If we zoom out of current events or Russia/US for a second, think about the run-up to the Iraq War. Are we sure the US wouldn't invent a narrative about some foreign leader, technologically deplatform them, invade the country, and then say "mistakes were made" a few years later?
That's the kind of not-too-unlikely scenario that has other sovereigns concerned about US tech companies. After Tonkin Gulf, babies-in-incubators, and Iraq WMD, quite a few wars were started by false narratives. Now imagine a national leader couldn't even rebut these.
If you buy (say) iron ore from a country, that's "decentralized". The vendor can't hit a key to melt the iron after they've sold it to you.
Software is very different. US tech companies retain root access and can kill-switch your communications grid if USG tells them to.
Many factors are driving a rise in national autarky, from COVID supply chain shock to SWIFT weaponization to NSA surveillance.
Those were somewhat behind the scenes, though. This one happened in front of billions of people, a 404 heard round the world.
To be clear, I don't think the rise of a siloed nationalist splinternet is *good*. It's a predictable result of recent events, but it just switches out one problem for another.
If we want to preserve liberal values and an open internet we'll need decentralized crypto protocols.
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This article is making the rounds. It’s well-written and makes a good case. And I should say up front that I have zero info about whether Tether really has 100% backing of every USDT.
First, the crypto ecosystem has survived Silk Road, Mt Gox, the DAO hack, the Bitcoin civil war, the Chinese crypto crackdown of 2017, and countless BTC obituaries.
Second, the tech is real. Look at defipulse.com, epns.io, Zcash, starkware.com, ens.domains, NFTs, Uniswap, rollups, and all the new L1 chains just to start. There is genuine computer science here.
The deeper point is that India doesn’t need to look up to Harvard. Indians are CEOs of trillion dollar companies, soon-to-be VPs, and of course (real) professors at Harvard.
We can build a wholly digital replacement. Declining US institutions aren’t all they’re cracked up to be.
In the same way China ascended from a mezzanine level of skill to becoming the factory of the world, India can ascend from providing a shadow academia on YouTube to producing genuinely world class digital learning institutions.
It’s capable of building digital alternatives to Harvard, Hollywood, and the New York Times. Indeed the people in these institutions often hail from India.
The v2 would lean on modern technology: online learning, AI video, cryptographic truth.
Expect many more national bans on American tech companies in the weeks and months to come.
Market caps will crater when deprived of markets. And we will see a complete inversion as states gradually begin favoring crypto protocols over American companies. theguardian.com/world/2021/jan…
The Regulatory Flippening
In the 1990s, the US government fought encryption. Now it mandates it.
Similarly, once regulators realize that crypto protocols exercise *less power* over their countries than foreign corporations, they’ll adopt a protocol-first approach.
Many governments already encourage the use of open source over proprietary code when available.
They will eventually prefer crypto APIs over corporate APIs for the same reason. Crypto is what comes after open source: it’s also open state & open execution. brookings.edu/wp-content/upl…
Thesis: the crypto version of any product ends up being far more valuable than the original.
Bitcoin is already more valuable than PayPal and will eventually be more valuable than gold.
And the various defi apps on Ethereum will be more valuable than their fintech cognates.
I had this thesis long ago. It's still in the early stages of playing out, but here's why it should be true.
1) far better developer experience with open APIs 2) far better reach for a true protocol than a corporate product 3) far more token hodlers than traditional shareholders
If you can make decentralized gold, wires, lending, borrowing, interest, derivatives, cap tables, or the like work...why would you *ever* use the corporate version?
It'd be like using Oracle over Postgres. You'd always pick the open version, if you can.
It is a matter of national security for India, Israel, and every other country to maintain a sovereign communications channel for their leaders to reach their people directly.
The world cannot be ruled by American corporations.
Every sovereign needs its own basic internet infrastructure: hosting, payments, anti-DDOS.
Over the long term, crypto is the obvious choice for the 80% of the world population that is neither American nor Chinese, as well as large swaths of both Americans & Chinese.
This is now going to happen.
China is already US-independent when it comes to communication & payments infrastructure.
India, Israel, Russia are obvious candidates to go techno-autarkic next. Then perhaps the EU, South Korea, Japan, Brazil.