This week, the sitting President of the United States weighed in on Bitcoin. Writing in a Tweet, Trump said, "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air." He went on to express aversion to Facebook's (planned) Libra currency, and to extol the strength of the US dollar. Link.
The Tweet came a day after Jerome Powell, Chairman of the United States Federal Reserve, compared Bitcoin to gold during testimony before the Senate Banking Committee. He added that people are using Bitcoin, and other cryptocurrencies, as a "speculative store of value," a surprisingly apt assessment. Link.
This newsletter has a heavy bias towards the technical aspects of cryptocurrency. You can expect that trend to continue in future issues. Let me explain why I've chosen to cover a "political" topic this week.
I cover the technical aspects of crypto because I'm a technologist. Tech is what I know, and what I'm interested in, and I suspect many of you reading this fall into that category as well. That doesn't give us an excuse to put our heads in the sand about the realities of what we're building.
Here is a hard but important truth: there are conceivable futures where Bitcoin sees wide adoption and the world is worse for it. The same goes for Ethereum and other crytponetworks. Technology is not automatically positive, and good outcomes don't flow axiomatically from good intentions. Even if the adoption of crypto does lead to positive outcomes, it will still be net positive. That is, there will be lots of winners, but there will still be losers. There will be costs.
If you want to see what I mean, just take note of how the President distributed this statement. He Tweeted it out. On the internet. I believe the internet has been net positive for the world, but it also decimated traditional media outlets, lead to upheavals across countless industries, and has introduced chaotic and polarizing forces on political processes across the globe. The internet is a transformative technology. I love the internet...but it came with costs. We've only just started realizing that. It may take us a couple of decades to really pay them back. It will be a messy process.
We should expect nothing less from decentralized cryptonetworks. If anything, the transformation wrought by them may be even more dramatic. This time around, we need to do better. Perhaps we can understand the mistakes made by today's tech titans in the early days of their ascent. Global networks like this had never been built before. But there will be no excuse for the irresponsibility of "move fast and break things," or the naïveté of "don't be evil" this time around.
As technologists, we ought to be more cautious. We need to be wary of the second and third or effects of what we're building. We need to engage earnestly and in good faith in the political process, even if we feel others are being unfair. We need to take account of those who may be harmed by the rise of decentralized cryptonetworks. We need to take some responsibility.
Decentralized crypto networks have become too big to ignore. If there was a shred of doubt left about this, the Tweet and testimony covered above should cast it out. That said, their success is not assured, nor is the prosperity that could flow from it. Both will take work. I'm going to try my best. I hope you'll join me.
1 Million. The number of Dai minted in a single transaction this week, with a transaction fee of 73 cents. Dai, you'll remember, is the decentralized stablecoin pegged to the dollar. It's minted via smart contract loans which lock ETH as collateral. This is the second time a million Dai mint has occurred-- the first was in June. Link.
A quick, related announcement. I've launched a mini sideproject: "Use Dai -- A curated, community compiled list of everywhere you can use the decentralized Dai stablecoin." If you own your own business, freelance, or moonlight, and wouldn't mind being paid with Dai, consider adding yourself or your company to the list. Link.
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