Blockchain utopia

When people write articles on the subject of blockchain, they usually repeat the same explanations of how it could work rather than how it actually will work. A recent LinkedIn post with just such an article is a great example.

“It would require a cultural shift towards the adoption of new working practices, but if successful it could prove, for example, that money went on organic fertiliser instead of chemicals.”

This is the bit I don’t understand, and nobody has realistically explained.

15 years ago I worked on e-Conveyancing and one of the biggest challenges was network effects. A system that provides authenticated, instantaneous end-to-end transactional completion was effectively worthless as long as a single transaction existed outside of the network.

Similarly here, at some point money exits the supply chain into fiat so suppliers – ultimately people? – can buy things like food or other basic staples. They’re not doing so with integrated* digital currencies and likely never will. And at that point the value of the entire network collapses.

(*Integrated is a key theme. While blockchain is a gold-rush and there are many players there is little incentive to interoperate, and thus the network chain is even shorter before collapse. Ultimately things will coalesce into a small (single?) pool of chain suppliers, reducing the risk of collapse. But at this point the decentralized benefit of blockchain disappears and the solution is no different to an existing centralized transactional log, i.e. blockchain doesn’t need to exist anyway.)

As with e-Conveyancing the solution is an all-or-nothing adoption that is to all intents and purposes impossible to implement and enforce, particularly in a world that can’t politically agree on, well, anything!

In my view, this is why blockchain is so much hype over substance. I get the math and it sure works in theory, but it relies on a technologist’s utopian ambition that just doesn’t acknowledge the reality of the world.

I think Erica tries to hint at this at the very end, despite falling back on a banking paradigm that she herself criticizes of the mainstream media:

“But once people have access to “mainstream” wallets that allow anyone to send any amount of money, pay direct debits, interchange between crypto and fiat seamlessly and with insurance – many if not all will have no need for an ordinary, day-to-day bank account ever again.”

My point is that for the promised benefits to materialize it’s not “people”. It’s all people. And it’s not “access”. It’s use.

I’m yet to see a proposal to overcome this issue.