The Case For Ethereum
While ETH and BTC seemingly aim to solve different problems – one can view ETH as the token of computation, and BTC as the token of money – ETH may prove to be the more valuable currency since its utility within its blockchain is indispensable. If a token becomes an indispensable currency within the world’s most valuable software network, by definition, it must be sound money since it is useful tender inside of the world’s most valuable digital ecosystem. — Read more from Identity Elem
Alpha leak on Memorial Day.
Blockchain, as the author suggests, is a very efficient way of recording transfer of title.
Currently, a buyer of a real estate property goes through a very inefficient manual process to obtain and record legal title. If necessary, a buyer can rely on the police, the laws, and the courts to enforce the right to inhabit the newly purchased property.
If ETH blockchain is used to record transfers of real estate ownership, then there will be many professional workers in the title, legal and possibly brokerage industries who will not be needed anymore. If these workers are permanently displaced, they very well might turn to the US government for universal basic income.
In addition, if ETH blockchain is used to record transfers, that process would still rely on the US government to provide a means of enforcement and to bear the cost of enforcement (police/laws/courts).
This is potentially a huge cost to the US government, among other problems. Why would the US government allow the ETH blockchain process (not under the government control) to be used as the recognized legal method of transfer? The government would be giving up all the control and keeping the costs of enforcement and, potentially, universal income transfer payments.
In addition, the government would lose significant control over the USD, effectively resulting in a currency printer that could not control the supply of currency in response to changing demand.
It seems more likely that a blockchain process sanctioned by the US government, along with a crypto version of the USD, would be authorized vs. a third party system (which is not under government control).
This is precisely the point I made here 🙂
https://heisenbergreport.com/2021/03/13/the-complete-application-of-blockchain-implies-human-subjugation/
The redundancies created by the complete application of blockchain are significant and cannot be ignored. But, when you view economic disenfranchisement from a historical lens, governments tend to rest on the side of capital. If the net impulse of wealth creation provided by software networks like Ethereum is positive, governments (particularly the US) are likely to rest on the side of capital and simply tax this newfound wealth (assuming history is any indication).
ETH does not threaten the USD in the manner I think BTC does; I believe USD and ETH can co-exist. ETH is simply the currency of a computational network, and at the end of the day, there currently exists a bijection between fiat and crypto. As long as this bijection exists, governments can line their coffers via this new wealth, and the question of distracting humans disenfranchised from the economic landscape provides another problem that technology, underwritten by capital, will purport to solve (I assert via the creation of virtual realities).
The implications of last 7 words that you wrote are quite terrifying. If that happened, it seems the birthrate of the human population would decline dramatically, by choice and also by government mandates. Also, who would decide which humans are allowed to pursue comfort and pleasure (VR) and which humans must work to provide for all of mankind?
I am still struggling to completely understand your contention that the US government would support blockchain because it would result in more efficiency/profits (that could be taxed) even though it displaces workers.
Governments do not like having excess, unemployed workers, because then the government has to provide for those people.
The Egyptians used their excess workers to build pyramids. The US government supports the (very inefficient) military industrialized complex, in part, because it keeps many people working. A lot of redundant workers are employed in almost every branch of the federal, state and local governments who do very little or in jobs where there is a lot of inefficiency, redundancies and waste. I do not see any efforts to drive efficiency in any of these private or public situations.
My observation is that governments only want more efficiency if there is somewhere else for a displaced worker to work that will increase total productivity/GDP.
Idle people/workers can cause a lot of problems- VR headset or not….including resentment in the people who have to work to provide for the non-workers.
I believe in blockchain, just not the non-governmental crypto that enables the blockchain process to function.
So, on virtual realities, I don’t mean this in the sci fi sense. I mean realities that are quite close to, but not quite, objective reality. Disney World is a virtual reality, for instance, and biased news outlets are similar examples under this context since they harbor objective reality from the observer.
