Now that we’ve covered blockchain based subversion as a strategy, I want to go over why those attempts have all failed. I know the last article was long and tedious, but necessary.
Whether these ‘subversive technologies’ can actually succeed or not, Government didn’t just watch this all happen without trying to stop it. There are enough people in government, such as Elizabeth Warren who don’t need confirmation of the risk to their control structures to take action and wage a war on those who try.
They might even make an example out of them just to buy time.
Non-Fungible Tokens (NFTs) (2017)
Decentralized Autonomous Organizations (DAOs) (2016)
Prediction Markets (2016)t.
Decentralized Market Makers (AMMs) (2018) and
Algorithmic Stablecoins (2017)
Oracle Networks (2019)
Non Fungible Tokens (NFTs) are a good idea, and indeed were used in some jusrisdictions to prove ownership in the absence of government. One example that comes to mind is BitLand or BenBen, I think I remember, which was intended to capture GPS coordinates of land in Ghana, allowing a farmer to walk the perimeter of their property , then mind an NFT claiming - the property as their own. This was not a subversion because the government there hardly enforced or took care of resolving property ownership disputes on those areas. The next big revolutionary application is that of proving your identity. Sadly, it seems very few businesses have leveraged this, and government realized this was an opportunity and a path forward toward implementing digital IDs, in other words, the very dystopian opposite of severing the ties with government provided identity services, with the added complication that a universal digital ID might make interacting with blockchains for other subversive purposes in anonymous ways nearly impossible.
It’s a race, government hasn’t won yet, but it’s hard to see how it won’t be forced on everyone.
Decentralized Autonomous Organizations (DAOs) have seen some level of success, allowing some projects that were initially under attack by regulators to evade them. One famous example is that of ShapeShift, an exchange that allowed users to anonymously swap tokens for each other on Ethereum. When government decided to impose Know-Your-Customer (KYC) regulation, the company converted their business to a DAO, complete with software development managed in a decentralized fashion, in order to claim the business entity was not actually handling customer funds. Since then other platforms have released decentralized systems that accomplish the same thing, with stronger claims to decentralization. DAOs have also been successful in demonstrating the power of vote counting and self organization, offering decentralized services for conflict resolution, even paid adjudication - jury duty.
Still, early participants were quick to identify problems with participation, noticing that the members controlling proposals often were able to steer votes in favor of outcomes they favored.
Several DAOs were also created to implement socialist style mini-communities for the implementation of Universal Basic Income with similar complaints.
Whether we will one day see DAO based governance in the real world for utilities and public goods is doubtful. It’s unlikely governments will cede control of these sources of power, not simply because of the desire to control the decision making and outcomes, with all the corruption and parasitic behavior it enables, but also because these things are an endless source of justification for its existence. Any good it declares public in the spirit of ‘fairness’ , backed by its power to use violence to resolve disputes, usually ends up being a great source of conflicts and reasons to advocate being granted more powers.
It’s hard to see how DAOs could ever present a real subversive challenge beyond that of existing registered and legal organizations. Private Membership Organizations for example already allow communities to escape the regulation imposed on others, because they have been carved-out, similarly to religious organization and others. In other words, the government agrees to let them be, for now.
Prediction Markets markets were an early innovation that held a lot of promises in my mind. For free markets to function, a lot of effort and resources must be spent evaluating risks. Reputation is one such thing - the Augur Token is named REP for a reason that escapes most people. If any kind of Peer to Peer market could develop to use Bitcoin or other crypto currency and function entirely on decentralized systems, then it would need these sorts of systems. A future blockchain-based AirBnB or Uber would need to use reputation systems and insurance, which ultimately would need prediction markets to remain decentralized.
That was my understanding and hope.
Reality set in almost immediately after Augur went live. Some idiot published an assassination market - one that predicted Trump would be alive in 2018, causing the press to comment on how fringe and unhinged the blockchain space really is.
Augur now has a community based review of markets to eliminate these.
It also suffered a slow decline as Ethereum transaction costs went up.
Other markets, Kalshi and PolyMarket were released on Layer 2 chains such as Polygon, allowing for a vibrant explosion of new markets, mostly gambling on sports and current events, elections and other things. Kalshi is more centralized. PolyMarket isn’t but it’s difficult to tell how much control exists. Regulators are already trying to figure out how to reign-in these platforms. Prediction Market’s reputation (ironic huh) was smeared further when some French millionaire made large bets and won big on the election of Donal Trump, providing mainstream media plenty of ways to spin up fallacies of election interference for the weak minded.
So, Prediction Markets are in a way one of the few places holding promise of true subversion if they can survive the attacks of regulators, but so far, I haven’t really seen anyone trying to really subvert. Their ability to tease out risk from the wisdom of crowds is a direct attack on government’s quasi monopoly on risk evaluation in many domains: beside being the sole ‘evaluator’ of risks to your life from foreign and domestic threats, it also inserts itself as the evaluator of last resort in motor vehicle risks, health risks, pathogen risk, diet risk, pollution risk, flying risk and many others.
It’s doing such a great job at it that it is now venturing into complete surveillance of the citizenry to make sure there are no flight risks. Yes, that’s sarcasm.
I suppose the Bitcoin folks think Bitcoin fixes the banking risk, and many of the other non-lethal ones, and indirectly those related to government overreach, so it’s a legitimate endeavor to at least remove those risks and prevent the nefarious affects of an out of control government enabled by its money printing. But there are many other things Bitcoin isn’t designed to fix, for example reputation and insurance.
For reputation to ever be handled by blockchain systems and some kind of prediction markets (your reputation is a prediction on the future risk of associating with you), we’ll have to at least wait until Identity has been solved and accepted.
I’m going to lump together the discussion of Decentralized Market Makers (AMMs) Algorithmic Stablecoins and Oracle Networks, because there isn’t much to say yet.
Decentralized AMMs have been effective at thwarting the government’s efforts to regulate crypto markets, but the surveillance has been much harder to evade.
At every Fiat on/off ramp, there is a government man with an axe, watching what you do. So, while it’s cost-ineffective for government to chase after every small time crypto trader who didn’t report swapping BTC for a meme coin that appreciated ten-fold, and it is much more profitable for government to go after the bigger fish who can pay the tax man of bribe him, it is still significant for those who get in the government’s cross hairs because the tools exist to make their lives miserable.
Oracle Networks, whose subversion would be welcome as an alternative to corporate media and government approved news, have not really flourished in that domain, for the reasons that should be obvious: citizen reporting on alternate media have been hugely successful at investigating the secrets governments would have preferred remained hidden, with the assistance of AI and the temporary and imperfect relief from censorship due to the purchase of X by Elon Musk.
They have limited their activities to providing prices for decentralized market makers and event outcomes for prediction markets.
Stablecoins have caught my attention because although I initially considered them a mere necessity for on/off ramping, I realized recently that they had far more potential to rescue the US Dollar from its demise, but also because it may end up at the heart of the next big financial crisis. It’s not on topic, so I’ll just say that the multiplier of US Treasury rehypothecation was around 6.5 several years ago, and if stablecoin users manage to figure out how to rehypothecate them in a world-level credit laundering scheme, we could see the scale of Z1 go up dramatically with consequences that are hard to foresee. When I reach clarity on this subject, I will write more.
This is the sad state of the decentralized world.
Sedition is alive and well. Subversion, not so much.
The attempts were honest but complicated. The normies still trust governments.
The crypto bros got hypnotized by bored apes and lambos in Dubai.
So, we need to talk about Sabotage.
