It’s time to award the Crypto Tulip of the Year Award for 2019, recognizing outstanding concepts, technologies, and trends in the Nakamotoan universe, cryptocurrencies, blockchains, and the communities who love them.
As always, Crypto Tulips combine irrational exuberance with technological dumbness. As usual, the competition is intense. This is a prize no one should want to win.
The cryptocurrenchy world thrives on enthusiasm, and does not seem to employ any sort of Bayesian logic. I.e., they never learn.
There were many stories of fraud, theft, and lawsuits that it isn’t possible to list them all. There were also the usual “oopsies”, amplified by Nakamoto’s insane clown engineering methodology, which can prevent bug fixing as well as completely obvious technical upgrades.
Ethereum was a serious contender again, with an exemplary record of non-achievements that shows no signs of dampening enthusiasm. Bcash deserves mention for a secret bug fix that rewrote history through a deliberate 51% attack by the powers that be.
I also noted a new class of entry, which I called “US Sanctions”, though many countries are playing similar cards. This year saw economic blockades, and the perennial claims that Nakamotoan cryptocurrencies are just the thing for sanctions busting helping the ordinary citizens. Of course, cryptocurrencies have had little success in these situations for many reasons, including the discovery that nations states can, in fact, do quite a bit to “censor” cryptocurrency.
Of course, Quadrigacx has to be mentioned. Major fraud–probably. Sudden death. Missing keys, missing assets. Mounties on the case. Lawsuits as far as the eye can see.
But all of this was eclipsed by the 900-pound gorilla in the room—Facebook’s Libra.
There has been a flood of information and commentary about Libra, and I can’t pretend to have kept up.
The bottom line is that no one can be sure what Facebook is actually trying to do, let alone what they may actually try to do. There are so many not completely coherent angles on this. Some people are enthusiastic, and a lot of people are worried and hostile.
Libra hasn’t launched and may never launch. But it already has made a major contribution to the Nakamotoan universe by attracting intense scrutiny and criticism. Bitcoin and its progeny have been puttering along incoherently shouting about “disrupting” money, with minimal interest and reaction. But a billion-dollar global monopoly dabbling in the crypto pond is a whole different story.
My own view is that most people don’t take Bitcoin et al. seriously. But everyone takes Facebook seriously, for better and for worse.
The Envelope, Please
So let’s get to it.
Special “Emperor Nakamoto’s New Clothes” Award
First, this year the judges introduce a new award, Emperor Nakamoto’s New Clothes, awarded for telling the obvious truth.
The judges found that there is a lot of straight talk coming out of Cornell University, though a lot of it academic and hard to read.
Hiaire Orman did a brilliant piece on Blockchain for identity.
Ultimately, the “New Clothes” award goes to Nick Weaver’s commentary. Congratulations, I guess!
“Most of the cryptocurrency community seems intent on speed-running 500 years of economic history for choosing their bad ideas”. (from Nick Weaver’s commentary)
The Crypto Tulip of the Year for 2019
First of all, let’s recognized a surprising non-winner. This year, for the first time, Ethereum was not short listed for Crypto Tulip of the Year.
The reason is that Ethereum is growing up, and becoming realistic. Sure, it’s still a cryptocurrency, with its fair share of irrational exuberance. But the big story with Ethereum this year has been more and more serious software engineering, along with the inevitable schedule slips that goes with the territory. The judges found that this is non-Tulip-y. Sorry.
Honorable mention goes to “Fraud”
Nakamotoan cryptocurrencies are designed to be “trustless”, which somehow makes them trustworthy.
But cryptocurrencies continue to be an ideal instrument for ransomware, grey marketeering, and, with the maturing of “ICO” (defending Crypt Tulip of the Year 2018), fraud of all kinds.
None of this has dented the faith that this all is “innovative” (as if any of these scams are new) and the wave of the future.
The runner up is “US Sanctions”
Nakamotoan cryptocurrency is designed to be “impossible to censor”, to be beyond government and corporate control. True believers consistently say that cryptocurrencies will help dissidents, revolutionaries, and ordinary citizens defy tyrannical powers, at home and abroad. Nakamotoans also believe that cryptocurrencies can defeat economic blockades.
This year has seen a drumbeat of “censorship”, including US Sanctions on Iran, North Korea and elsewhere, as well as stringent government controls in Venuzuela, China, and elsewhere. Nakamotoan cryptocurrencies have had little impact on these situations, and, indeed, they have been effectively “censored”.
Not that this has changed the irrational optimism that, any day now, cryptocurrencies will liberate the masses from the tyranny of economic warfare.
The winner is: Libra
Libra isn’t all that innovative, of course, intentionally building on various efforts in the crypto world. In the end, the specific design is just about as non-Nakamotoan as you can get without being run by a central bank.
Does this dim the enthusiasm of the crypto community? Of course not.
For starters, Libra is a tether coin, allegedly pegged to a basket of other assets rather than freely floating like Bitcoin. What these assets will be, and who manages them is unknown. “Trust us” is the basic idea.
For that matter, the whole show is run by Facebook, a giant, opaque, monopolistic company. The blockchain is proprietary (only “members” can write to the ledger). This is not exactly a “decentralized” system, in any sense of the word.
Libra also promises to adhere to the law, all of them. This includes stringent know your customer laws, though they promise that your identity will not be tracked. I’m not sure how they plan to square the circle of “transparent privacy”. I guess we’ll have to trust them.
They also assure us that Facebook won’t be controlling the currency, or using the transactions and other information to feed their advertising business.
“Trust us”, they say.
This is the deepest irony of all: using Libra requires you to trust Facebook and its partners (whoever they may be). This is a great example of exactly what Nakamoto was seeking to avoid with his “trustless” protocol.
Whatever Libra may be, it really isn’t Nakamotoan.
And, for extra points, Libra has a fair chance of not launching or failing shortly after launch. This could be the biggest “oopsie” in the history of cryptocurrency.
Congratulations to Libra, Crypto Tulip of the Year for 2019!
Libra sets a new standard for Crypto Tulip of the Year, one than may be difficult for anyone to match.