Speaker 1: Pushkin from Pushkin Industries. This is Deep Background, the show
Speaker 1: where we explore the stories behind the stories in the news.
Speaker 1: I'm Noah Feldman. Today we have a remarkable guest and
Speaker 1: a remarkable conversation to share with you here on Deep Background.
Speaker 1: I was fortunate enough to have a wide ranging conversation
Speaker 1: with Vitalik Bhuteran. Vitalic is the co founder of Ethereum,
Speaker 1: which you may have heard of as the other extraordinarily
Speaker 1: popular cryptocurrency and a broader blockchain that is a complex
Speaker 1: distributed computer network on which it is possible to build
Speaker 1: all sorts of different applications. Vitalik has contributed centrally to
Speaker 1: creating an enormous infrastructure and a tremendous amount of wealth,
Speaker 1: and unsurprisingly that's made him into a kind of folk
Speaker 1: hero of the crypto world. Oh and I may have
Speaker 1: forgotten to mention this Vitalk is all of twenty seven
Speaker 1: years old. Vitalik is a kind of public intellectual of
Speaker 1: the cryptocurrency and blockchain space. He has a blog where
Speaker 1: his posts are more like fully crafted, well thought out essays.
Speaker 1: This blog, which you can find at vitalic dot Ca,
Speaker 1: turns out to be one of the most extraordinary resources
Speaker 1: you can imagine for anyone who, like me, is trying
Speaker 1: to make sense of this new and complex set of
Speaker 1: developments in the world around blockchain. What inspired me to
Speaker 1: ask Metallic to come on the show was a particular
Speaker 1: post or essay on his blog about the nature of legitimacy.
Speaker 1: Legitimacy is a central concept in government, a central concept
Speaker 1: in constitutions, a central concept in property law. And I
Speaker 1: was stunned and amazed to see how central Vitalic himself
Speaker 1: made it to the whole structure of the blockchain and
Speaker 1: of cryptocurrency. I really wanted to delve deeper into his
Speaker 1: idea and to how it relates to the entire system
Speaker 1: of crypto and Vitalik graciously agreed to come and talk
Speaker 1: about exactly that topic. Vitalic, thank you so much for
Speaker 1: being here. I really appreciate your work because I see
Speaker 1: who as somebody who is simultaneously a creator, an inventor
Speaker 1: of things, and also a public intellectual of those same things.
Speaker 1: And I was extremely struck by one of the many
Speaker 1: fascinating posts that you put on your blog, and they're
Speaker 1: really I mean, most people would publish them as essays
Speaker 1: and magazines you put them up on your blog, so
Speaker 1: that makes them easily accessible about legitimacy, and in particular
Speaker 1: about the idea that legitimacy is a scarce resource and
Speaker 1: something that we need to think very seriously about. In
Speaker 1: the text of the blockchain. It grabbed my attention because
Speaker 1: my day job as being a constitutional law professor, and
Speaker 1: so what I do is I think about legitimacy twenty
Speaker 1: four seven three to six five, And I was fascinated
Speaker 1: to see the ways that you were engaging with the topic.
Speaker 1: So I wonder if we could start, maybe with your
Speaker 1: working definition of legitimacy, and then from there I want
Speaker 1: you to talk to us about your leading and really
Speaker 1: fascinating example that you given the essay, which is the
Speaker 1: great powable of Steam and Hive. So maybe the start
Speaker 1: by what you mean by legitimacy. Sure, So the thing
Speaker 1: that I use the word legitimacy to refer to is
Speaker 1: this idea that there are these collective patterns of behavior
Speaker 1: where people all act in a particular way, so they
Speaker 1: play a part in enacting and participating in some particular outcome.
Speaker 1: Basically because there exists this kind of collective idea in
Speaker 1: everyone's heads, that this outcome is like it or not.
