The false promise of Web3
https://marker.medium.com/the-false-promise-of-web3-7e6c1a00d4be
The advertised decentralization of power out of the hands of a few has, in fact, been a re-centralization of power into the hands of fewer.
The advertised decentralization of power out of the hands of a few has, in fact, been a re-centralization of power into the hands of fewer.
A few things to note from what I've learned about Bitcoin and "crypto" over the last couple of years.
In a Proof-of-Stake (PoS) system centralization of ownership is a big deal. It essentially means that the people who own more of the tokens have control over how the chain operates. They have the power to change to rules, so you'd better trust them if you're going to hold a significant portion of your wealth in their tokens.
In a Proof-of-Work (PoW) system it doesn't matter how many of the coins you control. It doesn't give you any special privileges over the rules. The rules are defined by the developers BUT they have to be accepted by the majority of nodes before they become "official". This makes it extraordinarily difficult to change the rules in sufficiently decentralized chain.
A good analogy for this is the difference between owning property (gold, chickens or barrels of oil) and shares (Tesla, Microsoft or Twitter). If you own enough shares in a company you can have a say in the future of the company. But if you own the majority of chickens, you can't change the fundamental properties of everyone else's chickens.
Also, the distribution graph in this article is misleading. Yes, there's a relatively small number of Bitcoin wallets with lots of Bitcoin in them but some of the largest wallets are owned by crypto exchanges, meaning the Bitcoin in them is actually owned by the customers of those exchanges.
Decentralization != equality.
The 80/20 rule applies pretty much everywhere. You can't escape from it.
The whole point of decentralization is so the top 20% can't stop the rest of the 80% from getting into the top 20%. Like oligarchs cooperating with governments on inventing "licenses" to get into a particular business. Or the "Twitter elites" banning important political figures just because they can.
I agree re crypto and NFTs but I'm on the fence with DAOs. The author makes the point that centralization exists in businesses because it's necessary, but I think he's wrong about that.
Yes, centralization becomes necessary as business entities become unnecessarily and unnaturally large. But it isn't necessary in small businesses — like, say, indie hacker projects.
Growth is good up to a point (probably right up to Dunbar's number, team-wise). After that, hierarchy and centralization and bureaucracy become necessary. Maybe staying small is the solution everyone's looking for.
Curious of indie hackers' thoughts on this. I tend to agree that Web3 hasn't had the greatest start and that it's shown more harm or limitations at this point.
I also agree that it's supported the e-centralization of power into the hands of fewer people. And that's ironically the opposite of what it aims to do. If the value of crypto keeps falling, I'm wondering how it will pan out.