The strong network effect of “good manners” stands in the way of decentralization

Why can’t we have our decentralized, cryptographically secured private cake AND eat it at the same time?

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Most folks’ wants are close to the mean. The normal distribution underpins this in many questions in the social sciences (keep implicit Response Bias in mind!)

The answer to the subtitle is rather obvious: because the desire for privacy stands against continuously shifting social norms which, for most individuals who dwell in meatspace, will outweigh any gain in financial privacy because the majority of human beings, sampled over large numbers, prefer likable company and a positive self-image that is socially reinforced over gaining plausible deniability over financial matters. The desire to show “good manners” in exchange for social inclusion is what slows down true decentralized solutions and pushes them to the fringes — and excerbates the problem of scams. Social recognition has the strongest network effects out there and that is why Education, in my humble opinion, should trump all other activities.

The desire for financial and further self-sovereignty spurred on by the creation of Bitcoin in the wake of the 2008 financial crisis has reaped us significant shifts in the state of the Zeitgeist that has lead many to jump onto the selective liberterian bandwagon (cherrypicking their causes) and cry out against government intervention in their finances and the economy at large, citing incompetence, corruption and nepotism amongst the elected and corporate elites.

And yet we have founders, believers and OGs of crypto entering and exiting the space all the time, some onboarding into self-sovereignty, others offboarding after realizing that a society composed of only self-sovereign individuals can only function if every aspect of human social interaction, however tiny, can ultimaly be brought on-chain in a formal manner. Such a society, as honest entrepreneurs, idealists and utopians would agree, is far away. Decentralization increasingly needs to make do with smaller goals if it wants to have any hope in rolling-up and gradually superseding the current world order instead of becoming the infrastructure of an irrelevant (in terms of geopolitics) subsection of a global digital diaspora.

In fact, it is debatable whether financially anonymous societes have an evolutionary advantage over transparent ones. The jury is still out and none of the people alive at the time of writing will get to know the answer.

The foolhardy, who try to bring solutions into this world that satisfy the urge for completely censorship resistant finance, are few and far between — the risk not being that Bitcoin, Ethereum or other cryptocurrencies can be co-opted by governments, agencies and other geopolitical actors or interest groups … but that the communities who built these self-sovereign infrastructures will co-opt themselves in a mirror-verse-like Catch-22 in order to conform with a externally primed self-image of themselves, their generation and even their purported worldview because their own neurochemistry drives them in that direction. To hold convictions deeply enough to have “normal life” not interfere with them over the long run while in pursuit of a vision for a better world requires mastery — or social protocols that have error-correction baked in. Both are scarce in Decentralization. This is why Ethereum is so hard to kill.

Mind is software. Decentralized groups need to guard their mental software. Religious and national institutions serve such a purpose for legacy systems. What does decentralization have to show here?

The bedrock of crypto sediments slowly and the boom-and-bust cycles the industry goes through is a symptom of that. Without the asymmetric returns it couldn’t attract the “weird talent” that is needed to push forward — those cycles also attract a lot of dead weight that hampers integrity and creates social noise that makes the ascent towards a community-polar world (instead of a multi-polar world) steeper every time a bull-to-bear market cycle occurs.

And even among the bedrock of Decentralisation there is a gradient. There be those cryptonatives who know how to build a solution in a fully decentral manner with no strings attached. And then there be those who skimp on the key ingredients of decentralization: exiting to the community. Fully decentralized funding. Frugal lifestyles that accompany this. Lack of security. Lack of recognition due to anonymity. And many more. And of those who do embrace all of this, even they can fail.

And as long as we’re not growing the 0.5 % of idealists at the right end of the bell curve who truly believe and understand how a self-stabilizing order on all levels of complexity crucially depends economic systems with controllable fairness — we will not be able to break out of the loop of social stratification that seems to come with technological advancement as we witnessed over the last century on a global scale.

Proudly produced in coopetition with 0xjim — read his work. Clap for us. Then meditate on what purposes exist out there that you could fulfill. And then make them reality.

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