I am a Crypto and Blockchain Luddite.

I am a Crypto and Blockchain Luddite.

In the 18th and 19th centuries, the industrialization of textile equipment allowed for cheaper production of clothing and disempowerment of skilled craftspeople across the industry. In the face of losing their livelihood to automated textile production technologies, the Luddites fought back. They fought for better working conditions in factories and they fought for a return to a pre-industrial era. They are known for “Machine-breaking” which was outlawed in the early 19th century as a way to ensure the Luddite movement would have severe consequences (death, in many cases).

And yet, many have noted that the Luddites were not actually anti-technology or anti-progress. Rather, they were against the poor treatment of workers and the deterioration of working conditions in the factories that implemented these technologies. They wanted high-paying jobs and skilled work for continuing to make high-quality goods. They rightly saw the “race to the bottom” for textile production (making the cheapest possible shirt, for example) was beneficial only for those who owned the factories and not for those who worked in those factories.

The Luddites were for a concept of “fair profit” in which the increase in profits from the efficiency gains of technology would be widely shared with the workers as a kind of moral imperative. They believed it was “good” for the wealth and productivity gains of industrialization to make positive change for the lives of more people and it was “bad” for those gains to have a negative impact on society by concentrating wealth in the hands of a few industrialists who, in many cases, already had the benefit of generational wealth.

Ultimately, the Luddites were defeated, as they lacked political power and the money from industrialized production easily outweighed the poor workers that were displaced by the advanced machinery. And yet, the concept of a “minimum wage” and worker’s rights continued to have an impact across multiple industry modernization efforts. Their movement was not successful in finding a way back to high-paying jobs for thousands of skilled handloom weavers, but their fight was an important one for how we understand the power technology and “progress” can have on our lives.

And perhaps, I am starting to see a movement toward a new kind of Ludditism, a new fight for the future of how money is made and who gets to control it. I believe the new fight is with Crypto and Blockchain technologies. And this time, the Luddites are going to win.

For the past few years, I had been cautiously optimistic about how blockchain technology might be beneficial for education. I was listening to folks in the Office of Educational Technology (in the US Dept. of Education) about their Education Blockchain Initiative which seeks to subvert traditional educational models in favor of transactional and credential-able learning outcomes.

I was enamored by the idea of easily transferable credentials that would not have to be verified by a single arbiter of education (a school, a business, a government entity, etc.), but would rather be verified by the whole system of learning that we had all agreed to govern the process (a distributed ledger of all learning!).

I was further excited by the idea of student ownership for their learning data and that future versions of student profiles could have their entire portfolio of learning objects stored “on the blockchain” which would allow for better reflection and demonstration of competency and progress.

And when strong and inclusive Community structures for learning became a part of the blockchain ecosystem, my head started spinning with possibility for what it could mean for educational institutions and individuals who are passionate about bringing people together to do important work (like solving for the climate crisis or creating a more equitable society).

Just imagine if you could hold “a token,” or key, to all of the resources you might need for your learning. Imagine that token was your identity and it could contain or provide access to your transcript, your job history, your “learning transactions,” and all of your assignments in an immutable ledger that requires significant storage space and computing power to add things or build upon.

And while I was continuing my cautious optimism about the ideas or the future of blockchain, crypto.com was buying stadium naming rights and Matt Damon started telling the world that investing in crypto was going to be the new frontier and we better get on board or we will be left behind (or worse, poor). The things that were actually the here and now of blockchain, the things actually being done with it in 2016-2022, were kind of terrible.

But, all of these important “caveats” of blockchain were somehow dismissed as either “beside the point” or were not about The Future, which was obviously going to be awesome! And then I watched this video from Folding Ideas (Dan Olson):

I fully understand that you may not have the time to watch this documentary length YouTube video, but you should. You should take one of the times you would otherwise watch a movie and watch this instead. It is that good. Oh, and after watching it, there is a high likelihood that you will start to see all of the complaints about Blockchain, Crypto, and NFTs as just the opening gambit for the full truckload of terribleness that is the grift-laden blockchain hype machine.

