by Matthew Cowen
After my recent hiatus from writing, I’m feeling good about writing a few essays this year on some of the emerging topics that have captured the imagination of the technorati. I’ll also be diving into some other issues that, whilst not specifically about tech, have such a tech element to them they can be considered tech subjects.
If there is one overriding theme, it is that tech, or digital if you prefer, is sticking its nose into almost everything. As tech enthusiasts, we’ve been used to being sidelined or kept in the corner where we could express our undying love for our tech and not affect anything around us by accident. That is no longer the case.
Too many articles discuss how tech’s disruption has caused more unintended ill than benefits.
Does this mean that all tech is terrible? No, no. Of course not. But what it does mean is that we as tech people need to educate ourselves on nearly everything else to comprehend the world around us we are affecting, and perhaps have some insight into bringing on board those that can help us in their specialist subjects. I’ll get into that some other time, but suffice to say that the future will be equally tricky and fascinating.
Upcoming Podcast
On several occasions, I’ve been a guest on Michele Marius’s podcast, the ICT Pulse Podcast. We recently started recording what we hope will be an interesting conversation around a topic that feels far off for many of us in the Caribbean but is perhaps closer than we realise.
I’ll let Michele announce and release these before giving the game away.
I wanted to say how much I enjoy this format —an open discussion on a specific subject in approximately one hour.
Look out for it on your podcast app of choice soon, and do give us some feedback or pointers into things we may have missed or poorly explained. I’d love you to contribute.
Web 3.0
There has been a lot of interest of late over this thing called Web 3.0. It is hard to accurately describe what it is precisely because no one definition exists. Web 3.0 is whatever you want to suit your world view of the tech environment. I wanted to jot some initial thoughts I’ve had and submit them for discussion. I don’t pretend to be an expert in all of this. I’m trying to figure this out too. I’m just doing it out in the open here, from the perspective of a longtime tech expect.
Of course, there are some common elements in all definitions, but that doesn’t tell the whole story.
Most people agree that Web 3.0 is a collection of new technologies that will provide a fundamentally different experience on the internet from the world of Web 2.0. Some of those technologies you’ll have heard of or even have dabbled in, like Cryptocurrencies, NFTs and VR/AR.
“But Juanita never comes to The Black Sun anymore. Partly, she’s pissed at Da5id and the other hackers who never appreciated her work. But she has also decided that the whole thing is bogus. That no matter how good it is, the Metaverse is distorting the way people talk to each other, and she wants no such distortion in her relationships.” — Neal Stephenson, Snow Crash
I’ve avoided the early 90’s noun coined by Neal Stephenson in his novel Snow Crash, Metaverse, purposefully because I have a feeling that, for the moment, it is just one massive land grab on the internet to get it “out there” that you are the most critical player in this field. Again, I’m not judging it as a concept. Even I declared having seen a part of the future when Marshmallow performed in Fortnite to 27 million fans in my essay The New Reality. Still, it is a little cynical in my view for companies to pretend that is it the next big coming purely for the benefit of themselves solely.
I’ll leave you with one last thought. I wrote about Fortnite hosting a live mega-concert for Marshmellow, with something like 10.7 million concert-goers — not counting the countless Twitch streamers (estimated at a total of 27 million people all told). I wondered then, as I do now, how could this technology be used for more “serious business” purposes. I was a regular attendee of Microsoft Conferences over the last 13/14 years, conferences that attract up-to 25 000 attendees in one place I have a badge and a letter to prove it 🏅. So how could Microsoft replace these conferences with an entirely digital experience? One thought that comes to mind is precisely that blueprint trialled by Fornite.
However, let’s start with the technology.
Web 3.0 is based on three technologies slowly gaining ground in capability and notoriety. Blockchain (and hence cryptocurrencies and NFTs), Augmented Reality, and Virtual Reality. I am starting with the former in this essay.
Despite different use cases and outcomes, I tend to group Cryptocurrencies and NFTs in essentially the same basket. I know they’re not the same but bear with me. These technologies are based on Blockchain tech, and honestly, I genuinely think that Blockchain is interesting tech with some compelling use cases:
the underlying technology of these currencies is actually quite interesting and has place for use in Digital Transformation, hence why I’d like to talk about it in this week’s issue. That technology is, of course, Blockchain, or as it was originally known as, Block Chain. — Blockchain ≭ Cryptocurrency
Blockchain’s current problem is that it is both slow and energetically inefficient. Scaling Blockchain to applications that require hundreds of thousands of transactions per minute (banking anyone?) is currently a pipe-dream, despite advances being made regularly. But a little like Linux Desktop, it’s always ‘coming soon’. From an energy standpoint, it seems a little immoral to me that extraordinarily greedy systems, from an electrical perspective, operate without the slightest regard for the environment.