Speaker 1: It is a thing that's happening, and everyone is okay
Speaker 1: with going along with it. Right. So basically it's this
Speaker 1: sort of self referential concept that you know, there's a
Speaker 1: lot of different situations in the world where the thing
Speaker 1: that is in everyone's interests is to just sort of
Speaker 1: play along with the same game that everyone else is playing. Right, So, like,
Speaker 1: if everyone else is driving on the left side of
Speaker 1: the road, it makes a lot of sense for you
Speaker 1: to drive on the right side of the road. If
Speaker 1: everyone else is driving on the left side of the road,
Speaker 1: it makes sense for you to drive on the left
Speaker 1: side of the road. Even if there aren't any police
Speaker 1: around enforcing the rules, it would still mostly work. And
Speaker 1: you know, even if like you personally have some slight
Speaker 1: preference for one direction or the other, it's still in
Speaker 1: your interest to just sort of go along with the
Speaker 1: strategy that everyone else is going along with. And I
Speaker 1: think that this is something that goes beyond very simple
Speaker 1: examples like that. I think it's an extremely important concept
Speaker 1: in just social relations in general. Right, And I gave
Speaker 1: a few examples of this kind of both on the
Speaker 1: blockchain and off So just starting with a couple of
Speaker 1: off the blockchain examples. Like language is one good example, right, Like,
Speaker 1: you know we argue whether or not a dolphin is
Speaker 1: a fish, right, you know, a version of English where
Speaker 1: a dolphin is a fish would work totally fine. A
Speaker 1: version of English where a dolphin isn't a fish would
Speaker 1: also work totally fine. But you know, even more important
Speaker 1: than getting the right answer is just effects that we
Speaker 1: agree on an answer. National borders are also another example
Speaker 1: of legitimacy, right, Like if aliens came in tomorrow and they, yeah,
Speaker 1: kind of edited all our brains and they to make
Speaker 1: us all think that, say the border between the US
Speaker 1: and Canada is five kilometers north of where it is today, Well,
Speaker 1: you know, the world will just keep on going. But
Speaker 1: the border between the US and Canada actually would be
Speaker 1: five kilometers north of where it is today. So governments
Speaker 1: have legitimacy. Systems of property rights have legitimacy, and systems
Speaker 1: of rules inside of watchains can have legitimacy as well.
Speaker 1: One pushback question before we get to the big parable.
Speaker 1: In my world, when we talk about legitimacy, we usually
Speaker 1: build into it a specific component that's in some of
Speaker 1: your examples, but maybe not in all of them, and
Speaker 1: you did allude to it, and that is not only
Speaker 1: that this is the game that's happening right now and
Speaker 1: it's in my interest to play in this game, but
Speaker 1: also the component that I think to use your words were,
Speaker 1: and I'm okay with that, right. So in other words,
Speaker 1: that's the part of legitimacy that is sometimes called not
Speaker 1: just descriptive but normative, you know, the m I okay
Speaker 1: with that part of it. And as you mentioned, it's
Speaker 1: a bit of a self referential concept because we can
Speaker 1: ask whether a system has legitimacy by asking do the
Speaker 1: people in that system feel okay with the way things
Speaker 1: that are working. The reason I bring this up, even
Speaker 1: though it's a teeny bit abstract, is that in your
Speaker 1: examples of pure coordination games like everyone drive on the
Speaker 1: right side of the road or everyone drive on the
Speaker 1: left side of the road, it literally doesn't matter which
Speaker 1: side we choose. Right in the UK and in Japan
Speaker 1: they drive on the left. In other countries they drive
Speaker 1: on the right. And you do it because everyone else
Speaker 1: is doing it, but you also do it because if
Speaker 1: you don't, you're going to smash into another car. So
Speaker 1: you're okay with it, but you're only okay with it
Speaker 1: in the sense that you had to pick one, and
Speaker 1: it's arbitrary as to which one you pick. In contrast,
Speaker 1: if you think about examples like borders, governments, property rights,
Speaker 1: saying you're okay with it means something a little more
Speaker 1: than that. It doesn't just mean, you know, like in
Speaker 1: a government of absolute arbitrary power, well, I'm going to
Speaker 1: go along with what the government says because I'm going
Speaker 1: to be killed. Otherwise, such a government might be legitimate
Speaker 1: if everyone starts saying and I'm okay with that, But
Speaker 1: the government might be illegitimate even if people are following
Speaker 1: the rules if people say to themselves, I'm not okay
Speaker 1: with this, but what am I going to do? I
Speaker 1: have no choice, And then if I knew that no
Speaker 1: one were watching, I would break the rules. So I
Speaker 1: just I guess before we dive into the concrete example,
Speaker 1: I wonder how important is it to you to give
Speaker 1: a definition of legitimacy that could be satisfied without our
Speaker 1: focusing on how okay with it people are. No, It's
Speaker 1: definitely a very good question and a very important points right,
Speaker 1: because people, I think do use the word sort of
Speaker 1: equivocating between the positive way of looking at things and
Speaker 1: the normative way of looking at things. So like the
Speaker 1: way that I defined legitimacy in the post, and you know,
Speaker 1: the government of North Korea is the legitimate government of
Speaker 1: North Korea, right, because exactly like you know, even if
Speaker 1: lots of people are really unhappy with it, North Koreans
Speaker 1: all act like it's the government of North Korea. I know,
Speaker 1: America act so like it's the government of North Korea.
Speaker 1: South Korea act so like it's the government of North Korea. Right.
