Centralization Strikes Again - September 2021 Edition
“The space promised a kind of society that real space could never allow — freedom without anarchy, control without government, consensus without power. In the words of a manifesto that will define our generation: ‘We reject kings, presidents, and voting. We believe in rough consensus and running code.’” — Lawrence Lessig
Timeline
Sept 2 - Amazon reveals plans to take a more proactive approach to enforce content that it deems is in violation of its cloud service policies. Source
Sept 2 - Bloomberg reports that the Juniper Networks breach from 2015 — which allowed hackers to decipher encrypted communications and gain high-level access to customers’ computer systems — may have been the result of an NSA backdoor implementation on US government’s advice. Source
Sept 6 - Report shows that privacy-centric ProtonMail had given up logged IP addresses of a French activist to Swiss authorities. Source
Sept 7 - Coinbase CEO Brian Armstrong shares in a tweet thread that the SEC had rejected Coinbase’s planned “Lend” product launch as it was considered a security. SEC then subpoenas Coinbase for records and information. Source
Sept 7 - “Privacy-centric” ProtonMail removes “we do not keep any IP logs” from its privacy policy. Source
Sept 14 - Luke Schor, Product lead at Gnosis, reveals that Apple had blocked its Gnosis Safe mobile app from being allowed on its App Store on claims of violating its paid digital content policy. Source
Sept 14 - Solana experiences network outage for over 7 hours after experiencing resource exhaustion which caused a denial of service. Source
Sept 14 - Blockchain.com responds to Coinbase. Source
Sept 17 - Apple and Google removes “Smart Voting" app from its stores at the behest of the Russian government. The app would have coordinated voting efforts to avoid vote-splits for opposition candidates to Vladimir Putin. Source Source 2
Sept 17 - The World Bank cancels a prominent report on global business conditions after investigators found staff members were pressured by the bank’s leaders to alter data about China and other governments, thus improving its rankings. Source (Thanks Phil!)
Sept 18 - Coinbase signs $1.36 mil deal with the US government to provide financial surveillance software on the blockchain. Source
Sept 19 - ByteDance Ltd (the company behind TikTok) imposes a 40-minute limit on the Chinese version of its app, Douyin, for all users under 14 years old. Source
Sept 21 - Reports reveal that Chainalysis secretly operates Walletexplorer.com, a block explorer site that scrapes IP addresses of suspicious users for law enforcement. Source
Sept 22 - Hackers take over the Bitcoin.org domain in order to to run a giveaway scam. Source
Sept 22 - Binance Australia announces it will be restricting users that haven’t completed KYC/AML requirements to “withdrawal only” services starting immediately, through to Oct 19. Source Source 2
Sept 24 - China bans all crypto transactions and mining activity. Again. Source
Sept 24 - An HBR article presents a different angle to the centralization problem: rather than a failure to protect data integrity, centralized platforms infringe on worker rights and collective action. Source (Thanks Cindy!)
Sept 27 - Facebook unveils plans to build the Metaverse responsibly. Source
Sept 29 - Crypto DEX 1inch begins geofencing US IP addresses. Source
Op-Ed
The following post was written by myself (whee!) in December 2020. If you are interested in contributing to this OpEd, please reach out on Twitter @haochizzle, Telegram @haochizzle, or email tim.ho@chainsafe.io. We need your voice!
Forget the money and hype: this is the reason why blockchains will define our future
How an industry for truth will conquer an archaic incumbent.
We are at the precipice of a major shift. Now, more than ever, we need to build stronger narratives around blockchain to drive mindful awareness and attention. But in the hyper-memetic world of cryptocurrencies and blockchain, memes like “Few” (shortened from ‘Few understand this’) are counterproductive to the mission of mainstream adoption. They drum up a sense of exclusion to the outsiders looking in. I mean, the memes are hilarious, but the community is not making widespread acceptance any quicker by leaning into this information asymmetry. This is nobody’s fault. Most projects are open source to the public for scrutiny and examination. But are we really expecting non-techies (moms, dads, neighbours, colleagues) to become polymath multi-disciplinarians well-versed in coding, cryptography, computer science, game theory, finance, mathematics, governance, and the likes?
My point is this: we have yet to crystallize the value proposition of blockchain down to a single, central idea. That is, until I heard Sergey Nazarov (co-founder of Chainlink) distill it to a core tenet that struck a chord with me: definitive truth.
Hence, my opening rhetorical.
One version, backed by math, creates definitive truth. The other version of truth carries weight in value because someone or some institution guarantees it with their “brand” (Sergey calls these “brand-based guarantees”). If you hadn’t guessed by now, blockchains create definitive truth. The other version of truth is about as good as astrological horoscopes telling you how your love life will be in the coming week. That is the magnitude of difference we are talking about here.
Definitive truth is irrefutable, unalterable, tamper-proof.
It is incredibly difficult to create definitive truth, especially when there are multiple, potentially adversarial (i.e., I don’t know you, you don’t know me) parties spread out over a large network. Yet in 2008, Satoshi Nakamoto unleashed a protocol that created definitive truths about whom owns what bitcoin without relying on a trusted intermediary. The fundamental ideas behind Bitcoin effectively birthed what we now know of as the “blockchain.” Without getting into the technical details here, because others have explained it far more elegantly than I can, the bitcoin blockchain guarantees transactional truth using cryptographic and mathematical proofs. It is why the Bitcoin network has emerged as the world’s most valuable cryptoasset network, and is possibly the most hard and sound money humanity has ever seen. Built on definitive truth.
Attestation of asset ownership, without trusting a third party, in a definitively true way. This is huge.
Many more projects have since gone on to expand on the concept of definitive truth created through blockchains. Ethereum attempts to create definitive truth through self-executing smart contracts that are guaranteed to execute exactly as written. The resulting changes to the states of accounts and contracts are then secured in amber on the blockchain. Filecoin attempts to create definitive truth about the storage of data, where one party provably shows to the network it is both: storing a unique copy of a client’s data, and that it existed in storage over time. This decentralizes cloud storage so failure or manipulation does not fall on a single point. Chainlink, although not a blockchain, nevertheless is a decentralized oracle network attempting to create definitive truths about the real world by serving up highly reliable and tamper-proof data into the blockchain.
An avalanche of research, design, and testing is underway for many more variations of arriving at definitive truths. Imagine definitive truth for the assertion and sharing of identity? Or definitive truth applied to the United States electoral process? Definitive truth will undoubtedly play a pivotal role in the future fight against misinformation. And when the next generation peer-to-peer ride-hailing application run on a decentralized system eventually subsumes Uber, definitive truth will prove you have paid for access to a cloud-connected smart car. That same car would feed definitively true data about the journey back onto the cloud, and onto the owner.
On the other hand, you have brand-based guarantees. As Sergey puts it:
“we are increasingly living in a world of inflation and bad monetary policy.”
20% of all USD in existence (the de-facto world reserve currency) was printed in 2020. M0, M1, and M2 money supplies from around the world have seen exponential growth since April of the same year. Everyday, our trust in brand-based guarantors of truth like banks and central banks continue to erode away as the promise of our assets held in reserve increasingly come into question (as of March 2020, the US Fed Reserve abolished the minimum reserve requirement for all banks). This actually presents an extreme point of vulnerability and exposes our financial system’s fragility. Brand-based guarantees of truth are by nature opaque, insecure, and prone to manipulation. The Libor interest rate scandal involved the daily adjustments of an infinitesimally small value puppeteered by a spider network of bankers. The 2008 financial crisis was partially exacerbated by the refusal (or negligence) of credit rating agencies like Moody’s to accurately rate subprime mortgage loans. That is to say, brand-based guarantees of truth present a definitive truth as real as the 6'5 height I used to put on my Tinder profile.
That said, brand-based guarantees of truth have served us well for the most part. You can probably trust that the $10,000 your bank says is in your chequing account will be there tomorrow. Math-based guarantees of definitive truth can be computationally expensive, pragmatically complex, and slow. It all depends highly on the specific use case, and what is at stake.
But as pressure on corporate solvency and sovereign debt continues to build, and the spotlight is increasingly shone on these long-trusted intermediaries, it will be up to them to prove to us definitively that all their T’s are crossed and I’s are dotted. Blockchains, on the other hand, are schematically deployed from the ground up to present a rigorously verified, extremely reliable, extremely redundant, and mathematically and cryptographically secured definitive truth. It is no coincidence that some people call Bitcoin “the truth machine.” Blockchains are the arbiters of truth.
Which option of truth would you rely on again?
What good would a crypto post be without some unabashed shilling? But it won’t be for some shitcoin. It will be for blockchain. As my one good friend Amer Ameen would say about his line of work in crypto:
“The cat is out of the bag. This is a hill I am willing to die on.”
Another good friend, a PhD researcher, suggests something far more uncertain, but far more ambitious:
“Blockchain as an innovation is on the level of the Gutenberg printing press.”
This conviction is not accidental. Claims like these would not be made for anything less than something as world-changing as definitive truth. It represents for us all an opportunity to rebuild the world to be more open, equitable, and accessible. Ofcourse, this won’t come easy. The community faces an uphill battle against a deeply entrenched incumbent system. We haven’t even found the simplest way to explain why blockchain is mission critical.
Until now.
’Tis the season when family members gather around the table to listen to your one cousin spout off about “fiat currencies,” “decentralization,” “mining,” “tokens,” etc., etc. Hopefully, you walk away from this post armed now with the most virulent way to explain, without the use of buzzy words, why blockchains will define the future:
Definitive truth.
Like all great things, our newsletter starts humble and, well... unpolished. If you have any feedback, please don't hesitate to send them my way, or reach out on my Twitter.
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