“There’s nothing wrong with capitalism. This is a problem of crony-capitalism / corporatism. <EOF>”
That is what people will reflexively say to any analysis that discusses the role of the profit motive and wall street earnings in leading to these outcomes.
The fact that systematic actions like this to amass advantages at expense of the public happen with regularity at Facebook, Google, Apple, Microsoft, Exxon Mobil, General Motors and many other for-profit enterprises, means there may be some room to improve the economic paradigm in which these things are built. And in fact, we have just such a paradigm, and the products of it (Wikipedia, Linux, etc.) are of a completely different character. They don’t have an investor class at all, that needs to recoup their investment by extracting rents forever.
The alternative to for-profit venture funded companies owned by Wall St doesn’t have to be communism or socialism. It can be a gift economy such Science, Creative Commons, or Open Source Software and decentralized permissionless networks based around protocols like HTTP.
For example, Uber can be replaced with an open source, decentralized marketplace that doesn’t take 50% of all drivers’ revenue, but has a free market and ratings / reviews operated by the community.
But if a project is funded by venture CAPITALISTS, subsidized by money-losing unit economics through multiple rounds, and then dumped on the public in a Wall St IPO, and subsequently owned by pension funds and other pools of capital, then yes that is a quintessential example of Capitalism. And the result is that there is an investor class that will always tell Uber’s board to maintain centralized control and extract rents from the public, squeeze drivers, as well as try to hack the society around them (as in this article: secretly trick, get around the police, lobby state officials) whereas an open source decentralized system wouldn’t do any of that.
The dream of cryptocurrency was that the developers would sell the tokens to the public and make money on the primary sale, but after that, the network would belong to the public. Even any royalties that could accrue (such as on every transfer of the token) would be above-board and disclosed once, so everyone knows the deal. Sadly, rather than focusing on a “peer to peer cash system” as Satoshi’s whitepaper said, the entire space switched around 2013 to “store of value”, HODL and speculative investment. It’s actually a cop-out that happened because blockchains can’t scale well.
Bitcoin was the granddaddy and it solved the double-spend problem, but in a very brute-force way, by gathering all transactions in the world in one place every 10 mins to search for a double-spend. It’s actually even worse than that, because every transaction has to be gossipped to every miner, and all mined transactions have to be stored forever in an ever-growing history. The tech is a straightjacket but the vision is good. We do need smart contracts to replace privately-owned middlemen, but we need the smart contracts to run on a better DLT than Blockchain. There have been tons of innovation since 2008 but Bitcoin maximalists and Web2 maximalists both deride all of it, so progress depends on open-minded people who look past the grift of utility-less coins long enough to build something useful
For example, Uber can be replaced with an open source, decentralized marketplace that doesn’t take 50% of all drivers’ revenue, but has a free market and ratings / reviews operated by the community.
The current plague of cryptocurrency proves that, by itself, the mere fact of the market being open source and decentralized doesn't do anything useful; it even makes it worse in a lot of ways. The scammers will do exactly the same thing, except they take a 100% cut of your money when they dump the tokens onto retail investors and then do a rug pull.
Smart contracts are a horrible invention that don't do anything new. The equivalent in a normal SQL database (the original DLT) is just running a transaction; every SQL database under the sun has supported this for ages.
No, smart contracts are the realization of something just as revolutionary as Web1 and Web2 and just as likely to change the world, once people use them to help communities organize and coordinate their activities:
Smart contracts represent the first time in history when you can trust code to do what it says. The next best thing that even come close is Intel’s SGX extensions, where we trust Intel, or AWS key management service, where we trust Amazon.
The idea that everyone can custody their own private keys as they want AND no one can be “above the law” and circumvent the business logic, is really powerful. That assurance and level of trust in the code is what enables a whole slew of new applications that currently require human gatekeeper institutions, same as Web1 replaced radio, TV, newspapers, magazines, and centralized platforms like America Online, Compuserve and Minitel.
You just are myopically focused on the silly Web3 phase, same as people derided Web1 personal home pages with <blink> and <marquee> tags until the Web grew up.
>Smart contracts represent the first time in history when you can trust code to do what it says.
This is extremely, extremely wrong. The operators of the network can change the smart contract VM whenever they want. There's nothing magic about it, the VM is just implemented in some code that all of the executor nodes happen to agree on at any given moment in time. In practice they don't change it, but neither would you if you were running a financial database on top of SQL.