Take a look at what happened in Kosovo and in China,1 2 where the governments have banned crypto mining because of the strain on the electrical grid and illegal electrical supply diversions being employed by the less scrupulous. There are attempts at cleaning the face of this technology. For example, an initiative to carbon offset NFTs is a thing3 but is unlikely to have broad appeal or affect the energy requirements of Blockchains materially.
The other elephant in the room over cryptocurrencies are the obvious parallels to pyramid or Ponzi schemes. Several articles in various reputable media outlets like the FT etc. show how much of the “value” of cryptocurrencies and NFTs is speculation. Speculation that requires new entrants into the market to prop up the value higher up the chain. With the clear Achilles heel, if the supply of those at the bottom of the stack —i.e., those who lose their investments— stop pumping money to the higher level of the stack, the whole thing will most likely come crashing down.
We should additionally consider the two central tenants of the “reason” for Blockchain. Decentralisation and Immutability.
Starting with the latter, immutability is the unique property of an entry in the distributed ledger (we’ll get to that in a minute) that, once written, is permanent. That is, it can’t be altered. Let’s look at that a little closer.
The most popular Blockchain of the moment is Ethereum. Countless projects have been built on Ethereum to mint and distribute stable coins, CBDCs, NFTs and unbacked cryptocurrencies. Late last year, a bug was discovered in Polygon, a scaling project of Ethereum. It was such a severe bug as to allow all assets to be put at risk of being taken away. Stolen is the technical term. Twenty-four billion dollars were at stake.4 And, Polygon paid bug bounties that amounted to nearly $3.5 million5, but not before 2 million dollars were lost. This is not a one-off either. Several “hard fork” instances have had to be enacted to save the Blockchain from total pillage, thus resetting the original assets to $0.
And good luck in getting redress if it’s your asset that was stolen.
This brings us to the second tenant, decentralisation.
The growing backlash against “Big Tech” has fuelled a view that stripping any one entity of absolute power is the answer to abusive centralisation. Meta (who are you kidding Facebook?), Alphabet (née Google), Apple, and Microsoft, amongst others, are all accused of abusing their power and essentially rent-seeking6 their users.
The idea behind decentralising the Blockchain is to prevent it from being domiciled on any one platform or property. The apparent advantages are resilience and allegiance. By definition, a distributed system is more resilient as failures in any single node are unlikely to disrupt the whole. Similarly, by decentralising the system, if one participating actor becomes abusive or otherwise falls out of favour, it’s easy to turn off the tap and squeeze them out of the system.
But what most people don’t realise is that this distributed nature of Blockchain is mostly a myth, and at best, being grossly overstated.
The issue lies in using the APIs necessary to build Blockchains such as the aforementioned Ethereum. There is only a tiny amount of APIs used currently, with prevalent ones like Alchemy being used by many. These APIs oversee the read/writes to the ledger. Other APIs used to pull information from the Blockchain are developed and run by a minuscule population. That is, a lot of trust is being placed on a tiny group for pretty much all Blockchain interaction.
Additionally, if you want to buy or sell assets, like NFTs, again, only a handful of platforms exist currently. You may have heard of OpenSea, for example. They account for around 95% of the NFT market.
Then ask yourself the question about where all this stuff runs? On the cloud, of course. But who’s cloud? Amazon’s and Microsoft’s, for the most part.
There are instances of whole markets becoming inoperable —i.e., no trading, no consuming— during AWS cloud outages.7 Thankfully they are not that often, but when they do occur, the inconvenience is enormous.
Then remember where the actual data for the NFT is stored. Generally on someone’s shared drive on a cloud drive service (at best) or a home-built server somewhere, god forbid.
This doesn’t sound as decentralised as perhaps you first thought.
To be clear, I’m playing Devil’s Advocate here deliberately to inform you and to provoke discussion. I’m crypto-neutral for the time being. I can see huge benefits, particularly to the unbanked or the vulnerable that are slowly being excluded from taking part in society. I can see the “value” of digital assets in the same way a 16th Century oil painting by some obscure bloke can be worth millions. Why not?
But without proper oversight, redress in the case of fraud/theft, and backing from governments, I can only see risk and potential for propping up devastating illegal activity with my blessing. It’s no surprise drug dealers are turning to crypto. I can’t morally take that position and refuse to prop up Ponzi schemes.
Matthew Cowen is the writer of The Future is Digital Newsletter
eCommerce4 months ago