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Risk and Precarity Part 2: The Age of Web3
Jun. 23, 2023. 9 min. read.
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Web3 enthusiasts claim that the blockchain will lead us to an age of decentralized power in finance and culture. The edgerunners and edgelords enthusing about decentralization are not the people feeling the harms of its disruption.
Is it the age of the blockchain yet? Web3 enthusiasts claim that the blockchain will lead us to an age of decentralized power in finance and culture. Let’s look at how close we are getting. I will be contemplating the ups and downs of decentralization and its impact on human society. It’s hard to get a solid statistic, but it seems we’re still in the early adopters’ stage, with a small minority of folks around the world using blockchain for bitcoin and NFT activities.
It Starts with the Crypto-Anarchists/Cypherpunks
The foundations for digital cash were established by David Chaum in the early 1980s, but the ideology of cryptography as the great liberator from authoritarian control of finance, communication and just about everything controlled by states and owners didn’t become a culture until the early 1990s.
Tim May fired off the opening salvo in 1988 with his Crypto-Anarchist Manifesto. In his document May avers that, “Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.” This will be a liberating force, he claims, that will, “be the wire clippers which dismantle the barbed wire around intellectual property.”
May was an anarcho-capitalist, as were many of those who followed in his footsteps. And while one may be forgiven for wondering if a pro-capitalist groups hostility to intellectual property might be a subject for psychologists, credit these digital freaks with being attuned to the nature of the just-then evolving digitally networked society in which restricting data would be seen as a roadblock to the wonders delivered by freely-flowing information and ideas.
On the other hand, anarcho-capitalists are not particularly big on making life less risky for the precariat (see Part 1). They are certainly no friend to any form of state-based relief for the vulnerable. There is a broad sweeping ideological narrative in which the complete release of a free market from any controls delivers wonders at such a rapid rate of change that everybody — even the legless homeless moneyless veteran of imperial wars — winds up better off. You see, according to such a narrative, there will be so much wealth flow that volunteerism goes quantum… or something like that. I would give this a hard pass.
In 1992, at a meeting of crypto-anarchists in Berkeley, California, St. Jude Milhon (my former writing partner, RIP) suggested they call themselves Cypherpunks. The name has had staying power. It is now incorporated into many crypto cash brands, but it all started there.
The end-to-end principle — people being able to exchange anything digital directly, without any persons or institutions interceding —was central to the cypherpunk ideal. Encrypted exchange would challenge centralized power and the institutions that use it, i.e. your three letter spy agencies, your taxmen, the copyright lawyers of the entertainment and data industries, your patent holders, and their representatives. Cryptology then was to be another weapon for information being ‘free’. The anonymity it afforded would protect the sharers of data (which would include capital as data) from real world intrusion by those who would block or tax its free exchange.
As with any and all instantiations of ideology or ideals, the reality of cryptos’ winding road to actuality became more complicated and messy than what the cypherpunks envisioned. Today, all those players, including those that were to be eliminated — the taxman, the lawman, the fiat-money based banker — mill uneasily about in the crypto mix. The reality today is a peculiar mix of the hidden and the wide open. For example, one has to give up more personal information to engage with most crypto exchanges than is required to start a bank account or even to get a passport. The government in all its branches is watching.
Realities like this make me a little skeptical of the claim that the blockchain will be radically decentralizing. As with the perfect anonymity proposed by crypto-anarchist and cypherpunk visionaries, the result is more turning out to be the usual mix, with all the usual power players dipping their hands in the till.
Is Decentralization A Sort-Of Digital White Flight?
Decentralization has long been a fever dream of anarchists left and right, and various flavors of idealists exhausted by the perdition of big states, businesses and political pressure institutions. The realities of decentralization as it is experienced may seem less attractive than the dream. Think of related words and ideas, such as the psychological and social decentering of a person, nation or a culture. Think of the devolution of social welfare guarantees.
In 1994 a group of digerati, some tied to the Electronic Frontier Foundation (EFF), met with the Newt Gingrich oriented Progress and Freedom Foundation (PFF) to discuss their mutual interest in devolving some aspects of the state (mainly social welfare, no doubt). They even issued a statement signed by Esther Dyson, George Gilder, and Alvin Toffler. (Dyson went on to write a cover article about Gingrich for Wired titled ‘Friend and Foe’. This fence-sitting illuminated the distinction between Wired magazine and MONDO 2000.)