Speaker 1: But then at the same time, I also later on
Speaker 1: in my post, I bring up these different theories of legitimacy,
Speaker 1: basically ways in which or reasons by which some outcome
Speaker 1: could be perceived as sell legitimate, and number one in
Speaker 1: the way I put brute force, right, But aside from
Speaker 1: number one, I had all of these others and the
Speaker 1: other theories of legitimacy having to do with things like
Speaker 1: fairness and participation and continuity and like, these are things
Speaker 1: that we would be much more morally okay with. And
Speaker 1: I think if I had any point on that question,
Speaker 1: I would say that like descriptive legitimacy and a kind
Speaker 1: of moral acceptability. Like they're both real contexts, and I
Speaker 1: do think that they have some kid action even in
Speaker 1: the real world, right, Like something being morally acceptable to
Speaker 1: the people in that context as definitely is something that
Speaker 1: really contributes to that thing being legitimate in a descriptive sense,
Speaker 1: but it's also not the only thing. Let's turn now
Speaker 1: to this what I'm calling a parable And like a
Speaker 1: lot of great essays, your essay is built around a
Speaker 1: central example, and I wonder if you would describe to
Speaker 1: us the parable of Steam and Hive. Sure. So, there
Speaker 1: was a sub blockchain called Steam, right, it was a
Speaker 1: trying to be a decentralized social media thing, like you
Speaker 1: could have some system for built in tipping. There's incentives,
Speaker 1: there's like decentralized content curation of sometime. You know, it
Speaker 1: was a very interesting experiment, right, But there is also
Speaker 1: this kind of political intrium inside of the Steam ecosystem
Speaker 1: that happens where basically at the beginning there is Steam
Speaker 1: the blockchain, and then there is Steam the company, and
Speaker 1: Steam the company that it happens everywhere exactly like you know,
Speaker 1: there's a the Ethereum Foundation, there's the z cash Foundation,
Speaker 1: there's all these foundations, but the big difference between a
Speaker 1: blockchain and a traditional centralized service is that in the
Speaker 1: centralized context, the like Twitter the company based has the
Speaker 1: technical ability to do whatever they want to Twitter the service, right.
Speaker 1: But Steam the company versus Steam the blockchain, there's actually
Speaker 1: a bit more of a difference. And most of the
Speaker 1: time in crypto land, I don't really think about this, right,
Speaker 1: But what happened here was that the owner of a
Speaker 1: Steam the company decided to sell Steam the company. Now
Speaker 1: it's not actually possible to sell Steam the blockchain, right
Speaker 1: because Steam the blockchain is a thing that only exists
Speaker 1: because you have these thousands of independent, coordinating participants and they,
Speaker 1: you know, ultimately have the right to run whatever code
Speaker 1: they want. But you know, ultimately, like what code gets
Speaker 1: run is constrained by the facts that people have to
Speaker 1: agree to all run the same code. And if you
Speaker 1: run different code from everyone else, then you know, even
Speaker 1: if your code is better, you're just kind of off
Speaker 1: in your own little universe and you're not talking to
Speaker 1: anyone else. Right. The blockchain's kind of forked, and you know,
Speaker 1: if you're on the minority for it, that's a lonely
Speaker 1: place to be. So Steam the company got sold and
Speaker 1: the new buyer, the new owner or Steam the company
Speaker 1: as this a character named Justin's son. And Justin's son
Speaker 1: is this crypto entrepreneur who's you know, a very controversial
Speaker 1: and is widely known for doing a lot of things
Speaker 1: that I personally against it are unethical, like you know,
Speaker 1: like his white paper, plagiarized ipfs, and there's other examples.
Speaker 1: So there's reasons for the community to be a kind
Speaker 1: of very suspicious of him. So overnight, basically this a
Speaker 1: sale was announced and I don't think the community was
Speaker 1: really consulted about it and the company to clarified by
Speaker 1: the way, because I think it's useful for people who
Speaker 1: are like me, who are come from other worlds. The
Speaker 1: things that he's done that you consider unethical are unethical
Speaker 1: within the ethical framework shared by other people who operate
Speaker 1: in and live in the blockchain. They're not illegal in
Speaker 1: some sense of the term. Or do you think maybe
Speaker 1: they were illegal in some cases it's possible that he
Speaker 1: did illegal stuff. It's possible he didn't. I don't. I
Speaker 1: don't know, but like plagiarism, that's one example, right, Like
Speaker 1: I don't that's not illegal, but that is considered unethical
Speaker 1: in a context much broader than the blockchain space. And
Speaker 1: like his white paper, did you know a copy a
Speaker 1: bunch of pages of I think it was the IPFS
Speaker 1: white paper pretty directly. Okay, thanks so close, Parenthices, go
Speaker 1: back to your story. Okay, So basically overnight, right, the
Speaker 1: Steam community woke up and they realized that Steam the Company,
Speaker 1: this thing that was supposed to be a steward of
Speaker 1: Steam the blockchain, and up until then they kind of
Speaker 1: trusted without really thinking about it, is suddenly controlled by
Speaker 1: a potentially hostile actor. And you know, they were obviously
Speaker 1: very scared by this, right, and so they and they
Speaker 1: before there was this sort of informal gentlemen's agreement that
Speaker 1: the funds that are that are controlled by Steam the Company.
