I spend a great deal of my time thinking about how we can evolve our institutions to secure a safe and prosperous future for humanity. I am by nature an optimist, a reform-from-within inclusionist. But more and more I am questioning whether our incumbent institutions have the ability to adapt in ways this moment demands. Behind the facades at the Federal Reserve and the Bank of England, there are a few men and even fewer women making decisions that affect billions. I fully believe that overwhelmingly these are highly intelligent, thoughtful and genuinely well-intentioned people - I find no fault in the individuals comprising the system. But due to their structure and culture - closed, opaque, restricted to a very select few with the right education and pedigree - I am not convinced these institutions are up to the task of administering services in a way that the 21st century demands. There is a playfulness intrinsic to the consensus economy that is easy to mistake for a lack of seriousness. Illustrations of dogs wearing sunglasses adorn [ethereum.org](http://ethereum.org/) - surely it all must be a toy, a joke? Make no mistake, though: because they embody the principles of Web3, blockchain protocols do not need to act like they are something they're not. They don't need to convince people that something with integrity sits behind the facade: people can examine it and confirm for themselves. Rather than making these technologies confusing and complex and staid to more capably exploit customers, the ecosystem is seeking to make learning fun and entertaining, so more people can learn about these technologies and join the movement. Permissionless means anyone can use these technologies (including criminals - though many illicit actors are coming to learn that it may be the worst form of money they could have chosen, as former Deputy Director of the CIA Michael Morrell [recently concluded](https://cryptoforinnovation.org/resources/Analysis_of_Bitcoin_in_Illicit_Finance.pdf)). Permissionless also means we can enroll the ingenuity and innovative impulse of the entire human race as we work together to build a brighter future. We face an unprecedented challenge in the coming decades. We need to radically reform our systems so that we can support human existence on this planet perpetually - a great rebalancing is required. Consensus technologies have an important role to play, and the sooner we can explore them with the humility and open mindedness they deserve, the more skillfully we will be able to apply them to our collective problems. Warm regards,\ [johnx25bd](https://www.twitter.com/johnx25bd/)