Random notes: crypto / web3 in the 2022 Well state of the world

(part 2 of this) On to crypto in various forms. Highlights mine.


permalink #60 of 340: Brian Slesinsky (bslesins) Thu 6 Jan 22 10:04

    Beyond the environment costs, though, I wonder about the cultural
    costs of the rise of gambling 2.0, investment edition. It turns out
    that not only any cryptocurrency but any small stock can be
    converted into a fun gambling game with a bit of promotion on social
    media. The new online casino is anywhere you can attract enough
    players to have some fun.

permalink #74 of 340: Vinay Gupta (hexayurt) Thu 6 Jan 22 15:06

    Stephen Diehl:.. A world class cryptographer ... If he applied that critical eye to, say, US indebtedness both
    personal and Federal, I have no doubt he would have very serious
    arguments against that entire system. Same for VISA, SWIFT, and the
    rest of the banking, credit cards, and consumer finance system.

    Then we could start in on how IPOs work and the stock market in
    general.

    Then the biggie: pension funds, and also State pension systems.

    Blockchain is part of this world. It is new and responsive to the
    needs of the moment, but it's as flawed as any other human
    construction - just newer.

    It's as simple as that: blockchain is a response to much bigger
    problems. It solves some problems, and creates others, *as is the
    nature of all things*. When was the last time we had a technology
    which had no down sides.

    We're refining it now: fixing proof of work, sorting out speed and
    efficiency, working with regulators to get clarity in the grey areas
    - it's evolving. But in the times we are in, what technology do you
    think could create a perfect fix?

I have heard the argument about how all our current financial systems are problematic, and therefore blockchain is the answer, quite a lot. I can see the problems, it's just more of a struggle to see that blockchain is the way forward. I am also not sure that 'tech' is the fix here.

permalink #108 of 340: Brian Slesinsky (bslesins) Fri 7 Jan 22 09:29

    I think good reporting requires actually being curious about the
    details and in a world of shallow opinion pieces it does stand out.
    Too many stories tell you how to feel and leave you wondering if
    they got their facts right.

    While my own curiosity often has limits, I am on team curiosity.
    Without it we just end up shallow discussions, like when people who
    don't know very much cryptocurrency or whatever go on about how
    terrible it is and get basic things wrong. This shallow conversation
    is happening all over, repeatedly, in many forums, and it's boring.
    Interesting critics (and advocates) did their homework.

permalink #134 of 340: Inky fingers (ianb) Sat 8 Jan 22 03:56

    [in answer to: what is web3?] Basically: the idea is to decentralise the
    web using blockchains to effectively replace databases, but it's a
    hazy concept. Key parts of it including decentralised finances (the
    use of cryptocurrencies not controlled by banks or governments), the
    creation of tokens of various kinds to denote ownership, and
    decentralised autonomous organisations (DAOs), which are
    organisations where governance rules are encoded programmatically
    (again on the blockchain).

    Some of it is interesting - I think DAOs are fascinating, although
    the early use of them is awful thanks to libertarian concepts of
    greater financial investment = greater democratic rights (some DAOs
    give more power to individuals based on how much they put in).

    Others are just worse technical solutions to existing problems:
    there is nothing that a blockchain can do that's not more
    effeciently done by a database is one of the common criticisms (and
    I've yet to find examples that prove that statement false).

    I think the name does it no favours. It's not Web3 - it's not really
    the web - and it's not a replacement for the web. It's something
    else, some bits interesting and some just the dreadful recreation of
    monetary power structures in code.

permalink #176 of 349: Brian Slesinsky (bslesins) Sat 8 Jan 22 14:00

    I was happy to see Moxie Marlinspike weigh in on the web3 debate. He
    didn't just mock it. He built something and kicked the tires like a
    QA tester or security researcher would do, looking for weaknesses
    and explaining what he found. This is criticism worth reading, tech
    blogging at its best.
    <https://moxie.org/2022/01/07/web3-first-impressions.html>

    And I always enjoy reading posts from Vitalik Buterin, who responded
    here:
    <https://www.reddit.com/r/ethereum/comments/ryk3it/my_first_impressions_of_web3
    /hrrz15r/>

    It seems like they don't really disagree on the details. The current
    state of things is pretty bad. The disagreement seems more about
    temperament: is better to be patient or impatient?