Speaker 1: So Steam the Company had twenty percent of all the
Speaker 1: Steam tokens would be like are sort of held in trust, right,
Speaker 1: and they're intended for the ongoing development of the Steam ecosystem,
Speaker 1: and they're not just like, you know, the personal play
Speaker 1: money of the founder. But then when Justin Sun comes in,
Speaker 1: they did not have the trust that this agreement would
Speaker 1: be honored, and so they had decided to make a
Speaker 1: move on the Steam blockchain, so using the voting mechanism
Speaker 1: of the allegated proof of stakes mechanism that's built into
Speaker 1: Steam in order to just add a rule that says
Speaker 1: that that accounts cannot be used to vote, because like,
Speaker 1: if that accounts could be used to vote, right, that's
Speaker 1: one accountable twenty percent of all the Steam tokens, and
Speaker 1: that would just give Justin Son essentially like you and
Speaker 1: a later all rule setting power. So just pause for
Speaker 1: clarification purposes, the people who the other holders of the
Speaker 1: tokens exercise their voting power to disenfranchise whoever would be
Speaker 1: the owner of it. In this case, it was a
Speaker 1: particular person, the owner of twenty percent of the tokens
Speaker 1: that were out there. So as it were eighty percent,
Speaker 1: I mean it made it probably wasn't all of them,
Speaker 1: but a majority of the of all the voters voted
Speaker 1: to disenfranchise the person who held twenty percent, right, Okay,
Speaker 1: go on. That's fascinating in its own right because of
Speaker 1: the way that's parable as headache. It is. Yeah, So
Speaker 1: Justin Son struck back, right, and what he did was
Speaker 1: that he made another proposal. The eventual result of them
Speaker 1: was to basically like kick out the delegates, the kind
Speaker 1: of elected participants that participated in the original move against him,
Speaker 1: and basically kind of secure majority control over the blockchain
Speaker 1: to the point where he could not be diswatched anymore.
Speaker 1: And he did this using not just funds that he
Speaker 1: had directly, but he also talked to exchanges, right, because
Speaker 1: there's a lot of users that just have like their
Speaker 1: Steam tokens held by exchanges and exchanges like they have
Speaker 1: the private key, so they theoretically have the ability to vote.
Speaker 1: And so he wants to a bunch of these big
Speaker 1: exchanges and convinced them to make this kind of big
Speaker 1: move to basically make a counter vote reverse those results
Speaker 1: and just secure power for himself. Now again clarification question,
Speaker 1: when you say secure power for himself, if you asked him,
Speaker 1: if we had him on the show, wouldn't he say,
Speaker 1: what do you mean? Secure power for myself? They just
Speaker 1: disenfranchised me, and so all I was trying to do
Speaker 1: was get back my voting power. I mean, leaving aside
Speaker 1: whether that would be sure or not. Is that what
Speaker 1: he would say? I think so? And what do you
Speaker 1: make of it? I mean, well, there's multiple levels to this, right,
Speaker 1: because this is one of those situations where there's like,
Speaker 1: like there was this sort of informal agreement that the
Speaker 1: coins owned by the companies should like should not be
Speaker 1: used to vote in before the handover, were not being
Speaker 1: used to vote. But then of course that agreements have
Speaker 1: ended up never being put into stone. So you can
Speaker 1: blame the community for not being careful as well. You know,
Speaker 1: you can blame the ritual owners of Steam for not
Speaker 1: being transparent and not consulting with the community about the handover.
Speaker 1: I think ultimately, like the thing that caused the community
Speaker 1: to do this is just that like they you know,
Speaker 1: did not want to participate in a blockchain where one
Speaker 1: participant had this amount of power Like that just sort
Speaker 1: of goes against what even the purpose of a blockchain
Speaker 1: is trying to be. So then what happened when he
Speaker 1: got back the power that he had been taken haven't
Speaker 1: been teamed from him. So when he got that power back,
Speaker 1: at that point, he had power secured in the sense
Speaker 1: that he had all of these delegates, he had a
Speaker 1: lot of coins, and so the only move that the
Speaker 1: community had available was to do this sort of extra
Speaker 1: protocol appeal, right, they announced that they would make a
Speaker 1: hard work. They would just release a new version of
Speaker 1: the software, and that new version of the software would
Speaker 1: basically remove the right to vote from and I think
Speaker 1: even burned the coins of anyone who participated on justin
Speaker 1: sun side during the votes, right, so they made this
Speaker 1: protocol keeping while keeping the value of their own coins,
Speaker 1: I guess, transposing it precisely. So they decided this is
Speaker 1: totally fascinating, and it's it's where your story starts to
Speaker 1: look really different from what could have happened in a country.
