After reading that if one year ago I invested $1000 in the Shiba Inu cryptocurrency, today’s return would be $740,258,740 (yes, you read well: $740 million), I started digging into the crypto world. Speculations are no big news but to this level?
As an Equitist, I believe that financial hyper-speculation is wrong, especially when untied to any benefit for a community. But when looking into the new world of cryptocurrency, I found much more than just speculation. The ambition of the men (unfortunately, mostly men as a very unequal sector) behind these currencies might be revolutionizing society.
Buckle up, and follow me on this journey exploring cryptocurrencies and what this might mean to an equitist world.
FIRST: WHAT’S A CRYPTOCURRENCY, BLOCKCHAIN, DAO, ETC?
Investopedia gives a pretty neat definition of a cryptocurrency: "A digital currency in which transactions are verified and records maintained by a decentralized system, rather than by a centralized authority." Cryptocurrencies are literally booming as they represent a new vehicle to store value - as gold and other elements have been for millennia - that cannot be manipulated or regulated by governments, as their decentralized nature means they are normally run by the community that uses them. Cryptocurrencies use blockchain as the technology that verifies and records those transactions. Blockchains run on a distributed network of millions of computers making it virtually unbreakable. For this reason, blockchain makes for a decent store of monetary value, voting records, and other types of information.
The most famous cryptocurrency is the one I am sure you have heard of, Bitcoin. It was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. In the last decade, many more were created (and many failed, and many others were scams). The second most important cryptocurrency is Ethereum, which became a key player allowing anyone to deploy decentralized applications onto it (basically, build companies and other things on it). This gave way to the creation and exchange of NFTs - units of data often used to create million-dollar-worth digital art pieces. It also created a thriving "play-to-earn" gaming industry where users can bet and compete to win coins (check out Axie Infinity's incredible story here and how people in certain countries are living off it).
The community of enthusiasts in this space is vast and genuinely engaged. Not only because the prospects for profits are immense but also because many believe that the creation of Decentralized Autonomous Organizations (DAO) - what I pointed at before: organizations like Ethereum, Bitcoin, and so on run by their users and not by their founders/a small group of owners - will soon transform many other sectors than finance, arts, and gaming. Ethereum founder Vitalik is already theorizing about blockchain-run cities, while many others are thinking about the potential of fully decentralized parties and nations.
LOOKING INTO THE DARK SIDE: WHY DO CRYPTOS HAVE A BAD NAME?
As an unregulated and largely anonymous store of value, cryptos have a name to be a tempting field for illegal activities. Arms, drugs: is the world mafia running its affair on bitcoin? Recent studies seem to disprove this point: “In 2020, the criminal share of all cryptocurrency activity fell to just 0.34%”.
However, at least three issues are genuine when talking about cryptos.
- Outstanding energy consumption that such a decentralized network of computers uses to run the blockchain. A recent Cambridge University analysis concluded that Bitcoin consumes more energy in a year than Argentina. Obviously, in a time of great ecological distress, this is already a huge argument against this tech.
- As in every highly-attractive, tech-driven investment opportunity, scammers thrive. In the last years, there have been countless scams. It’s recent news that the “Squid Game coin,” a highly-anticipated release, was just a scam that defrauded 40,000 investors: stories like this are not rare. This is mostly due to the lack of knowledge when it comes to crypto & info - people are less likely to make sound decisions & be defrauded.
- The industry has also been plagued by a gigantic lack of access. There’s a huge gap in terms of gender (twice as many men as women invest in cryptocurrency in the U.S.) and those with the financial capabilities to take risky bets - normally men - are up for huge profits further concentrating wealth in the hands of a few. And these patterns are not only coming in the gender field but also across other traditional divides such as race.
Hence, it is clear that the crypto and related technology are at risk to replicate history-old issues such as putting profits over the planet or becoming ‘elite-dominated if not addressed early enough.
THE EQUITIST VIEW: DEMOCRATIZING IS ACTUALLY VERY COOL! BUT…
So what can we make of this phenomenon after such a long explanation? From an equitist point of view, if purged from the issues previously mentioned, Decentralized Autonomous Organizations might be an excellent tool to make the world a bit fairer. This is because a DAO can allow for equitable access to opportunities and rights to all its “users,” if its parameters are strictly set against biases/prejudices that humans tend to input in every process. For example, a decentralized public administration authority will not be tempted to allocate more public funds to projects submitted by “better connected” people, while it could actively support people from traditionally discriminated backgrounds. In addition, the efficiency of such setups would allow for way more transparency and speed of execution, and exponential democratization of processes.
As today’s participatory democracy is complex and slow at times, tomorrow’s one could be as simple as logging in to your phone to express your view on a decision for a local budget as well as for debating on the need for an expansion of rights in a country. And why even need physical countries anymore, when one could build digital states to allow for wonders at unprecedented scales, uniting people from every corner of this planet (and beyond) to cooperate and work as one?
However, this can only positively impact the planet if we do not forget the primary lesson history taught us: at times, propaganda and false promises can sway large numbers of people in horrific ways. Precisely as today’s cryptocurrencies experience an impressive shift in values if Elon Musk tweets on the topic, how could other decentralized networks be impacted by the likes of tomorrow’s Trumps (or worse)? Together with the big issues described in the previous paragraph, this is the real nut to crack as while some are willing to take a financial risk with Bitcoin, no one should be able to do the same with the future of our societies.
So let’s be open to this new world; let’s embrace technologies that can make our societies radically more equitable but let’s work to create solid parameters to eradicate discriminations and inequities and make them resilient to the worst instincts of the human race.
- Ways to contribute: email me your thoughts on how to protect DAO from populism, and at Atlas, we are working to explore the potential of a Digital State. Email our team for questions or to join them!
Interesting sources: a very interesting piece on 'cloud countries' by Balaji Srinivasan, the work on crypto-UBI by Santi.Eth
THE EQUITIST CORNER
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