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If you haven’t heard of web3, that’s probably good news. It means you aren’t being poisoned daily with new arbitrary concepts that people come up with under the guise of “helping society.” Anyway, in short, it refers to a “decentralized web” made up of decentralized apps that are all, theoretically, controlled by a decentralized authority, meaning that nobody “owns them” except the users themselves. One of the core tenets is the idea that you cannot be banned or censored on web3, and you own everything you put on there.
There is also the concept of the DAO - the decentralized autonomous organizations - that are (allegedly) meant to be authorities that are controlled either totally autonomously or by “user democracy,” by which they mean “every user gets to vote on any proposal that a user puts forward.” They use “smart contracts” (autonomous pieces of code) that operate the business operations, and in a vacuum, that’s pretty cool - that you can set up a software entity that runs itself, assuming the code is sound. Users can submit a proposal and then vote on, based on how many tokens they have. This all sounds lovely until you think about it for a second.
“DAOs are basically like if you started a business that went public on day one, and held shareholder votes way more often,” says the writer Nathan Baschez. There’s a program called Snapshot that facilitates this voting process, allowing DAO members to use tokens as votes in a group poll. The more tokens you have, the more votes you get.
So, assuming we follow this thought experiment, DAOs fall into the same issue that stops shareholder votes from being “democratic” - that whoever has the most shares/tokens can vote for whatever they want, meaning that it’s an oligarchal system. Web3 is built on a (flawed) postulate that the existence of the possibility of democracy is the same thing as a system being democratic - and is purposefully engineered to give dominance to those who have the most “things” - in this case, tokens.
The problem that all of these things have - DAOs, NFTs, cryptocurrencies, etc. - is that they have all equated the idea of “freedom” with “decentralization.”
The posit is that because there’s no central authority, anything goes - that there will be nobody that ‘owns’ web3 because what makes it run is decentralized, meaning that it cannot be “brought offline” based on some sort of government overreach or attack of some sort (other than when that’s happened). It - once again! - equates the existence of a system with the guarantee of a possibility, in this case, that because anyone can theoretically create in a system that they have the means and ability to do so, which they do not because creating crypto stuff requires time, money and the ability to code, which a lot of people don’t have.
More importantly, there is the assumption that freedom equals equality, which it does not. While a DAO may seem democratic, it is controlled not simply by those who have the most tokens (IE: money or early access, meaning privilege) but by those who wrote the smart contracts that operate it. Are those people free from bias or mistakes? Just because their code is published publicly doesn’t mean that there aren’t issues in it, and despite everybody being able to read their code, there is no guarantee anyone will notice a mistake - or whether those people give a crap if said mistake leads to harm against women or people of color.
The Problem with Freedom
People have a great attachment to the idea of freedom - that we are “free” to do stuff and that any impingement against said freedom is a cardinal sin - and the entirety of crypto is built around the idea that more freedom is good, and freedom means no centralized rules or controls, with protocols that are run “without the permission” of government authorities or resource-rich entities.
Except nobody wants total freedom because total freedom removes the bumper guards that most people disregard. And I do not believe that a majority of the crypto industry is actually interested in “freedom,” nor do I think DAOs or NFTs are an attempt to create more equity or access - it’s, at its core, just a way to abstract wealth away from those they perceive as a threat and making said wealth for themselves.
True freedom - the ability to do what you want, where you want - comes at the cost of others being able to do what they want, where they want, potentially in front of or to you. If you were conned out of, say, a $150,000 piece of artwork, you would go to the police, and (potentially) they’d help you recover it. If it was a unique piece of artwork, it would be challenging for someone to sell it because it is now a stolen good, and the act of buying, selling, or even possessing it is illegal.
However, when somebody cons you out of a $150,000 NFT of a monkey, there is no way to recover said monkey picture. Thanks to the wonders of the decentralized web, it was pretty easy to steal the monkey picture - from what I can tell, it was a social engineering attack where the person was conned into updating their wallet’s settings to give someone else access - and there is no way for them to get it back unless the person decides to return it.
An interesting twist in this story is that three of the significant NFT trading platforms have now banned the sale of this particular monkey picture. Why does this matter?
Because it shows that there are absolutely centralized authorities in a decentralized system and that it is not truly “free.” Perhaps it is free in the sense that Opensea and other NFT trading platforms exercise their rights to control what does and doesn’t happen on their platforms, but it isn’t free in the “nobody gets banned” sense, which is one of the core selling points. People want there to be guardrails and controls, and people will still gravitate to trusted platforms, trusted platforms that guard them against the costs of freedom.
That’s because - like I said! - web3 isn’t freedom, because nobody is truly, fully free. And these systems are not “free” or “owned by the people,” but owned by the people who created the systems. These people will always have the leverage, always have the control and always have the ability to do what they want, because that is the system they built. They may be able to create systems that stop them being able to do literally anything - but these systems are about as free as the systematic inequality of America, in that they are simply decentralizing who is inheriting the wealth and power.
