… week of Feb 1, 2021
Welcome to my weekly letter! This week let’s switch gear and look at the crypto technologies (e.g. blockchain and cryptocurrencies) with a bit of SWOT analysis! Without further ado…
Weekly Read
- Strengths: Fat Protocols (usv.com) – this older article explains how blockchain, being the protocol cryptocurrencies based on, shifts the value proposition from application layer to protocol layer. And by doing that, it’s able to “reduce the barriers to entry for new players and create a more vibrant and competitive ecosystem of products and services on top”. Am I the only one who’s reminded of the shift from mainframe to client/server infrastructure?
- Weaknesses: The word ‘decentralized’ has lost all meaning — Enough is enough (cointelegraph.com) – this article I found to be a more succinct summary/commentary than other more detailed posts in coindesk and decrypt.co about how decentralized blockchain tokenization (cryptocurrency) could be implemented in such a way that is no longer decentralized, and it led to the conflict episode between TRON’s Justin Sun and Steemit.
- Opportunities: Who Will Control the Software That Powers the Internet? (a16z.com) insightful review on how the internet evolved in the last 35 years and the potential for blockchain to become the mainstage of the future of the internet. A few emerging successes can be seen in SuperRare, Foundation, and a HTTP replacement.
- Threats: India’s cryptocurrency bill catches industry off-guard; investors nervous (The Economic Times) – government policy could potentially interfere and causes some imbalance to the overall picture. Or completely break it. Other major economic bodies in the US, China and Europe are planning some type of regulation on cryptocurrencies. This is not necessarily a threat, yet.
- Potential Threat: Here’s Why Quantum Computing Will Not Break Cryptocurrencies (Forbes) – If you are thinking quantum computers will break everything crypto (you are not alone, people has been worrying about it plenty: 1, 2, 3), here is a good article on the rationale and the plan to prevent it. The risk level is mitigated to… S2 😉
Thoughts
From a technologist perspective, it is very exciting to see blockchain technology becoming prominent and cryptocurrencies being taken seriously by institutional platforms as well as policy makers. It feels like the early days of the Internet, with so much potential and flexibility, as well as the risks and unknowns.
Assuming the history is to repeat itself, one can imagine 30 years later, we will all be living and breathing blockchains as we do HTTP today, (side notes: Internet Archive, or, the Wayback Machine will hopeful be saving all the data hosted on HTTP today, all twitter and TikTok posts searchable via it’s ‘legacy’ Google interface, oh. at least keep the #seashanty threads?) then what? Are we gaining anything from today? What problems would we have solved by this protocol shift? Are we falling into the trap of a solution in search of problems?
One could argue that the blockchain’s open-source nature can help cloud-base softwares becoming better, putting control in the hands of the community. But this is essentially the same argument that’s been around for Linux and existing open source communities. While being open source is definitely a good trait, it does not establish itself as a solution to any particular problem.
One could argue that the cryptocurrency provides better transparency to moneyflow, with the community contributing to auditing ledgers. But we can all see that as this new type of currency becomes more prominent, it begin to expose to the similar threats (e.g. TRON v.s. Steemit episode) and the need for more regulation and oversight as the traditional currencies. What problem is it solving? What value does cryptocurrency adds?
This write-up has turned 180 degrees since I started writing it, so let me rephrase: I am personally more excited by the potentials introduced by the blockchain technologies – I hope to see that with new technologies come better applications and services that improve people’s day-to-day lives. But the business side of me took a step back to see the forest, and realized that either all these are hypes to drive innovations and market volatility, or I have not been educated enough to see the full benefits of blockchain. I hope it is the latter. (your feedback and comments are welcomed!)
Stay Tuned…
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