,
45 tweets,
5 min read
Read on Twitter
1/ Blockchains and cryptocurrency sit the intersection of cryptography, distributed systems, economics and politics. 
2/ Everyone looks at this and thinks "I get the economics and politics stuff but this cryptography and distributed systems stuff is hard."
3/ I think the inverse is probably true.
4/ Cryptography and distributed systems are complicated and hard for sure, but they are largely unknown knowns.
5/ When you people start talking about Merkle trees and SHA-256, everyone goes “what is that?” They know they don’t know it.
6/ Politics and economics by contrast strike me unknown unknowns. We don't know what we don't know about them.
7/ In the last year I have discovered that almost all my friends on Facebook are both political and economic experts...
8/ yet are entirely incapable of predicting how political and economic systems will behave.
9/ We are far more ignorant of these systems, yet believe we understand them. As Kahneman said "We are blind to our blindness."
10/ Crypto-land makes this more obvious because the politics play out in public.
11/ Commentators talk about how toxic Crypto-twitter can get,
12/ but if you read any tell-all memoir of someone working at a big company, that shit is just as crazy.
13/ The only difference is they do it in board rooms behind closed doors.
14/ In crypto-land, it happens on Twitter, message boards, Slack and other public channels.
15/ These political and economic dynamics are fundamentally human in some way.
16/ However, what systems theory teaches us is that you can design a system with same constituent parts but different interactions and...
17/ ...incentive mechanisms that will reach vastly different results.
18/ In The Dictator’s Handbook (summary: taylorpearson.me/disintermediat…), de Mesquita and Smith show why a democracy is better than a dictatorship
19/ It is not because presidents are intrinsically better people than dictators,
20/ but because democratic systems distribute power in a way that makes it more difficult to coerce people.
21/ A dictator that doesn’t like how things are going can just get the eight warlords underneath him into a room and tell them:
22/ " You are going to do what I want or I am going to chop your nuts and kill your family."
23/ A president has more people who he needs to get things done and so has to work at building a more reasonable consensus.
24/ 2017 has been an interesting test of that. Despite lots of crazy headlines, Trump basically hasn’t gotten anything done.
25/ He needs other people in the government to help and many aren’t cooperating.
26/ Warren Buffett’s line is 'Buy into a business that's doing so well an idiot could run it, because sooner or later, one will.”
27/ The political equivalent is “Construct a system of government that an idiot could run, because sooner or later, one will"
28/ To date, Churchill’s comment has stood true: 'Democracy is the worst form of government, except for all the others.’
29/ The question to me is not “Is blockchain the next internet?” I think it’s clear that’s the case.
30/ However, a question I’ve been pondering lately is “Is this the next democracy?”
31/ We may be at a stage analogous to the Articles of Confederation where we are trying a new system of governance that is promising but...
32/ ...still has major kinks to be worked out.
33/ Do we need to scale out or up? What was Satoshi’s vision? Should we care what his vision was or adjust to our own current needs?
34/ These are similar questions to who should be allowed to vote? What did the founders mean by the right to bear arms? Should we care?
35/ The potential of this new form of governance is bringing a different mechanism, or system to wrestle with those questions.
37/ Questions as fundamental as how to scale the protocol are probably too complex to really be knowable going in.
38/ However, are we now able to fork the constitution and bootstrap new systems of governance to see which works best?
39/ @Naval has suggested we are perhaps discovering a more meritocratic and less violent form of government -
40/ We should be cautious. The 20th century should have taught us that testing out new forms of government is a dangerous business.
41/ I’ve no idea how this will all play out. But it’s a hell of an experiment to be a part of.
42/ As always, thoughts, feedback and criticism are welcome.
Who, I should add, made this image
as part of their startup that does bitcoin-collateralized loans - unchained-capital.com
as part of their startup that does bitcoin-collateralized loans - unchained-capital.com
And to add a shameless plug for myself, I send out a newsletter every week or two here - taylorpearson.me/newsletter/
