Source: news.google.com
Consistent errors in Litigation, corruption, corporate greed and a plethora of disgraced officials have understandably inflamed widespread societal mistrust and skepticism of governments and centralized points of authority. Cryptocurrency early adopters, or “degens” as they are known within the Web3 community, are relentlessly calling for a world that gets rid of central banks and, in some cases, all traces of fiat currencies. You don’t need a fancy economics degree to see some of the benefits associated with a free market; however, the vast majority of degenerative ideals are impractical and, depending on the use case, introduce more complexity rather than remove it.
Decentralized infrastructures could drastically improve many aspects of our compromised financial system, but the journey to a decentralized economy is long and not without impracticality.
The infrastructural impracticability of decentralization
The vast majority of modern blockchain technologies tout a value proposition based on the idea of decentralization, which means that no one party or entity controls the network. Currently, when you want to send someone $1,000, you can either go to the bank and initiate said transaction or use a popular money transfer app like Zelle, PayPal, or Venmo. The intermediary here has full control over whether those funds go to their intended recipient, which requires the sender to trust their bank to act in good faith.
The transfer of crypto assets works just like these platforms, where one user can send funds to another if the recipient has shared their public key, similar to a username, with the sender. However, what happens under the hood is very different and allows for the removal of the centralized point of authority.
With blockchain technology, a network of computers called “nodes” compete to win said transaction through a lottery system. This system ensures that all transactions are handled in the same way and that no one can knowingly exploit the network. All transactions go to a publicly visible ledger so that no tampering occurs after a transaction has been settled; this is known in the industry as “immutability”. While cutting out the middleman is a significant step towards a new digital economy, there are also some considerations about how applicable this framework is to everyday life.
Many blockchain protocols (the set of rules that establish the transaction structure of the blockchain) consume a lot of power and are sometimes slower than fast credit card transactions. This issue instantly detracts from the number of potential use cases and the overall adoption rate.
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Some networks, such as Solana and Algorand, have made distinctive changes to the way their algorithms work to address this issue, which is part of the larger “blockchain trilemma”: the challenge for a network to achieve decentralization, security and scalability optimally without sacrificing one for the other. Other networks have moved away from blockchain entirely like Hedera, which uses a next-generation “hashgraph” algorithm powered by LG, IBM, and Google. Blockchain giant Ethereum has even scrapped its original protocol standard in favor of one that is more energy efficient.
Not all blockchains are meant to solve the same problems and that is why we need multiple ones. We also need time for the development and advancement of the industry to reflect the effectiveness we know this technology could have in our daily lives. The ways we initiate cryptocurrency transactions today are too difficult for the average person to follow. Opening your cryptocurrency wallet while standing at the register to pay for an avocado toast and a pumpkin spice latte while 30 people behind you breathe on your neck is an anxiety-inducing endeavor that most people love. people are not ready and, ultimately, they are not. want. Until consumer finance products within Web3 are as usable as their Web2 counterparts, credit cards will continue to rule microtransactions.
the middle ground
As a Web3 addict, I pray for a world where MetaMask is listed among today’s most popular money transfer apps, but I also recognize that the greatest value proposition all new technologies must have is convenience.
The best and most successful technologies are the ergonomic ones that make our lives more efficient. Blockchain technology could dramatically improve the lives of the unbanked, as well as those looking to transfer large sums of money instantly. However, its design is still not user-friendly and therefore cannot replace our contemporary financial system in the developed world. From my perspective, cryptography is one of the greatest engineering feats of this century, but its total addressable market (TAM) will only grow as fast as the user experience improves.
What we need right now is a healthy middle ground that demonstrates the synergy between centralization principles and Web3 and works for the masses. In practice, it seems that intuitive user interfaces attract the early and late majority versus early adopters who make futile efforts to push new users up the adoption curve. Resources need to be dedicated to creating custody solutions that are more like what we are used to. We must eliminate seedless wallets and arbitrary alphanumeric domain addresses if we wish to eliminate friction.
While these tasks right now seem somewhat insurmountable, the important thing is that we have time. Recent price action and catastrophic blowouts, combined with the growing need for regulation, are standing in the way of Web3 taking a significant step forward. Despite this, he will take a step forward.
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