some common arguments against blockchain

Bitcoin has no inherent value

To address this argument we need to reach a common understanding of ‘value’. In the past ‘value’ was assigned in the actual material of currencies. Gold had value, so a gold coin had value proportional to the amount of gold. All that you need to transact with this currency is the shared belief in gold as a valuable material.

Now, with fiat currencies, ‘value’ is assigned based on the decree from a centralized body that their issued fiat currency has the value they declare. The US dollar for example is a completely arbitrary value and one could absolutely make the argument that it has no inherent value. It is worth a dollar because you believe the federal government’s decree that it is worth a dollar.

Bitcoin operates in a similar realm of assigned value, but rather than the value coming from a centralized party’s decree, the value comes from the collective decrees of each bitcoin holder in the world. When you purchase a bitcoin for $x you are making the decree that you assign the value of bitcoin to be $x or higher. The aggregation of these decentralized decrees is what gives bitcoin its value.

When one single decree assigns the value of a currency you’re introducing a massive risk. What if that centralized party becomes corrupted? What if that decree changes?

With bitcoin the risks are different. Because there is no centralized party to become corrupted and change the decree, that is no longer a risk, but the decentralized nature creates its own risks.

The decentralized network runs on the collective hashing power of miners. This network needs to be running and uncorrupted at all times. The risk here is a corruption of the network which can arise from a 51% attack. The bitcoin ecosystem needs to continually incentivize high hashing power in order to keep this risk at bay.

Cryptocurrencies are inaccessible

This argument against cryptocurrencies likely holds the most water. It’s true that to transact in crypto one needs a device, internet connection (no-net solutions are in development!), and technical knowledge to keep their crypto secure. This is the hard problem in crypto. Whoever solves this problem will be doing a huge service to the world.

However I like to think of this in comparison to the system we have now because accessibility is a comparative operator. Saying that all crypto is inaccessible is like saying that all buildings are tall.

Billions in the world do not have access to the fiat banking system, especially in developing countries but even in the most developed. In order to gain access to this system, one needs to be ‘whitelisted’. You need permission from whatever central organizing body. Crypto, on the other hand, is a global decentralized body.

Let’s say you wake up and you’d like to go purchase a bagel for breakfast. Would you rather live in a world where the requirement is internet access or the permission of a centralized corruptible party?

DAOs are just companies

It is a huge misconception that corporation structure has iterated into the ideal form of productivity. It’s true that over the years we have pinpointed the ideal organizational structure for corporations to navigate the capitalist economy. C-suites, board of directors, etc are great for distributing decision making correctly but only in the context of what they are. A capitalist corporation.

Imagine if we tried to run the executive branch of the government like a corporation. Much of corporations productivity can be attributed to the CEO having the final call and the ability to make that call with whatever speed desired. This works great in ambiguous corporate decisions where making a decision fast matters more than making the decision with the right tradeoff. In the case of politics where a black and white decision is usually far worse than a tradeoff decision that aggregates the sentiment of the group, the corporate structure begins to crumble.

Imagine if we tried to run healthcare like a corporation. We do and it sucks.

Different types of decision making optimizations require different organizational structures. DAOs that exist outside of the incentives of capitalism should not operate in the capitalist-optimal structure. DAOs can adapt to make decisions based off heuristics other than profit.

Take the example of allocating funds to a group.

In a corporation setting this decision will be made based on the final call of a centralized party, whether the C-suite or board of directions. The ability to make a faster and more decisive call here does not have much benefit. If the party is biased towards Group A, that group will receive more funds even without deserving it.

In a DAO setting this decision will be made based on the aggregation of the sentiment of the entire party. The slower process with more transparency and better aggregation of sentiment is much more appropriate. Whichever group deserves the funds will get the funds.

NFTs are just images

The associated image is the least cool thing about NFTs. The beauty is in the interoperability, transparency, and decentralization.

Interoperability occurs in the ecosystem building on the same blockchain and therefore leveraging the same on-chain data. An NFT you collect on one app can be leveraged on another app. Because there is no centralized party standing to benefit, obfuscate data, claim ownership, etc. this becomes a positive sum game where apps continue to build on each other.

Take the example of NFTs assigned for completing a coding task. If I complete some tasks and receive NFTs as proof, these can be treated as an immutable proof of who I am and what work I have done. These NFTs can give me access to features elsewhere in the ecosystem and provide the building blocks for my proof of identity.

There’s no limit for how NFTs can serve to build a digital identity. The transparency and decentralized nature mean that this identity is grounded in truth and is not at the whim of a centralized body with corruptible incentives. The vision of an identity based on truth will have implications on society that at a glance sound hugely beneficial.