At the meta-scale of decentralization, Balkanization is the term that has been used to describe the breakup of large nations into fragments. It has often given rise to tribalized conflicts in places like the former Yugoslavia, where the world witnessed the Bosnian and Kosovo wars. Domination by backwards religious sects and economic confusion can clearly be a result of centralized institutions breaking up. Afghanistan is another of many decentralized disaster stories, albeit helped along by imperial competition between the former Soviet Union and the US and then, later, between Iran and the US. The Kingdom, into the 1970s, was relatively secular and progressive; the imposition of a pro-Soviet government was a mess but still kept the religious fringe from power. The opportunism of Zbigniew Brzezinski helped bring the breakup of the state and, with it, Al-Qaeda and the mess that is the 21st century.
In the US, we only have to think about the use of “states rights” to deny civil rights to black citizens or of the recent Supreme Court decision that gave state governors the privilege of forcing women to give birth (not to mention draconian laws criminalizing medical care).
Dissipative Structure
During the 1980s and ‘90s, there was enthusiasm, particularly among New Age types, for Ilya Prigogine’s dissipative structures theory of self-organizing systems in nature. The then-popular capsule summary, which was fundamentally accurate, was that dissipating systems in nature come back together at a more complex level of coherence. They reach a new equilibrium. This was viewed as a cause for optimism (and relative taoist-style inaction). The usually unasked question was what happens to people in the interregnum — you know… during the ‘dissipating’ part. I share this as an example of how abstract theories presumed to be sampled from natural law get instantiated into activities that may be less than beneficial (thank you social Darwinism.)
Outta Sight! Out Of Mind
The earlier examples reference decentralization on the scale of nation-states. I am more interested in the notion that the ideology of decentralization might take us away from the solutions to problems that can only be fixed at national or global scales. In other words, forming your well-mannered, mutual aid, ecologically-correct enclave does little or nothing to stop the existential threat of climate change, of nuclear and biological weapons, and does little to protect against pandemics (unless the entire world agrees to stop traveling). Like the idea of “temporary autonomous zones” (TAZ) that was particularly influential in counterculture during the 1990s, there is and was an underlying sense of having given up on big revolutionary or reformist change in favor of Hakim Bey’s party that has more meaning than the entire US government. Bey himself wrote “There is no becoming, no revolution, no struggle, no path; already you’re the monarch of your own skin.” The ‘90s were fairly depoliticized and this made for a happier, less anxious culture but I think it’s inarguable that big trouble is too present now for dropout scenarios. The apocalypse is everywhere.
Decentralization on a small scale brings another problem: the ‘out of sight – out of mind’ problem. The suffering of others is removed from view and therefore from consciousness. And in a civilization intimately connected not just by technology but by weather and germs, it will come back and bite us all.
Out-of-sight-out-of-mind is, arguably, reflects in the culture of crypto enthusiasm, and the virtual adventurism and risk-taking of those who play for pay in that realm. A world of hurt doesn’t appear to dim their excitement.
The Scams of the Blockchain
The angelic ideals of networks of trust and security enhanced by crypto have been crowded out of the public imagination by the demons of NFT scams, exchange hacks, and dodgy ICOs.
In 2022 alone, Forkast News reports $2.8 billion was lost to “rug pulls, a relatively new type of cryptocurrency scam.” There are people at the other end of each of those pulls, not to mention on the other end of the billions stolen by Sam Bankman-Fried. The list and amounts stolen are immense, and many of the victims don’t have a comfortable fall back. The Federal Trade Commission tells of, “over 46,000 people reporting losing more than a billion dollars in crypto to scams since the start of 2021.” Many are elderly and lacking sophistication about these activities.
Still, I’ll keep things in perspective. It’s estimated that the games played by banks, investment firms, real estate hustlers and others cost $22 trillion in 2008 and the beat goes on. I would only say that when people get slimed by a crypto scam it’s more immediate, more visceral, more like an expensive three card monte out in the street.
Risk Isn’t A Board Game
Every attempt to bring novel idealistic technologies into general public use evolves new vulnerabilities. It is usually the precariat — those most vulnerable, most desperate, least likely to have the time, inclination or connections to separate the promising opportunities from the Ponzi schemes and the like who suffer the greatest loss.
As a culture, we need to be able to continue to value risk-taking. Adventurers test new drugs that might prove useful for psychology or creative problem solving. The Wright Brothers had to test the first airplane. Nothing is going to happen in space if conscious individuals can’t voluntarily risk death. But we have to find a way to provide soft landings for those who are not equipped for a high level of risk and adventure.
Technoculture, as a trope, has been a place for edgerunners and edgelords, but the risks were never just for themselves. It was always about dragging the entire species (not to mention their wealth) into the spooky and inarguably dangerous new realm of digital space. Tech enthusiasts need to add a new demand to their project: a cushion against the most harmful aspects of this historical dislocation for those falling over the edge.
A follow up column Risk and Precarity Part 3: Possibilities and Solutions will follow.
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