This is the original text of a talk I wrote for the Tallinn Digital Summit 2024, which was 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.
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.
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.
Teemu and I discussed the possibility of Avalanche no longer requiring subnets to validate the main network.
At the time, I did not see the value - why wouldn’t you just build on Cosmos?
Teemu mentioned the possibility of raising from capital that needs to invest in an otherwise barren ecosystem.
I now suspect they may end up sucking air off L2s instead of Cosmos.
Also, I think Avalanche has the advantage that they can tell any EVM story to those were looking to L2s.
It is something I hadn’t considered.
It might not pull away teams that are looking into Cosmos, but will impact those that look at the L2 landscape and decide there is not enough there for them.
TL;DR: I don’t see any practical path forward for decentralized stuff other than abandon the pretense of cross-chain value transfer and embrace balkanization, while letting the centralized stuff handle the cross-chain value transfer.
Fully private systems, like Aleo, will be mostly memoryless systems (memory will be provided only by an individual’s viewing keys).
These systems will allow for a class of application we haven’t seen online before - UTXO/records as rai stones that just happened to materialize along with a zkp.
Given that fully private systems will be memoryless black boxes with zero-knowledge proofs, one cannot verify that a contract path got executed in the exact same way that you would have wanted. Therefore, it makes no sense to cling to the notion of traditional execution, and one should focus on the result that one wanted to achieve.
This would seem to indicate that private systems lend themselves to intent-based approaches.
Backlash Technology is a term coined by Peter Watts - it’s tech for which one of the key properties is a prominently displayed middle finger at something else. Think Signal and Telegram adoption spikes whenever WhatsApp screws something up, or crypto as a reaction to the financial system (particularly in places plagued with hyperinflation).
I got reminded of the term by a discussion regarding Bluesky vis-a-vis Mastodon, the Fediverse, and ActivityPub. It seems that something being Backlash Tech can also provide a certain stickiness, since it a lot of the reactions could be summed up as “I’ve already lashed back, what else does this add?”
Here’s the link, if you are curious. The conversation is biased towards skepticism - expected, given the participants and where it’s taking place - but there are some good points in there.
Upgradeable smart contracts are like guns: they have their uses, but you need to make sure you trust the one holding them, and pray that they’re never used against you.
(Update: This is an older view on the potentials for bridges for crypto. For an updated perspective, check my thoughts on The Spelunking Podcast Ep. 21 about how we are moving to a “zero-knowledge everything” world, or this piece on ZKP Bridging.)
Cosmos and Polkadot, which were both born to ensure interoperability among different chains, are in a race to maintain their relevance.