And besides, the worst issue in software development is unintended bugs made by programmers. No programmer I know would ever trust any non-trivial code to simply "do what it says" because there could be complex bugs lurking in there somewhere. Smart contracts can't do anything about that, practically speaking they make it much worse by making it difficult/expensive to change the smart contract. There is nothing revolutionary or powerful about them, the point of them is actually to make them weak and expensive on purpose so the executors can charge increasing gas fees.
Edit: I looked at that list of applications, almost all of them could be done better without smart contracts or even without computers. Those things are all thousands of years old. The only exception on that list is NFTs, but NFTs are an entirely bogus concept that are yet another version of a ponzi scheme.
You seem intellectually curious and honest from what you write. So I think you’re one step away from the epiphany, if you can resist doubling down on this statement
this is extremely, extremely wrong
Sure, they can “hardfork” the protocol in a backwards-incompatible way, but they’d have to get the fork adopted by everyone who is currently running (and “securing”) the other version of the database and its “stored procedures”. Often, the node operators don’t all know each other and it’s hard for them to all collude to run the hardfork. Often, the old network has large enough incentives for each individual to not switch, similar to how everyone always threatens to leave Facebook but it still has the same MAU because its network effect is so huge. Good luck leaving when all your friends are on it, etc. And Facebook doesn’t give you a steady stream of income, even. If it did, if you made more profit than it cost you to run a node, why wouldn’t you ALSO keep supporting the old network? I can think of one reason only — if the new network hardfork would pay you MORE and it would be a zero-sum game. It would have to break old contracts AND gain enough traction to pay all the node operators MORE than the old one. That’s quite a hurdle and becomes harder the bigger the original network was.
Bitcoin was forked multiple times, but even a sensible hardfork change like increasing the block size proved too hard to do. Bitcoin Cash and Bitcoin SV are around but most Bitcoin ”miner” nodes still run the tried and true old blue.
Ethereum team had to put a “difficulty bomb” in there to try to get the miners to upgrade. See Ethereum Classic, for instance, it is still being run, despite having no widely adopted applications or stablecoins on it. So even without utility, you can have shitcoins running for years, and you’re talking to me about how ALL nodes can just abandon it?
Now about the bugs and correctness. Look… first of all, no one is claiming that smart contracts will solve every single problem, neither did Web1 but it solved enough that everyone left AOL and CompuServe and MSN and joined it. That’s a FACT. They also left Encarta and Britannica which were quite popular capitalist enterprises, paying all editors top-down from their profits, and instead Wikipedia eclipsed them all. They are now a rounding error.
But you bring a fair point — since smart contracts must be immutable to be trusted (like UniSwap Factory, or many other protocols) they have to be audited and battle tested before the public can trust them with large amounts of value (elections, money, etc.)
The ultimate in this is Provable Correctness, and there are now tools to actually prove a smart contract or a program is correct.
The second place is what Cardano is doing — running fuzzing with massive amounts of input through what is essentially a functional programming language (Haskell). What is not enough about that? You get the best of all worlds… trillions of tests, and then immutable code you can trust.
Disclaimer: I am not building on Cardano and have no connection to their ecosystem. Just that they are focused on moving the space to a more provably correct set of smart contracts, and it addresses your concern.
>So I think you’re one step away from the epiphany, if you can resist doubling down on this statement
I will double and triple down on it. I've been following this for at least a decade now. Smart contracts are completely useless and they need to go. The "epiphany" here is that it was obvious since The DAO transaction was reverted that there is nothing actually immutable about blockchains or smart contracts. If enough whales are threatened by some activity then they'll hard fork, because the miners/stakers all depend on the activity of the whales to realize their profits. The network doesn't exist without them, and it's not actually hard for them to collude.
This is another reason why it's futile for you to expect anything out of blockchains; they're not actually run by volunteers, by design they're run by the greediest possible participants who are supposed to do whatever they possibly can to maximize their profit from mining, because if they don't do this then the network collapses. This is entirely how the system is designed to work. You're not actually "trusting the code", you're trusting that a hardfork won't be successful for entirely non-technical reasons, i.e. that they would lose money. People who run ordinary databases also don't mess with the database for the same reason. Blockchains don't add anything new to this, they're not a good or even interesting invention.
>Bitcoin was forked multiple times, but even a sensible hardfork change like increasing the block size proved too hard to do
This is ahistorical, it wasn't hard to increase the block size, it was just undesired by the majority of the miners. BCH happened because some miners were upset about SegWit, a change that did actually succeed.
>The ultimate in this is Provable Correctness, and there are now tools to actually prove a smart contract or a program is correct.