Speaker 1: Let's say they said, we're going to go and make
Speaker 1: our own new ecosystem copied from the old ecosystem, excluding
Speaker 1: the wealth and the power of the people whom we
Speaker 1: now see as the bad guys, replicating our own wealth
Speaker 1: and power, but in theory in precise proportion to how
Speaker 1: it's allocated among us right now, minus the parts that
Speaker 1: we burned, exactly. And they did this right, and for
Speaker 1: trademark reasons, they had to rename it, so instead of
Speaker 1: being Steam, it was called Hive, and a huge part
Speaker 1: of the ecosystem actually did migrate, right. So I think
Speaker 1: since then the market caps over the two have actually
Speaker 1: been sort of pretty neck and neck against each other.
Speaker 1: So what is your takeaway from this whole parable? Right?
Speaker 1: I mean, you know, many influential people in history, religious
Speaker 1: leaders amongst them, like to speak in parables. It's a
Speaker 1: good way to reach people, but it's sometimes helpful to
Speaker 1: explain what the parable means. So what does this parable
Speaker 1: mean to you? Right? So the conclusion that I made
Speaker 1: in the post, right, is that this was proof that
Speaker 1: like Justin Sun never actually owns the coins. Like when
Speaker 1: we talk about ownership, there's you know, this concept of
Speaker 1: like usas fructus and abusis I think is the Latin
Speaker 1: phrase like you can use the property, you can enjoy it,
Speaker 1: or you can abuse it. Like those are the rights
Speaker 1: of ownership. Right, If you own something, you can you know,
Speaker 1: basically do whatever you want with it, with the exception
Speaker 1: of regulations that apply regardless of what property you're using
Speaker 1: to do things. But clearly, in this sense, like Justin
Speaker 1: used the coins that were in his possession, but he
Speaker 1: ended up not being able to use them successfully, right,
Speaker 1: because you know, the ecosystem forked off and he was
Speaker 1: not able to sort of fully implement the thing that
Speaker 1: he was entitled to emplements. According to the formal rules
Speaker 1: of the system. And what that shows to me is
Speaker 1: that this is proof that justin sun Never and even
Speaker 1: the Steam company never actually owns those coins. Right, the
Speaker 1: coins in some sense actually were sort of owned not
Speaker 1: just by the holder of a cryptographic key, but they
Speaker 1: were also owned directly by a community conception of legitimacy. Right,
Speaker 1: they were directly owned sort of by this metaphysical object
Speaker 1: that consists of this set of principles that existed and
Speaker 1: we're maybe unstated and we're maybe informal and vague up
Speaker 1: until that point in the Steam community's heads, and like,
Speaker 1: that's a really powerful thing. It's tremendously powerful. So now
Speaker 1: if I may, let me just say a quick word
Speaker 1: and ask your dreer reaction about how these same issues
Speaker 1: are thought about in the context of property law and
Speaker 1: constitutional law, which you think of themselves. You know, constitution
Speaker 1: law thinks it's the law of the blockchain, and property
Speaker 1: law thinks it's the law of the tokens, at least
Speaker 1: in this particularity. So in that world, we would say
Speaker 1: everything that you described could happen in a real existing
Speaker 1: community or government. It's usually called a revolution. Right, you
Speaker 1: have some backgrounds set of principles that people think of
Speaker 1: as the allocation of power. Who's in charge, who are
Speaker 1: the courts, who do you have to listen to? Who
Speaker 1: are the police? And then that system uses some set
Speaker 1: of rules to decide who owns what property law governs
Speaker 1: the stuff you own, voting rights law, which used to
Speaker 1: be thought of many many years ago as a species
Speaker 1: of property law, because they're closely connected. Governs how you
Speaker 1: get to participate in decision making. But if someone exercises,
Speaker 1: or some group of people or size a lot of
Speaker 1: power in a way that makes other people in this system,
Speaker 1: usually a majority of them, but it doesn't have to
Speaker 1: be a majority angry enough to break the system. You
Speaker 1: can get a revolution, and in that revolution, people break
Speaker 1: the existing structures of power. They take away people's property rights.
