Thing 1 of 10,000 i don’t understand about blockchain
Recently I read a report about how bot trading manipulated an increase in the global average price of bitcoin from $150 to over $1000 in a few weeks. Reading this, I was pretty upset. What if the spark that set off a global conversation was completely fraudulent and cost real people real assets? (other links here, here, original here.)
Talking to crypto enthusiasts, they seem unfazed.
‘Sure, there are bad actors in the market, there are bad actors in every market.’ ‘Sure, there are attackers and vulnerabilities in blockchain technology, there are vulnerabilities in every technology.’ Fair enough.
However, here’s what i don’t understand about this technology in particular (the first thing, at least): if blockchain technology is fully transparent and totally private, doesn’t that make it all the more fallible?
Beyond the directly implicated parties, doesn’t blockchain in effect trivialise accountability because it deeply decontextualises information? Doesn’t accountability only matter if the people in the populaiton of that network have the time and effort to care?
One of the things that i am promised by blockchain enthusiasts is transparency. One analogy I’ve heard is that blockchain is like having an auditorium full of accountants, each with their own ledger, and blockchain trades are like walking on the stage of that auditorium and annoucing the transfer of assets from one place to another for everyone to record. That metaphor tracks well in a local city hall, where 100s of people could record hundreds of transactions.
But i’m confused about how that metaphor scales. Because there are not just 100s of people in the auditorium, there are millions. And there is not just one stage and one microphone, there are 100s. And the meeting of accountants is not just one or twice a day, it is perenial, across time zones. So the blockchain is being adjusted when you are asleep, and when you are not paying attention.
And though it is all being diligently recorded, we’ve seen several times that what is being recorded is sometimes fraud. Card-counting, loaded die. Right in front of our noses. On our own books. In our own handwriting.
‘We trust maths so that everyone can enter the market.’ ‘We cannot fake the authentication so that we trust the value of the work.’
I like magic tricks where the rabbit appears out of the hat. But the magician lets me remain sceptical, I can be genuinely impressed without having to geniunely believe. I do not mind that the smoke and mirrors mask the inevitable (if unknown) fallacy of what I see.
Blockchain, however, seems to refuse my scepticism. It seems to demand my trust, but I cannot see that it deserves it outside local, boundaried contexts.
I am deeply cynical of the existing financial system. It is bloated. It is expensive. It is discriminatory and incredibly fickle, and because of that it is illiquid and supports the hoarding and abuse of resources and power.
We need better and maybe we have that with blockchain, but I’m not exactly sure how? I see so many much-need applications for blockchain, but I don’t buy all the rhetoric.
Can you help me? Comment and help me see what I’m missing!