These tools do not solve the problem, because "correct" is entirely subjective. With those, you can prove that the program doesn't violate its own invariants or contain certain logic errors, but you can't validate that the output for the human is correct. No amount of fuzzing can solve this.
I mean, I could say that you sound like the old fogies in each generation like Steve Ballmer who famously yelled "search is not a business!" People just don't get how the next generation of users could POSSIBLY find something useful, which they don't see useful. It's like people drew the future with flying cars, when in reality the innovation was in something else.
In a regular database, I can't have an election because someone can go in there and change all the votes or stored procedures. I can't trust the code. I can't trust the database. One person with one key can change everything.
You know what's better than that? People being able to only act as themselves, and the rules being enforced by multiple machines. As I said, it doesn't have be "a blockchain", but what I described is the defining features of "smart contracts". It's simply more resilient than any middleman, and it makes it much, much harder to corrupt the system to extract rents. The system ends up being neutral, and all the "profits" are either taken out of circulation or accrue to the participants. There is no parasitic investor class in the end. People sell the tokens once and then they circulate among network participants. There are multiple gateways to get or cash out of the token instead of one (like cashing in/out of PayPal using PayPal Inc only). It's very hard to shut the system down or exclude certain groups from it. In all these ways (except the last one perhaps, depending on who you ask), it's strictly BETTER than centralized, closed, privately-owned systems. Why do Web2 maxis hate all these improvements?
You’re jumbling up a lot of things here. Fixing the economic paradigm does not lead straight to crypto. Maybe it’s part of the solution in some areas, but it doesn't prevent capitalism or encourage open source bootstrapped enterprises.
The closest thing IMO to a swing at fixing the economic paradigm would be something like requiring all companies to be nonprofits once they go public or something…
Who pays volunteers on Wikipedia, Linux, BSD, Webkit, Chromium, PHP, Python and all those other technologies and languages who have taken over the world? Is TimBL rich through extracting rents from all users of HTTP?
Vitalik is mega-rich from selling his tokens once, and now he doesn’t control the network. That is the alternative I am talking about. The developers of a successful project make buck but then the project becomes bigger than them. There were was an article posted the other day from an open source author complaining that they are now being required to use two-factor authentication before they can continue releasing their product. They said “well, I guess I don’t pay for the distribution platform, so I will take what I can get.” But they are missing the point entirely — the distribution platform isn’t supposed to serve the one author/maintainer. It’s supposed to serve the public! Those are the actual customers, and even if the author pays $1,000,000 a month to such a service, the value to the public of NOT having a security backdoor on the next update can become far, far greater. At some point, what you built just becomes bigger than you.
That’s why science has peer review, wikipedia has talk pages and open source commits have reviewers before merging the code. No one wants something to be rolled out at 5am on the whim of one guy, EVEN IF he has two factor authentication.
There is a fundamental, fundamental difference in mindset between on the one hand the celebrity culture we have on Twitter, and various entertainment, and the peer review culture of science, wikipedia and open source. The latter is far more useful to society.
In fact, most of our divisions and strife in demicracies is a result of for-profit news media trying to write one-sided outrage articles with clickbait titles because the market selects for that, while our social network algorithms surface this and put us in angry echo chambers because that leads to the most “engagement” (and therefore, profit). Once you see it, the profit motive IS WHAT CORRUPTS these networks. Wikipedia and Linux may have their faults, but not these.
Who pays the volunteers? No one. They have enough financial stability to spend an hour here and there making a commit. There doesn’t need to be a billion dollar investment by any party to advance the thing forward. They’re like ants… and it beats closed profit-driven silos in the end.
>Who pays volunteers on Wikipedia, Linux, BSD, Webkit, Chromium, PHP, Python
In order: Wikimedia Foundation, various companies, various companies, Apple, Google, various companies, various companies. Most of those developers are paid. The wikipedia editors are unpaid volunteers, but the IT staff isn't.
No, I asked my question assuming we lived in the world you’re suggesting where all software is built by volunteers in a utopian gift economy. I am asking who pays your volunteers. The question is semi-rhetorical.
The answer as GP points out is that in the majority of these cases open source software is still funded by capitalists. Wikipedia content presumably being largely a volunteer effort doesn't change this. Something still has to fund Wikipedia's existence. Wikipedia and signal for example are funded by nonprofits. I quite like this model which is why I suggested it in my previous comment.
The main point is that you can’t just tell everyone to work for free and still call it capitalism or even expect it to work at all. That’s what it sounds like you’re suggesting… I like your challenge to the capitalism/socialism dichotomy. I think your solution is lacking some sophistication in understanding how the open source landscape works, what motivates people and how to yield production, and is kinda out of touch with reality.