    Marlinspike is probably impatient based on his background. He wants
    Signal to win market share from WhatsApp and other chat services. He
    seems to be thinking like a startup founder - you need to build the
    features that users want, and if you're too slow you become
    irrelevant, run out of money, and everyone leaves.

    The urgent style seems native to social media and the press. We are
    living in unprecedented times, etc etc. And it's also native to
    financial markets.

    By contrast, most of what Buterin writes exudes calm and patience.
    Protocols last a long time and we can think carefully about what we
    do next. If a feature isn't ready, we'll delay it. Other people can
    do what they want in the meantime, but we're building things that
    last and can take the time to think things through and achieve
    consensus. Whatever problems users are running into now isn't our
    problem. When we ship a protocol improvement, people will use what
    we built.

    Someday we'll see if being patient worked out for them.

permalink #178 of 349: Vinay Gupta (hexayurt) Sat 8 Jan 22 14:31

    One of the games we play in the blockchain space is "which year is
    it on the blockchain?"

    Some people will say 1999, right before the dotcom crash.

    Some people will say 1980, microcomputer revolution just starting.

    I think it's more like 1976. The blockchain is a component of
    something bigger, something which will tie all the world's computing
    resources into a single addressable problem-solving supercomputing
    surface - all the underutilize compute resources in the world,
    cheaply recruitable to your problem.

    Blockchain is a small part of getting us there. It solves a couple
    of problems: namespace management, and possibly (not necessarily)
    payments.

permalink #204 of 349: Gyrgir (jonl) Sun 9 Jan 22 08:24

    I enjoyed very much Moxie Marlinspike's web3 critique: it's fair and
    balanced, but ultimately brutal. I also read Vitalik's answer,
    posted by <bslesins> in #176, but I have a different take on it.

    Vitalik mirrors a sentiment that I often see in the tech contingent
    of crypto/web3, as expressed here also by Vinay: "Yes, all these bad
    things are true, but this is not what we intended.". That, and "give
    it time".

    But Vinay, we are not living in 1976: this is 2022 and it's all
    about unintended consequences now. And we do not have time.

    Anyone who claims that blockchain-as-in-practice-today is just a
    basic technological brick ignores the total sum of our collective
    experience from 2000 onwards.

    It's like saying social networks, or even graph theory for that
    matter, are a technology with both good and bad aspects, but then
    again: Facebook.

I wonder how much time we have.

    I might sound rant-y but I'm an optimist at heart, and I won't throw
    the baby out with the bathwater. So I'm asking: what about these
    (and other) unintended consequences? What can we do about them?
    Today*, not tomorrow. With blockchain or not, according to your
    tastes.

    For example, as Bruce wrote in #7, in our chronically diseased world
    there are some things you just can't do anymore. Maybe coordinated
    action at an inter-national level is one of them.

    Are DAOs any kind of reasonable answer to that, today? ....

permalink #208 of 349: Vinay Gupta (hexayurt) Sun 9 Jan 22 09:16

    ... https://twitter.com/avalancheavax/status/1456334992687128577?lang=en-GB

    Avalanche is 20? 30? 100? times faster than Ethereum, Ethereum
    compatible, and emits less than 500 tons of carbon a year - and is
    offset.

    I sorted out their carbon credits buy last year for COP26, as well
    as encouraging them to go Net Zero in the first place.

    It's already here. Ethereum will take a bit longer to reach Net
    Zero, but they'll get there.

    Bitcoin is A Problem. It would cost about a billion dollars a year
    to get Bitcoin to Net Zero. Maybe half that if they can prove how
    much solar/hydro/wind they are using, which is going to be tricky.
    Moving those people to Net Zero is going to take either a miracle or
    acts of law: they've defined that electricity burn as core to their
    security model, so they would have to unpick a decade of propaganda
    to move to a "proof of stake" bitcoin fork.

permalink #231 of 349: Gyrgir (jonl) Mon 10 Jan 22 07:15

    ... Orthogonally, I'm not
    happy with carbon accounting in this way because it depends on all
    kinds of data that aren't there, blockchain or not. It also follows
    a near identical hype curve with Internet of Things and for good
    reason. As nothing large-scale beneficial happened through/with IoT
    in the last 10 years, I don't expect anything from carbon accounting
    either.