Speaker 1: They can take away physical objects that people have, or
Speaker 1: they can take away their abstract rights, like you know,
Speaker 1: the abstract idea that they own a piece of land,
Speaker 1: or you know the shares that they In theory wouldn't
Speaker 1: that kind of value can be destroyed, And because we
Speaker 1: know that that can happen, we tend to think their
Speaker 1: property law and a whole constitutional order are contingent and
Speaker 1: their contingent on their not being a revolution. And when
Speaker 1: we're looking for a word to describe the world where
Speaker 1: there's no revolution, sometimes we use the exact same word
Speaker 1: that you used. We say this system has a property
Speaker 1: of legitimacy, meaning that right now, no one is starting
Speaker 1: a revolution who has enough support to make it into
Speaker 1: a very successful revolution. And we think that all the
Speaker 1: time we're operating against that backdrop. So in my world,
Speaker 1: your story makes perfect sense, and we also always assume
Speaker 1: that it's true, even though we might not always talk
Speaker 1: about it, except when there's revolution in the air. As
Speaker 1: you were saying early in peacetime, you don't have to
Speaker 1: think about these things. So I guess the first question
Speaker 1: I want to ask is, when you hear me say
Speaker 1: what I just said, do you think duh, you know
Speaker 1: that's obvious? And if so, why does it why did
Speaker 1: it seem or why does it seem surprising in the
Speaker 1: context of the blockchain for similar dynamics to be in play. Again,
Speaker 1: I'm definitely not surprised that constitutional law has similar vocabulary
Speaker 1: for these kinds of things. The thing that just surprised
Speaker 1: me and fascinated me about this happening in block channel land.
Speaker 1: Is that the way that a lot of us think
Speaker 1: about the world, or at least philosophers think kind of
Speaker 1: legal philosopher's take about the world, right, is that you
Speaker 1: have the laws of physics and the laws of physics
Speaker 1: or layers right, and the laws of physics. You know,
Speaker 1: you have guns and bombs and soldiers, and like that's
Speaker 1: what ends up kind of ultimately in the extreme of
Speaker 1: extremes deciding things. Then you have layer one, and layer
Speaker 1: one is like basically legal norms that are run by countries.
Speaker 1: And then sometimes that layer one collapses, but most of
Speaker 1: the time that layer one doesn't collapse, But then everything
Speaker 1: above that layer one is some layer two. And the
Speaker 1: way that layer two works though, is that most of
Speaker 1: the time it runs fine, but the portion of the
Speaker 1: time when it does not run fine, what you have
Speaker 1: is you actually have some kind of appeal like a
Speaker 1: descents to layer one, right, Like if a business transaction
Speaker 1: goes badly one if this party sues the other party,
Speaker 1: you know, layer one, the government legal system ultimately ends
Speaker 1: up kind of deciding who's right. If say you have
Speaker 1: a dispute where the employees of Twitter decide that they're
Speaker 1: going to take over Twitter servers because they have different
Speaker 1: opinions about which accounts should be banned. They might be
Speaker 1: able to kind of achieve some victories for a few hours,
Speaker 1: but you know, eventually they the police get called in
Speaker 1: and then the courts get called in, and like this
Speaker 1: layer one that presents this abstraction of just always giving
Speaker 1: you some kind of concrete final resolution that has you know,
Speaker 1: universal agreements, is what ends up being the final designer, right.
Speaker 1: But in the blockchain space, what we have is like
Speaker 1: we in this particular context, we don't have that, right,
Speaker 1: Like there's no sort of recourse to at least the
Speaker 1: nation state layer one legal system. Instead, we have something
Speaker 1: that feels more similar to this kind of layer one's
Speaker 1: that is the blockchain community. And then that ends up
Speaker 1: descending to something that feels like a different layer zero,
Speaker 1: which is basically not quite laws of physics, but at
Speaker 1: least kind of the laws of computing, and like the
Speaker 1: practical rules of well, you know, who actually is running
Speaker 1: the software, who actually is running the blockchain, how quickly
Speaker 1: is it possible to convince people to update software. So
Speaker 1: things that feel like there are sort of aspects of
Speaker 1: nature as opposed to things that are aspects of a
Speaker 1: kind of a human main construction. We'll be right back.
Speaker 1: Let's bring now your big claim about legitimacy to bear
Speaker 1: on the big picture of the blockchain. Sure, to those
Speaker 1: on the outside who were eagerly like me, eagerly learning
Speaker 1: about the ideology of the blockchain and its functionalities and
Speaker 1: its goals and its trans and are really interested in
Speaker 1: the question of its transformative capacities, A crucial question is,
Speaker 1: you know, why will lots and lots and lots of
Speaker 1: people in the future engage on the blockchain, right? Why
Speaker 1: will they prefer it to other more centralized options. How
Speaker 1: much of the answer for you is connected to this
Speaker 1: legitimacy question. How much does it connect to the idea that, well,
Speaker 1: the blockchain can offer forms of legitimacy for the kinds
Speaker 1: of things that it does well or that enables people
Speaker 1: to do well that are different from and maybe more
Speaker 1: attractive than the kinds of legitimacy that we're accustomed to
Speaker 1: seeing in more centralized deployment. I think that's a good question,
Speaker 1: and it depends quite a lot on no legitimacy, and
Speaker 1: I think that's true on multiple levels. So there's sort
Speaker 1: of two different levels that I can talk about. So
Speaker 1: the first level is that I think the decentralized architecture
Speaker 1: of blockchains is something that directly can give users a
Speaker 1: feeling of a safety and a feeling of safety that
Speaker 1: the functionality that the blockchain provides is not going to
Speaker 1: just change on them in unexpected and unacceptable ways. And like,
Speaker 1: one very practical example of this, right is, like if
Speaker 1: you look at things like Twitter and Facebook, they at
Speaker 1: the very beginning had very open APIs, and there are
Speaker 1: lots of startups that built themselves relying on the assumption
Speaker 1: that the APIs would continue to exist as they have existed.
