Kicking Blockchain While it’s Down
I appreciate Paul Krugman’s “Blockchains, What Are They Good For?” article, but I’m hopeful his answer is wrong.
Krugman’s withering assessment of the state of crypto currency is warranted, but conflating the underlying blockchain technology itself may not be. Is blockchain doomed to the trash heap of tech history, or is it an idea still waiting to find its best use?
Krugman asks “what useful thing does it do?” It’s a good question without a great answer… yet. But as a musician, I’ve dreamed of something like a distributed ledger with a smart contract attached that could make artist royalty payments more transparent and fair; keeping track of complex royalty streams (mechanical, performance, sample clearances, cover versions, etc.), and then distributing payments to the rightful recipients automatically, in perpetuity. Could blockchain potentially take on this role, negating reliance on shady record industry gate-keepers? Because said industry has a historical problem with transparency leading, more often than not, to dreadful under payment of artists while record executives reap huge profits, a blockchain solution could indeed be useful.
The same holds true for other forms of IP (visual art, writing, film/video), and even physical property: Don’t paper titles and deeds seem outmoded? Do we really still need to pay a title co. to have someone root through a warehouse of paperwork in order to rubber stamp a home sale?
Useful, above-board blockchain applications won’t flourish in the kind of libertarian dystopia that’s led us to the current crypto-wild-west. But they could and should exist within mainstream, regulated and insured legal and financial systems. Most major banks are already well down the road of blockchain experimentation.
Krugman rightly condemns the horrendous amount of wasted energy spent on crypto mining, but the proof-of-work process used for Bitcoin is not a necessary component for blockchains to function. In fact, the second most popular crypto currency, Etherium recently switched over to a proof-of stake model which has lowered its carbon footprint by 99.99%. Etherium was also the first blockchain to incorporate smart contracts.
Who knows where this will all lead? I’m certainly no expert. Perhaps Krugman is right that blockchain technology is a good-for-nothing pyramid scheme and we’re currently witnessing its demise. I’ll remain hopeful though, that eventually some good will come from it.
