Can crypto escape the problem of politics? That’s the question behind this excellent recent paper
by Nathan Schneider, an academic at the University of Colorado. Vitalik Buterin, one of the co-founders of Ethereum, has an equally interesting response here
. I highly recommend both pieces. Each is thoughtful and fascinating, whether you know a lot or a little about crypto.
Schneider looks at the promise of crypto protocols to replace the “problem of trust” in social systems with cryptoeconomic incentives. Schneider’s starting point is somewhere between “open minded” and pro-crypto, but he offers a critical evaluation of the various mechanisms that different protocols have created to influence the collective action of their participants. His core concern is whether crypto’s reliance on economic incentives can produce socially desirable outcomes or if this approach erodes the non-economic values that make political cooperation possible.
Buterin is sympathetic to the problem (see also our discussion in TiB 158
of Buterin’s essay
on the challenge of legitimacy in crypto-governance). He draws a distinction between “financialised” and “non-financialised” systems, where the former is defined as systems that “do not attempt to prevent collusion” between participants. His argument is that in the off-chain world, non-economic incentives do a pretty good job of presenting collusion (e.g. the role of judges in most modern states) - but it’s possible to design crypto-native systems with similar features, such as TheGraph
, which Schneider discusses too. There’s room for lots of innovation here. As Buterin says:
“There is plenty of room for blockchain-based systems that do not look like money, and indeed we need more of them.”