Avoiding Fraud on the Blockchain

The promise of blockchain technology is entangled in a concept of freedom from central control of currencies and platforms. It’s unsurprising that Bitcoin emerged when it did, after the 2008 Crisis, when everyone watched as the nation’s savings and investments were eroded by risky Wall Street bets made with other peoples’ money. It turned out that when Wall Street traders realized it could make huge bets on the market, with the Fed ensuring a minimal downside (thank you Mr Greenspan), they did exactly that.

Bitcoin emerged in early 2009 as a solution removed from the control of Wall Street, a peer to peer cash system with no central authority to corrupt it.

Despite its usefulness in transporting money from person to person, I’m pessimistic Bitcoin will change much about human action. On the margins? Yes. Certainly, people’s lives have been changed by Bitcoin and blockchain tech in general.

But the problem Bitcoin tries to solve is a false one: centralization is not the core problem of economies. Human vice is.

Austrian economists blame the government. Progressives blame corporations. I think most people realize when they look at these two institutions, they’re often driven by the same things: Greed. Pride. Envy. For the love of money is the root of all kinds of evils[1]. One doesn’t need to be a Christian to read that line from St Paul’s letter to Timothy to realize they are true words.

But let’s be real: do we love Bitcoin because its adoption will make us rich? Do we think that cryptocurrencies are good because we have a lot of them, and will make a fortune if they succeed?

That thinking can cloud one’s judgement, and in many cases it can turn a bagholder into a cheerleader for a particular bad token. If you’ve spent any time in Telegram or other social media channels focused on ICOs or tokens, you’ll know what I mean.

Try not to confuse “we’re going to change the world!” with “we’re going to change my world, with your money![2]” As a rule of thumb, if somebody is publicly dishonest about the terms of a token sale, it’s time to move on to a project with integrity as its focus.

What’s your point, ProtegeAA?

My point is this: blockchains don’t detach us from our obligations to be good to other people, and there are plenty of bad actors in the space right now whose number one goal is to make money at (almost) any cost. Blockchains are cool tech, and as I pointed out above, they’ve made some people’s lives better. But blockchain is not a magic word that bestows goodness and utopia on the world, and we need to ensure we still act with integrity when we use and design them.

Anyway, end of mini rant. I’d love to hear your thoughts in the comments below!


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[1] This line is often (mis)interpreted as “money is the root of all evil”, which is quite false. It’s an important distinction, because the vast majority of us need to earn a living, and that involves a paycheck that allows us to buy the goods our families need to live a healthy life.

[2] Holmes belongs in jail. Keep her in mind when evaluating founders: you can commit fraud and cheat for 8 or 9 years and walk away with a slap on the wrist.

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