Bitcoin showed a new way for society to interact. But something went wrong

Every time I see information about the future value of Bitcoin — if ten times more people begin using it, or if offshore funds start using it, or maybe hedge funds — there’s something that makes me feel uneasy. It did not seem like global transformation of society due to the onset of decentralization, or transparent practices of management, or anything in that vein. It was only later that I realized that what we’re witnessing, on a global scale, is the redistribution of resources (in a decentralized way:) ) between the smart and the hopeful. The ICO industry has only deepened that feeling. Everything written below are completely without value-judgements, and are purely the facts that I’ve witnessed recently.

Crypto-currencies are being promoted now like multi-level marketing (I’ll talk ICOs separately):

• ‘Get on board, before they all do’
• ‘Buy now at a 50% discount / buy the dip’
• ‘Just look how very few people have bought so far’
• ‘If you had bought back in 2013, you’d now be…’

Instead of getting on and creating actual value, people are being talked into taking part in a zero sum game.

What community can do instead? There are several approaches:

1. Promoting Bitcoin as a currency that’s not controlled by a government. Bitcoin offered the chance to skip around all regulations (be they patrolled by democratic society, such as combatting human trafficking; or imposed by tyrannical regimes to bolster their power) concerning financial transactions. Anyone who this actually suited, for their own reasons, switched all their financial operations into crypto-currencies. From a legal viewpoint this isn’t legal, and states are unlikely to take it in the near future (as we’ve just seen in China).

Conclusions: I don’t believe in a Bitcoin that can be ‘regulated’, with ‘accountable’ exchanges, KYC, taxes on trade, traceable transactions, or mining licenses. This won’t be Bitcoin at all, and its value will drop to 0 (and I can prove why, too). Sure, and in result, marketing of Bitcoin as a payment method will be interpreted by powerful states as trying to bring down the system. That’s why I don’t expect any real adoption in the short-term.

2. There’s a stress on the contribution Bitcoin can make in developing new ways of interaction between people. This is where the mechanism of consensus comes in, along with game theory, incentives for project contribution, smart contracts which aren’t reliant on trust, and all those things. Bitcoin has shown it’s possible to set up a decentralized, anonymous, autonomous system that processes financial data. On this basis, you could come to any governmental body, and require it to transact its financial processes transparently. Keeping things locked up for the sake of security has ceased to be an argument. The technical side of this issue is hugely simpler even than Bitcoin.

Conclusions: Economies which work in the most autonomous way possible, according to built-in and unchangeable laws, reward their users flexibly, and grow on the basis of quick feedback from users, and will gradually replace old-style economies. But implementing this kind of project is much more complex than it may seem — and there are no quick fixes in this area.

3. Technological breakthroughs in the financial sphere. Bitcoin has shown that asset management using cryptography is seriously viable idea. We could set up accounting systems, or asset trading, in substantially less costly and more secure ways.

Conclusions: Making use of modern technologies in the financial sphere optimizes the use of resources, offers many people access to capital, enables cuts in time and material costs, and ushers in a new era of entrepreneurship (just as the Internet did).

Which of these aspects should be our main focus is a question for individual personal choice. I would really prefer that things weren’t based on promoting ‘investments’ that will only grow in value. Our company Distributed Lab, for various reasons, chose Approach 3 (we got our fingers burnt by nuances in Approach 2). We share all of our knowledge on these matters with you via our YouTube channel, where we post videos of our free blockchain online-course (in Russian, but English is coming too): https://www.youtube.com/playlist?list=PLhZQuknA7yUBt82ow8rEfw_G8tNZjt3qB

We use the same principles of content selection at our conferences. The nearest one is Blockchain.ua (https://blockchainua.com/ — 23rd of March). There will not be any advertising of token sale — and if you find any, we’ll help you buy them with a 10% discount! :)