Speaker 1: But then what happens in a lot of cases is
Speaker 1: that Twitter and Facebook basically pulled the rug on them right,
Speaker 1: like they just made the APIs no longer work. Regardless
Speaker 1: of what the reasons were. The result was that people
Speaker 1: like Yahd entrepreneurs have just spent years building these projects.
Speaker 1: But the result is that like Twitter just makes a
Speaker 1: decision with a few clicks and boom, their entire business
Speaker 1: model is gone. With a blockchain like that, you can't
Speaker 1: really do that, right because even if you don't want
Speaker 1: to talk to a blockchain directly and you're making a service,
Speaker 1: and it's like working through some APIs like from ether
Speaker 1: scan or some one of these kind of service providers.
Speaker 1: Like if either scan decides to change its serves of service,
Speaker 1: the blockchain is open, right, and there's other alternatives. You
Speaker 1: can just like go over to ether chain and they'll
Speaker 1: start doing the same thing. And then if someone suggests
Speaker 1: that the rules of the blockchain themselves change, then that
Speaker 1: can only happen through this long, open process, and even
Speaker 1: you can just potentially go in and raise your objections
Speaker 1: to it, and like it's much much harder and much
Speaker 1: less likely for the thing that you were doing to
Speaker 1: just suddenly, you know, become impossible on you. Right, for example,
Speaker 1: is even just a twenty one million women in bitcoin? Right?
Speaker 1: Like I think bitcoin is sometimes like they overstate this
Speaker 1: a bit and they say that, you know, the twenty
Speaker 1: one million limit is backed by mass, like obviously it's
Speaker 1: not right, Like, obviously, if everyone agrees that tomorrow we're
Speaker 1: gonna run a new version of the Clients, and that
Speaker 1: Clients now says that there's thirty one million bitcoins, then
Speaker 1: like for all practical intents and purposes, there's thirty one
Speaker 1: million bitoins now, but in practice, like, there are these
Speaker 1: very strong forces of a legitimacy that go against that. Right,
Speaker 1: there's this entire community that basically says, you know, twenty
Speaker 1: one million is the zone data of bitcoin or like,
Speaker 1: without that property, this sting is not bitcoin. And there's
Speaker 1: enough people who just really fervently believe in this that
Speaker 1: you know, in practice, breaking the twenty one million limit
Speaker 1: is just going to be like extremely harder impossible. So
Speaker 1: that's money answer, right, Okay, good, let's talk about that answer,
Speaker 1: and then I'm sure you have more to say about it.
Speaker 1: But this answer is really fascinating an incredibly generative. So
Speaker 1: I want to say a couple of different things about
Speaker 1: it in question. So the first is, let's start with
Speaker 1: this question of is the argument basically, look, distributed power
Speaker 1: democracy would be the analogy in ordinary constitutional design has
Speaker 1: some real advantages over concentrated power like autocracy or certain
Speaker 1: forms of monarchy, and so in the long run, many
Speaker 1: people will prefer the blockchain model to the more centralized model. First,
Speaker 1: sort of like the reasons that people prefer democracies to autocracies,
Speaker 1: which includes the possibility or includes the probability that for
Speaker 1: a democracy to make changes, you need a lot of
Speaker 1: people to agree, and so you need this a certain
Speaker 1: amount of decentralization there, whereas in a pure autocracy, you know,
Speaker 1: the emperor decides tomorrow or Hijinping decides tomorrow, the things
Speaker 1: are going to be different and then they are going
Speaker 1: to be different. So my first question is is there
Speaker 1: a kind of loose analogy there such that when people
Speaker 1: are making the argument for the appeal of the blockchain
Speaker 1: and its advantages, it has a kind of family resemblance
Speaker 1: to the argument about the advantages over decentralized governance, namely
Speaker 1: democracy over centralized government, namely autocracy. I think that's definitely
Speaker 1: a good analogy. So if it is, and that's for me,
Speaker 1: that's very clarifying. And I apologize for translating your world
Speaker 1: into my world, but for lease some listeners, your world
Speaker 1: is certainly newer than mine. If that's true, then what
Speaker 1: about the counter concern, which is that you know, there
Speaker 1: are a lot of people who prefer big centralized systems
Speaker 1: of governance, and what partly the reason for that is
Speaker 1: that big decentralized groups of people are susceptible to their
Speaker 1: own weird changes over time. Right, they can collectively decide
Speaker 1: that they're going to go out and do something completely different,
Speaker 1: and we call that a revolution, a revolution that establishes
Speaker 1: and achieves legitimacy, And it doesn't necessarily do a better
Speaker 1: job of protecting settled expectations than do the older systems
Speaker 1: like monarchies and autocracies. Yeah, so I think two answers there.