But, in case you don’t have the time to sit down for the full video, here are a few summarized highlights that I found compelling (with linked timecodes):

  • Blockchain projects (especially those around NFTs, Cryptocurrency, or gaining access to something via ownership) are inherently a “Greater Fool” scam in which the early adopters and hype-based promoters are rewarded and later adherents receive diminishing returns (38:51).
  • The security of blockchain is laughable and the privacy of blockchain transactions is almost nonexistent (81:00 and 85:41).
  • NFT’s (and all blockchain data) only “point to” the resource/image/asset being sold, and therefore manipulation of the NFT is as trivial as changing what the URL resolves to and the assets are infinitely copyable and can be “owned” on as many blockchains as can be created (46:47).
  • One of the primary (although, unstated) goals of blockchain technology is to “tokenize everything,” making everything into a stock market that can be speculated upon (94:48).
  • Organizations (like labor unions, communities of practice, schools, etc.) are too complex to be represented in code as a DAO and any of the claimed benefits (efficient bookkeeping, improved asset management, etc.) can already be done by faster technologies at a fraction of the price of running transactions on a blockchain (123:54).
  • The “winners” of Crypto and blockchain projects are the same “winners” we have in more traditional financial instruments and that is why they so closely mimic the financial bubbles (and busts) of the past rather than representing a brave new world of commerce (75:16).
  • Putting all of your records (passwords, credit card info, your social media profiles, etc.) into an identity on the blockchain creates a single, easily decipherable and socially engineered, point of failure that is not only impractical but has demonstrated to be an easy target for would-be thieves (80:25).
  • Deflationary assets (in particular, currencies) punish the actual use of those assets, as there will never be more “tokens” or “coins” and so holding on to them is the only way to guarantee you “win” (meaning, can sell them tomorrow for more than they were worth yesterday). This means that the Crypto becomes essentially useless for tasks other than speculation (112:06).
  • While decentralization has been sold as a core tenet of blockchain technology, the power over much of the “network” is concentrated in a very small number of people’s/company’s hands, and those people are not interested in further democratizing the internet (114:19).
  • The power consumption for blockchain technology is entirely unnecessary, as the vast majority of the power needed is consumed doing duplicate work for verifying transactions (15:52).

I could continue to list all of the persuasive things in Dan Olsen’s video essay, but I feel as though it would just be piling on. By this point, you should recognize that Blockchain technology is bad at what it claims to do well: propose a viable alternative for economic institutions and transactions and way forward for building lasting and meaningful social institutions. You should also see that in attempting to solve for non-existent problems like man-in-the-middle attacks (31:15) or previously solved problems like conducting straw polls (125:20), it creates far worse problems for pretty much everyone involved (136:09).

This is why I am now a Crypto and Blockchain Luddite.

It isn’t enough to write snarky jokes on Twitter about Blockchain projects or do important think pieces about why paying more than a million dollars for a meme is a terrible idea. We must actively engage in “Machine-Breaking.” We must dismantle the incentives for folks to create more and more “Greater Fools.” We must not listen to the celebrity endorsements or the promises of large windfalls just over the horizon. We must not wait and see what the future of Blockchain technology holds. It is here now and no amount of hype is going to make the fundamental flaws in the technology go away.

But, what does a Blockchain Luddite believe? I have a few thoughts:

  1. I believe in hard work over inscrutable schemes.
  2. I believe in people and transparent processes over code and immutable ledgers.
  3. I believe in shared ownership of ideas and power over individual gains and concentrated wealth.
  4. I believe in equity and inquiry over toxic positivity and a hype machine.
  5. I believe in sustained progress toward a better future over techno-futurists’ quick fixes.
  6. I believe in building trust in and with others over creating trust-less systems.

And what can a Blockchain Luddite do to make sure that this kind of technology does not become the backbone of our economy, politics, or education?

  1. Invest in local solutions to local issues. This includes investing in and supporting public schools, independent journalism, and technologies/companies that honor and value people.
  2. Fight back against the hype machine wherever it presents itself. Whenever someone “makes a good point” about Crypto solving a problem (or potentially solving a problem in the future), ask if that problem could be solved better without blockchain technology. Ask if those who are “getting in now” are having the same opportunity as those who “got in” days, weeks, or months prior.
  3. Do not buy Cryptocoins, NFTs, or other technologies that are based upon the Blockchain. If we do not provide more “Greater Fools,” the speculative markets will collapse.
  4. Make cool things that do not leverage append-only ledger technologies or trust-less networks. Make privacy-focused opportunities for innovation. Bake equity into your technology and your organizations.

With all of this said, I do not claim to have a special kind of knowledge about the future (or the past for that matter). I am a technologist and an inquirer. I make observations based upon the information in front of me and what I can learn from others who have done the same. So, even if you aren’t ready to join me in becoming a Blockchain Luddite, I encourage you to read widely on the subject and make financial and technological decisions based upon your values and your understanding. That is the best that any of us can do.

If, on the other hand, you are ready to make Regular Progress that is not built upon the Blockchain, I’m attempting to forge a new community of people here to do just that. Blockchain Luddites of the world, unite!

Leave a Reply

%d bloggers like this: