This is a talk I plan to deliver at Tallinn Digital Summit 2024, which is built around the theme of Securing the Digital Tomorrow.
Teemu brought up on Ep. 33 of The Spelunking Podcast a gripe against crypto that I’ve often heard myself: if crypto is so great, then why hasn’t it achieved more penetration in a decade?
The simple answer is that people forget the speed at which the Internet truly developed.
“An Outside Context Problem was the sort of thing most civilisations encountered just once, and which they tended to encounter rather in the same way a sentence encountered a full stop.”
– Iain M. Banks, Excession
My last piece on where prediction markets break down made me realize I hadn’t written about outside context problems here yet.
Outside Context Problems are the most interesting situation one can encounter, when considering pure innovation.
TL;DR: if you expect an embryonic prediction market to tell you the result of a highly-politicized event when there are perverse incentives at play, and a significant disparity between amount-at-risk and expected outcome, you are going to have a bad time.
Recently got into the topic of data ownership on a conversation with Carey Lening which helped catalyze a few ideas I’ve been kicking around for a while.
In short, data ownership requires layer fungibility.
I’ll elaborate below.
While discussing BlueSky’s custom feeds and composable moderation with a friend, he wondered:
I will need to ponder whether it is viable at scale for millions of users to put in the effort to customize their feeds in a thoughtful way […]
They don’t have to - they only need one person they trust (or are willing to take at face value for a test) to create a feed, or to add a feed to a starter pack.
But more importantly, I realized, any customization someone can do, thoughtful or not, is an improvement. It introduces some delta on the perspective, even while they are within a group, instead of putting them into the monoculture dictated by which news items are more clickbaity and likely to bring ad revenue.
It is the same way with genetics: even small mutations can help diversify the perspective gene pool.
I’ve been somewhat erratic in posting these, but we have a new Spelunking Podcast episode out!
Mika Honkasalo, partner at Equilibrium Ventures, joins us on the latest Spelunking Podcast to discuss our hope that Futarchy can help fix token governance by forcing participants to risk something for their decisions. The discussion varied from liquid vs. illiquid vc investments, if we are in a bull market or seeing bull market behavior from crypto insiders (something we wouldn’t agree on), and wonder if the crypto market will end up dominated by TradFi.
There’s a discussion going on the Topology discord about what systems can be described as peer-to-peer.
I think the whole thing is mostly academic, and too focused on implementation details.
Sure, your particular choice of blockchain might have a peer-to-peer gossip protocol and consensus mechanism, but that’s rather irrelevant if people are mostly using tokens with a freeze authority, isn’t it?
And while Binance Smart Chain might have a P2P protocol for sharing information, that’s entirely irrelevant when it’s completely proof-of-authority and a single institution chooses who gets to validate.
If you are looking to describe a system, describe the kind of things it enables that no other approach does.
That’s something the local-first camp does right, and something other projects should strive for.
On my latest conversation with Teemu, we warn people off the vaporware of crypto + AI tokens, go over how the market is changing - including how ETFs may provide a path to something that scans like IPOs - and discuss the Eigenlayer grants to prominent critics at the Ethereum Foundation.
Over at BlueSky, Dell Cameron brought up that Facebook’s involvement in crypto, VR, and GenAI aren’t working out because they are only secondary to their main business purpose: surveillance. (link)
I disagreed. Cameron was right in that it failed because their main business is surveillance, but I suspect they screwed it up because it was such a great fit that they got too greedy.
Crypto would have been for them - if Libra had taken off, Meta would have gotten access to their users' transaction information, something they don't necessarily have right now.
They luckily came out the gate too hard and scared everyone off by making it too obvious it was a supranational currency.
— Ricardo J. Méndez (@ricardo.bsky.social) Jun 4, 2024 at 9:08
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Would it have been different if they’d seen it as a technology investment?
Two projects grew on the compost of Facebook’s Diem open source dump: Sui and Aptos. As of June 4, 2024, their combined fully-diluted valuation is about $10 billion. Facebook could have captured that value if they had spun it out from the start, even as a subsidiary where they control most of the token supply.
But Libra was never a tech investment. You don’t get to have an arms-length independent company and share data.
When all you have is surveillance, everything looks like a data trove.