Onto the interesting detailed content from Vinay:


permalink #143 of 340: Vinay Gupta (hexayurt) Sat 8 Jan 22 07:35

    ... I did a lot of
    the early comms and project managed the launch of the Ethereum
    project. A lot of these concepts like Web3 come out of the period
    when the Ethereum team were discussing how to communicate what we
    had done.

    Note: I divested in 2016 so I am not a multi-millionaire unlike all
    of my cofounders. I feared the wrath of the SEC, and the SEc turned
    out not to have any wrath at all. At which point... <shrugs> not the
    first fortune I've missed out on.

    I will now proceed to assign homework.

    https://vimeo.com/161183966 is a talk I did about five years ago
    which explains *what is happening* with blockchain at a fundamental
    sociotechnical level. This is before tokens, this is before ICOs,
    this is before there was any real money in the field. This is the
    definitive *what this technology will do to our society* talk, from
    before the ponzi scheme people arrived.

    The basic story:

    first databases lived alone - isolated inside of organizations

    then databases were networked between organizations using APIs, but
    peer-to-peer collaboration through APIs is *extremely* difficult as
    the number of collaborators scales. This is the N SQUARED problem:
    50 computers in fifty companies trying to talk to each other
    peer-to-peer needs 2500 successful technical integrations. The
    amount of human labour involved is serious. At 100 computers, it's
    10000 connections. At 200, four times that again. Large scale
    machine-to-machine collaboration is impossible except for very
    simple protocols.

    What do we get instead? Hub-and-spoke monopolies: you connect to
    Square or VISA or Intuit, and they connect to everything else for
    you. You need one technical integration: "my software talks to
    Google, Google talks to everything else". Hub and spoke concentrates
    power in the hub.

    This N SQUARED problem is utterly fundamental. If you don't
    understand it, reread what I said, ask me questions, whatever it
    takes. But until it *clicks* and you realize that peer-to-peer is
    *impossible* because of the complexity growing as (at least) the
    square of the number of diverse systems being integrated, the need
    for blockchain will not make sense to you. You must get clarity
    about this critical point before forming an opinion about Web3.

    Now, those hub-and-spoke service providers? That's the
    wealth-concentrating megamoghuls of Silicon Valley.

    Why does Facebook exist? RSS readers failed, so rather than having
    everybody with their own blog, and I have my feed reader which does
    not insert advertising and I pay for my own compute and bandwidth,
    we have the entire social graph of an entire society owned by a
    private entity.

    Why does RSS fail? Different blog software outputs different RSS
    feeds. Different readers may fail to render some feeds, some times.
    "Oh, right-to-left unicode characters on wordpress 1.5.2 break font
    rendering in FeedStorm, but only on MacOS 8.3 and above." That's a
    classic N SQUARED problem: five dozen RSS-emitting blogging
    platforms, five dozen feed readers on five different platforms, and
    the software complexity just got more and more tangled. The system
    because hard to use, understand, and (critically) expensive to
    maintain.

    FB comes along and is basically "right then" and has one piece of
    blogging software and one RSS reader which it controls, and that's
    it: you connect to FB, FB connects you to everything else.

    This pattern replicates **EVERYWHERE** once you can see it: gmail,
    sure, ate decentralized email. VISA ate decentralized bank card
    settlements.

    Over and over again, the technical complexity of keeping things
    peer-to-peer rises as the peer to peer networks scale. So you get
    great little subcultures of peer to peer innovation, then they
    scale, then the N SQUARED problem makes them too expensive to
    maintain, then a monopolist comes in and eats the P2P network and
    replaced it with a hub-and-spoke monopoly which winds up owning the
    entire "connectedness infrastructure" of whatever it is they just
    ate.

    Blockchain is the solution to this problem *for exquisitely fiddly
    technical reasons which are almost never discussed in the press
    because almost nobody understands them.

    I will explain in the next part what that solution is, and why it
    actually works. But, first, please watch the video I linked. If you
    want to understand Web3 *properly* start there.

