Why Common-Sense Regulation and Compromise are Critical To Blockchain’s Survival

Earlier this year, I attended a panel on blockchain governance at CryptoHQ in Davos, Switzerland.

While there, I listened as enthusiasts explained how the blockchain is going to replace every form of governance currently in power — how it is the savior that will finally provide freedom and accountability to the masses of the world, disentangling us from the dangers of centralization and dismantling the oppressive international superstate.

These panelists, along with some of those in attendance, belong to a segment of the crypto community that sees itself as fundamentally disconnected from the rest of the world. Like attendees of the Porcupine Freedom Festival who meet in New Hampshire to trip balls and trade silver every year, they see the collapse of the state as inevitable, and blockchain as the heroic harbinger.

However, while an entirely decentralized reality is something the world might one day see, crypto enthusiasts would do well to remember that nobody has yet put tanks or Tokarevs on the blockchain. You can have all the distributed ledgers you want, but as long as Mao’s unfortunate maxim that power grows out of the barrel of a gun holds true, it will be impossible to replace the current modes of governance with something more egalitarian.

As long as governments control the critical levers of power — setting the rules and determining norms on an international level — our community’s survival depends on playing, at least to an extent, by their rules. Like any other complex and semi-aware system, the global superstate will act to defend its long-term interests. Fighting against it will only result in being crushed by the inexorable gears of state. The blockchain has too much potential for us to let it die in an act of obstinate and pointless self-defense.

Instead, we should work with the state to ensure the development of blockchain technology is mutually beneficial, and to create an environment conducive to sustainable growth. This will allow cryptocurrencies the foundation they need to play a larger role in an eventual financial revolution. This is why I feel that the best thing that could happen for Bitcoin and other cryptocurrencies is common-sense regulation.

Although this might be anathema to much of the crypto community (and potentially the ultimate vision of Satoshi), there will need to be regulation to stabilize the markets and create true viability. Only once the scam artists, crypto Twitter trolls, and peddlers of scam-bait ICOs are brought to heel can true growth begin.

If the crypto community fails to create the systems to work with the global superstate, it will suffer horribly at the hands of a reactionary system that doesn’t eschew force as a means of exerting control.

Like the Decembrists of 1825, who took a principled stand against the Czarist system and its exploitation of the Russian serfs, the crypto community will find itself on thin economic ice with the artillery of a hostile legal system crashing down all around it. This global superstate could crush Bitcoin, for example, while everyone else looks on sadly, watching as the world’s best hope for economic freedom settle as little more than scraps of paper following furious litigation.

Luckily, there are people at work to prevent this from happening.

Take the work being done by Vinay Gupta and the rest of the legal visionaries at Mattereum. Rather than basing their development plan on some dystopian vision of an eternal Burning Man on the cryptoPlaya, Mattereum is working to create systems and methodologies that ensure cryptocurrency operates in complement to existing legal systems. They’re doing this by working to make smart contracts legally enforceable around the world — a crucial step toward cooperating functionally with existing superstate bureaucracies.

Another critical step towards long-term viability is for blockchain entrepreneurs and developers to transition away from projects strictly rooted in finance.

One example of someone doing this is Kat Kuzmeskas, whose Simply Vital Health seeks to redefine the use of blockchain technologies through the creation of the Health Nexus. By using blockchain-based, globally HIPAA-compatible protocol to provide better health data management for providers and patients, Kuzmeskas is working to demonstrate that blockchain technology can work with systems currently in place to protect consumers and their data. These sorts of efforts are necessary to set the stage for large-scale adoption and to break through the stereotype of libertarian Sovereign Citizen “Freeman on the Land” drivel that clings to the blockchain market space like cheap perfume.

In order to guarantee our survival, the crypto community must take the middle path and work with governments to self-regulate. While decentralization is a fine and lofty goal, it will take many smaller steps to actualize. And all it takes is one government crack down to severely damage the movement, no matter how richeous the cause.

A revolution in thinking takes time — and lots of it.

Rather than waste time attacking an immovable system, we should collaborate with existing financial and legal structures to demonstrate that, together, we can create a better, freer, and more efficient world.

EDIT — 5/30/18): References to Michael Stollaire and TBIS removed given the recent revelations about their ICO funding spending.