I certainly see disenfranchisement as a risk for blockchain progress, but I just don’t agree with the assertion that governments will combat this development in a meaningful way (re: The Industrial Revolution, explosion of ecommerce and destruction of retail, and digitization of the workplace post pandemic). For instance, if governments wanted to fight redundant unemployment in the post-pandemic world, I think mandating companies to enforce work from office policies would be prudent, particularly in cities such as NYC. This, in my mind, is easier policy to enact than obliterating a decentralized software network. Yet, we have resorted to fiscal stimulus to combat the negative externality of economic disenfranchisement. As a kicker, the US is already entertaining UBI, and the Biden administration has already gone to great lengths to support those economically handicapped by the pandemic. It seems the generally accepted political answer to economic disenfranchisement is to support these individuals via government sponsored subsidies.
I substantiate the historical precedence for disenfranchisement and humanity’s infatuation with technological adoption in the link below. My final piece in this three series installment will come soon (the Bitcoin piece above being the first, this being the second), and it will cover the creation of these virtual realities (aka simulacra, per Jean Baudrillard).
https://heisenbergreport.com/2021/04/30/collateral-damage-technology-and-the-theft-of-history/
Thanks for taking the time to read the piece and for sharing your thoughts!
“If these workers are permanently displaced, they very well might turn to the US government for universal basic income.” No, they might do what other people do and look for a different job. They are not getting universal income from my taxes.
And there I thought you were crypto illiterate. Awesome piece! Looking forward to your take on DeFi!
Always check the byline. I didn’t write this one.
That’s a relief.
I have a hard enough time keeping up.
I think Ethereum has a very compelling case long term. I think Bitcoin will eventually be devoured by Ethereum which can effectively “wrap” bitcoins and move them around inside their wallets without needing to access the bitcoin chain in the same way a physical gold fund might keep all the gold in a safe in the basement as buyers and sellers repeatedly exchange it. That is to say Bitcoin will become very valuable but Ethereum will be indispensable. Imagine going back to life before the internet and credit cards, that’s how different an Ether powered world will likely be.
More of humans creating the concept of a god and then forgetting they did so. Blockchain as our new digital god that will make us all safe and secure from whatever fuels our nightmares. Or maybe it’s just a fascination with computation.
Best part of life is meandering…….purpose is control…..
It’s a cool concept with cool sounding roles. Now, what is the actual value of holding contracts in an anonymized, distributed database?
Call me narrow minded, but the only main value added I see is the reduction in time of secure money transfers if banks were to trust the blockchain. Contracts are not expensive just because of the cost of filling and storing them. Ethereum is competing with wire transfers, PayPal, and ACH.
60% risk free returns is what Bernie Madoff clients were getting. Be among the first to get in and make sure to be among the first to get out.
The idea of blockchain is marvelous, but it will be implemented sustainably only between institutions. The transaction costs will be covered by the participating entities (who would charge to transfer money instantly to another bank when it could be offered for free as a perk of opening an account?). No need to “invest” in the cost of interacting with a database.
I hope I’m saving someone from losing her/his savings.
Competing with wire, PayPal and ACH?
Did you actually read this great piece?
Ethereum is not about transacting money; it is basically a operating system.
Web 1.0 ran on Windows and Unix/Linux
Web 2.0 on iOS and Android
Web 3.0 will run on Ethereum, Polygon, Cardano etc…
There are so many industries/middlemen/validators threatened by this Ecosystem it is hard to wrap your mind around it all.
The real value of crypto is not about memes, nor digital gold; it is about running software.
I hope I’m inspiring someone to invest with some more Vision.
This is the essence of the piece in much fewer words!
Thanks for reading 🙂
Will be fascinating to watch this unfold. Innovation vs the powers that be. So many unsettled questions. CBDCs will likely eat BTC’s lunch, but some form of DeFi/smart contracting will likely emerge and Ethereum has the biggest head start. Thanks for this piece. Only feedback is editorial (I know it’s hard to follow Heisenberg’s high bar) but when quoting interviews/podcast transcripts please clean up verbal fillers so it’s easier to read.