    I did not coin the term, but I certainly created much of its
    meaning.

permalink #366 of 366: Vinay Gupta (hexayurt) Sat 15 Jan 22 02:14

 

    Here is an NFT on OpenSea which gives the owner the right to
    physically take delivery of a 1oz gold bar currently vaulted in
    Singapore, or its financial value.

    https://opensea.io/assets/0x495f947276749ce646f68ac8c248420045cb7b5e/478243877
    05324153400210554042155132922682187088261737780213014306821163188225

    When this NFT is purchased, each new buyer pays 2% of the value of
    the NFT for a set of six Ricardian contracts, each signed by a
    real-world legal entity with a bank account, corporate registration
    documents etc. Actual companies, including my own, which
    orchestrates the legal-technical interface work.

    The payments happen on chain, and the proof of payment (a digital
    signature on the blockchain, authorizing the payment) constitutes
    acceptance of the contract: a service is offered, accepted, and paid
    for in a single transaction.

    You can see this suite of contracts here:
    https://passport.mattereum.com/ntfa.20210319.20.alpha.004.619263/

    Each warranty offer protects the Real World Asset gold bullion NFT
    buyer against a different class of risks. Together they form a sort
    of "legal testudo" - providing a relatively secure armoured shell to
    protect the assertion that the NFT buyer **actually gets the gold**
    or equivalent financial value in a very broad range of
    contingencies. Over time, obviously we'll add more and more
    protection in layers to get closer to 100% protection over time.

    Here is the full legal text of one of the Ricardian contracts:
    https://passport.mattereum.com/ntfa.20210319.20.alpha.004.619263/06_carbon/ass
    ets/out/certification-contract.html

    This one is a contract between the NFT owner and my company, which
    guarantees that we have bought-and-retired carbon credits to cover
    the physical mining of the gold bullion that is being sold. It also
    covers the CO2 emissions of the NFT issuing process.

    Clause 20 has the arbitration machinery.

    We've worked fairly closely with the UK government on arbitration
    rules for blockchain asset disputes.

    https://www.pinsentmasons.com/out-law/news/new-dispute-rules-envisage-direct-t
    o-blockchain-enforcement-arbitral-decisions

    The rules themselves are here:
    https://35z8e83m1ih83drye280o9d1-wpengine.netdna-ssl.com/wp-content/uploads/20
    21/04/Lawtech_DDRR_Final.pdf

    We get a name check on page 4.

    So what's being built out here is a very tightly bound legal
    framework for buying and selling physical goods, with suites of
    Ricardian contracts creating legally-enforceable claims about what
    the goods are **DRAWN ON THIRD PARTIES**. Those third parties do not
    benefit from the sale of the goods themselves, they make a living
    providing legal warranties on the goods - they're essentially third
    party inspectors with no economic interest in the situation other
    than by selling insurance on the fact that something (for example)
    contains no slave labour.

    We work with a world class anti-slavery expert on a long term
    project to drive slavery out of the supply chain using exactly these
    kinds of certification protocols. I would estimate it will be two
    years before we are doing this at an industrial scale - it is very
    complicated - but the will is overwhelming and the technical, legal
    and slavery-prevention expertise is sufficient. We are going to do
    this, do it right, and do it at scale. It took us a couple of years
    to get CO2 done, and now all the NFTs we produce attached are fully
    offset.

    We also took the entire Avalanche blockchain Net Zero CO2 last year.

    https://podcast.mattereum.com/episodes/ending-slavery-with-technology-social-m
    ovements-with-helen-burrows/transcript

    You can read more about our anti-slavery work here.
    https://passport.mattereum.com/ntfa.20210319.20.alpha.004.619263/

    The objective is to produce a trade commons: a circular economy ("on
    the blockchain") in which all goods are fully CO2 offset, slavery
    free, and nearly everything has been used before and is being passed
    around and used, repaired and re-repaired, until it is genuinely
    done.

    We think that will produce both higher quality of life, and
    *dramatically* reduced environmental impact from that quality of
    life.

    I've put this stuff here in quite some detail to really illustrate
    the point: Ricardian contracts are extremely powerful tools for
    creating the world you want if they are applied diligently and
    intelligently to real-world problems. It is an act of will: you have
    to *push* in that direction to get the blockchain to behave this
    way.

    Otherwise, if you don't, it's a lazy beast that follows the path of
    least resistance, and you get very expensive
    cartoon-monkey-wearing-a-hat jpegs.

This might be a way forward to addressing the problem of how blockchain or whatever distributed ledger systems for tracking goods actually connect to the reality, or not, of the physical items.