I think it’s quite the reverse: rather than being out of touch with reality, it is based on behavioral economic studies of reality ignored by capitalists. Watch for example this video: https://m.youtube.com/watch?v=rbR2V1UeB_A
The way they would be able to contribute is that the UBI would allow them to negotiate shorter workweeks. They’d use the time for other things, like taking care of their own children and parents, rather than sticking them in a nursing home and public schools.
Honestly I’m not even sure what we’re talking about anymore. I definitely agree we need a way as a society to have families raise their own kids and break the power couple plus daycare dynamic. But I doubt a volunteer economy would achieve those results. We need to make homemaker a socially prestigious occupation and provide people doing that role more of a support system and structure so they can participate in the economic machine and feel/be valued the same way “breadwinners” are. Then they’ll be seen and see themselves as equals.
Also the Atlassian example in the video is meh. The people aren't working for free. They’re working for a paycheck. The company just lets them have autonomy for one day a quarter. So 4 days a year they get to work on what they want instead of what their managers want and this is your example of how a volunteer economy supported by UBI will work? Have you paid any attention the last 2 years? People don't work if they don't have to feed their family and pay the mortgage… I think you’re conflating innovation with grunt work. Until we have robots to do all the grunt work, UBI is a pipe dream. And I say that wanting it for myself just as much as the next person… so I’m with you there.
It is easy to check in a variety of ways, including calling their API of contributors. Where would Wikipedia get the money to oay this vast army of people? And even if they did, divide the amount they raised by the number of contributors and tell me if it is a meaningful amount compared to what employees are paid in the capitalist company model.
A better argument: People will always try to dupe, deceive, get rich and get their way. Capitalism is - so far - the best way to channel at least some of that energy into building something productive for society as a whole.
Metapoint. You seem to keep significantly editing your comment, so I don’t know what’s been voted or commented on. Either responding, or editing with the —-EDIT—- line would help there.
That is what people will reflexively say to any analysis that discusses the role of the profit motive and wall street earnings in leading to these outcomes.
The fact that systematic actions like this to amass advantages at expense of the public happen with regularity at Facebook, Google, Apple, Microsoft, Exxon Mobil, General Motors and many other for-profit enterprises, means there may be some room to improve the economic paradigm in which these things are built. And in fact, we have just such a paradigm, and the products of it (Wikipedia, Linux, etc.) are of a completely different character. They don’t have an investor class at all, that needs to recoup their investment by extracting rents forever.
The alternative to for-profit venture funded companies owned by Wall St doesn’t have to be communism or socialism. It can be a gift economy such Science, Creative Commons, or Open Source Software and decentralized permissionless networks based around protocols like HTTP.
For example, Uber can be replaced with an open source, decentralized marketplace that doesn’t take 50% of all drivers’ revenue, but has a free market and ratings / reviews operated by the community.
But if a project is funded by venture CAPITALISTS, subsidized by money-losing unit economics through multiple rounds, and then dumped on the public in a Wall St IPO, and subsequently owned by pension funds and other pools of capital, then yes that is a quintessential example of Capitalism. And the result is that there is an investor class that will always tell Uber’s board to maintain centralized control and extract rents from the public, squeeze drivers, as well as try to hack the society around them (as in this article: secretly trick, get around the police, lobby state officials) whereas an open source decentralized system wouldn’t do any of that.
The dream of cryptocurrency was that the developers would sell the tokens to the public and make money on the primary sale, but after that, the network would belong to the public. Even any royalties that could accrue (such as on every transfer of the token) would be above-board and disclosed once, so everyone knows the deal. Sadly, rather than focusing on a “peer to peer cash system” as Satoshi’s whitepaper said, the entire space switched around 2013 to “store of value”, HODL and speculative investment. It’s actually a cop-out that happened because blockchains can’t scale well.
Bitcoin was the granddaddy and it solved the double-spend problem, but in a very brute-force way, by gathering all transactions in the world in one place every 10 mins to search for a double-spend. It’s actually even worse than that, because every transaction has to be gossipped to every miner, and all mined transactions have to be stored forever in an ever-growing history. The tech is a straightjacket but the vision is good. We do need smart contracts to replace privately-owned middlemen, but we need the smart contracts to run on a better DLT than Blockchain. There have been tons of innovation since 2008 but Bitcoin maximalists and Web2 maximalists both deride all of it, so progress depends on open-minded people who look past the grift of utility-less coins long enough to build something useful