Now, the big dumb guy response here is that “the crowd will just move to a fairer platform,” which is not happening because people do not want totally unrestricted and unmoderated platforms. To claim that these are “free” because a human being is not running them is ridiculous - autonomy is coded and controlled by a person’s whims, whims that can be corrupted based on their own history, biases and privilege.
And, generally, when people say a platform isn’t “free” enough, it’s because their particular brand of bigotry or libertarianism isn’t allowed. Gab is a great example of a truly awful company run by terrible people, based on the idea that people should have “freedom of speech.”
In this case, I think it’s more annoying and avaricious. Those claiming that web3 is the future, and that everything must be decentralized, are simply trying to rig the dice of the casino before anybody has learned the rules. Putting aside the insane transaction costs of Ethereum, instead of having a company controlled by a CEO, their board and the hierarchy of the company, you are actually centralizing power based on whatever the person or people were that created the code, and the “voting power” is entirely based on how those same people decided it should work.
They’re capitalizing on two painful threads of modern society - the greed and desperation we have to be wealthy and powerful in an unfair world, and the desperation we have to feel like we’re part of a community. The Web3 zealots play on the feeling of helplessness that many feel and give them a false image of control - that simply by existing in a community they have more power than they have, that web3 “allows them to control the future of a company,” that “their community has their back,” and so on.
In reality, these are just as greasy and untrustworthy systems as those that currently enrich people, sold to people as a dream of, deep down, having the same ability to control and manipulate others. As with NFTs, a more convoluted idea is being sold as a solution to a problem that it has no relationship to - while algorithms are useful for solving problems, they are not the solution to monopolies or bad leadership. And it’s all so transparently tied to the idea of enrichment - of being “first” to things, of being “early,” of “getting in on the ground floor” - all of which are ideas that would not matter if there was not a clear goal to enrich someone, packaged and sold as allegedly enriching everyone.
The big, stupid suggestion is that web3 is the solution to big monopolies controlling people’s lives. The problem is that these networks - no matter which one you pick - are still monopolies, except instead of the company everybody uses being the monopoly, the monopoly/monopolies are in the literal protocols you use to access whatever it is you’re accessing. And how fair is any platform that requires you buy a token to access it? Or that requires you to have a certain level of computer literacy to access it? Or, indeed, that requires venture-backed players to launch a company on?
You are ultimately taking the company in question at their word. While Uber is a labor-abuser company that burns money, if they charged your card $420,000 due to a coding error, that would be illegal, and you would get that money back. If a bad smart contract takes your money, you are screwed, even if the screwing was done accidentally, and if someone steals your $150,000 monkey picture because you changed your settings to send it to them, there is no way you’re getting it back, unless you build something into the contract system that builds a method of reversing a transaction - which, of course, would immediately remove the entire point of having an immutable, unchangeable blockchain. Also, who decides if it was fraud, or someone willingly handing something over? Sounds like something one would refer to a central authority of some sort, like a government.
Sidenote: I also feel like many of these people don’t really understand what the point of a centralized authority is. While America isn’t remotely perfect, fair or equitable, there are at least base rules that exist that theoretically stop people from simply executing others in the streets, stealing their property or moving into their house and saying “this is mine now.”
Laws exist to limit and restrict human behavior, as human beings are chaotic and selfish. While one might perceive having less laws as having more freedom, having less laws also means that others have more freedom to restrict your own.
In the case of a company, a company generally is centralized because the random people yelling at them on the internet don’t necessarily know how things are built or what’s possible. While one might want the input of a community, surrendering control to it would not necesarily benefit the success of the company, or even the community.
The decentralized utopia does not exist, because a decentralized world is not one that actually works. There is no truly decentralized authority that is designed by a human being, as human beings are flawed and selfish creatures that will create something that they like, and the only way for one to truly work is to give everybody administrative privileges and no means of communication, or be small enough that social pressures matter…and even then, that is a biased system.
Note: you could have a totally unrestricted and unleashed codebase that is entirely controlled by a democratically-distributed token in a theoretical universe, and it would be very funny and not good at what it is trying to do. Email me at mtgox@quibi.info if you disagree.
And in the end, how is this better than the current system? Why do we assume that because people can vote on everything that system is better? There will always be those with more power, those with more control, those with the ability to manipulate and influence - and these systems do not mitigate said influence or control, and in many cases enhance its ability to permanently and brutally exploit others.
A Footnote from your newsletter writer:
Hello all, thanks for reading this part. I’m thinking about adding an advice column to this Substack, as I fairly regularly get people randomly commenting/asking stuff anyway, and thought I’d get it more organized.
If you have a problem at work that you would like advice on, please email me at ez@substack.com (a real email address, I promise) with the subject headline “Please Help Me.” I will publish (anonymously) comments and attempt to answer them.
If nobody likes it or emails, that’s fine, I won’t do it anymore, but it seems like a fun idea.