The problem with blockchain is in its design: dependence on mining, an industrial activity based on the availability of infrastructure, puts any blockchain product in the custody of whoever manages to attract large-scale capital.
A year ago, when we proposed an ideological map of the movements emerging on the Internet, we laid out two axes: abundance–degrowth and centralized-distributed. Debate arose around bitcoin and currencies and services based on blockchain, because we placed those who bet on them closer to the origin, closer to centralization, than those who bet on pure distributed structures of servers like GNU Social.
The argument was simple: the growing dependence of the blockchain system on “miners” not only tended to make the stability of bitcoin and its derivatives dependent on a limited and shrinking number of agents, but over the long term, they could change the rules of the game.
In January, a similar argument by one of the main developers of Bitcoin started a global debate, and in a few months, all kinds of headlines appeared about “the collapse of bitcoin” just as we were hearing declarations of love for the blockchain from Davos.
But this week, as shown by public data, the general situation became dire: two Chinese “mines,” Antpool and DiscusFish/F2Pool, have more than half of all blocks created. With free electricity and calculating power, they already have the capacity to modify the rules to their liking. Why should we trust them any more than any other centralizer, like Google, Facebook or Twitter?
The problem is one of design: dependence on mining, an industrial activity based on the availability of infrastructure, puts any blockchain product in the custody of whoever manages to attract large-scale capital.
Davos, the great forum of overscaled capital, wasn’t so wrong. Nor were the “misfits and millionaires who wanted to reinvent money.” Bitcoin and blockchain are systems that, in the end, serve the logic of the large scale. Their own structure eliminates control/capture by central banks, and replaces it with the possibility of capture by those large masses of capital that that can’t find a place these days. If there’s already little democratic control over central banks by political representatives or the market, what can we expect from a couple of anonymous Chinese millionaires? Should we hope for them to be replaced by their still larger colleagues on Wall Street or in London?
PS. If anyone thought that blockchain could be the basis for a “redesign of money,” just today, some interesting news came out: the US Federal Reserve is prepared to globally regulate products based on blockchain which, as the interest coming out of Davos confirms, are created to centralize.