Speaker 1: One is that I do think that blockchains have more
Speaker 1: of aya do nothing biased than like sort of built
Speaker 1: in inherently to this lay or zero that we talked
Speaker 1: about them, than systems of governance do. Right, Like, if
Speaker 1: the social layer goes to hell in a country, then
Speaker 1: you know, often a strong man does get in power
Speaker 1: and do whatever they want, Whereas if the social layer
Speaker 1: goes to hell in something like biquin and ethereum, then
Speaker 1: like often just nothing happens. Right So that now, of
Speaker 1: course you can you know, disagree, and there might still
Speaker 1: be the possibility that the social layer goes to hell
Speaker 1: in such a way that makes it easy for crazy
Speaker 1: things to happen in a blockchain. But like it feels
Speaker 1: like there are these a sort of layer zero. Pressure
Speaker 1: is just because of this coordination problem of getting people
Speaker 1: to update their notes at the same time that make
Speaker 1: it less likely. So I think the distinction here is that, like,
Speaker 1: blockchains are only the bottom layer of an application, right,
Speaker 1: and blockchains don't even necessarily have to innovate much for
Speaker 1: applications to be able to innovate much on top. And
Speaker 1: so going back to your point of what if people
Speaker 1: like centralization, one of the big reasons why people like
Speaker 1: centralization is just performance and the ability to kind of
Speaker 1: rapidly pivot and make changes. But applications on a decentralized
Speaker 1: system can do this, right, Like, there's plenty of applications
Speaker 1: on ethereum where those applications have internal governance, and that
Speaker 1: internal governance has the ability to, like say, completely switch
Speaker 1: over the rules with a sixty to eight time delay
Speaker 1: or sometimes completely switch over the rules with a zero
Speaker 1: day time delay, right, Like, you can build rules and
Speaker 1: you can make things a kind of all long the
Speaker 1: spectrum from the centrals a full centralization on top of
Speaker 1: a decentralized system. Now, what you can't do is you
Speaker 1: can't build a decentralized application on top of Twitter, right,
Speaker 1: So that's kind of the intuitive case for wanting or
Speaker 1: you can only in so far as Twitter will let
Speaker 1: you exactly right. So that's kind of the intuitive case
Speaker 1: for wanting things that are closer to being base layers
Speaker 1: to be more decentralized, but wanting things that are closer
Speaker 1: to the application layer to be more centralized. Although you know,
Speaker 1: in the case of the modern state, you know, the
Speaker 1: post sixteen forty eight state, the state actually has exactly
Speaker 1: that hybrid character that you just describe. The state is Twitter, right,
Speaker 1: it maintains control, albeit it has a governance mechanism behind it,
Speaker 1: although so does Twitter. Technically it has the laws of
Speaker 1: corporations behind it. But then by enabling a free market,
Speaker 1: the state is in a sense allowing people to build
Speaker 1: all kinds of applications on the centralized platform. And so
Speaker 1: the state has really hugely benefited in the modern era
Speaker 1: from this domination. So it is possible and similarly, presumably
Speaker 1: if you were, you know, a major platform, you might
Speaker 1: want it might be the smartest move to allow the
Speaker 1: building of all kinds of you know, decentralized things on
Speaker 1: top of your platform, because it actually encourages everybody to
Speaker 1: be to be invested in that platform. That might be
Speaker 1: the winning strategy from a certain standpoint. That's very possible,
Speaker 1: but there are also limits to the extent to which
Speaker 1: a centralized state can commit to a trustfulness. Like one
Speaker 1: very practical example, right as if we look at say
Speaker 1: centralized US tech companies, like back about ten or fifteen
Speaker 1: years ago, they were fairly fairly trusted internationally, right, and
Speaker 1: there was this kind of legal order where people could
Speaker 1: sort of put their heads in the sand. It kind
Speaker 1: of pretends that these Silicon Valley companies were basically living
Speaker 1: inside of an anarchy, and they would just like be
Speaker 1: able to you know, keep on and do keep on
Speaker 1: doing whatever was in their business interests. But then what happened,
Speaker 1: and what's happened over the last ten years, is that
Speaker 1: a lot of countries, like both governments and people in
Speaker 1: countries and especially countries that are not very friendly to
Speaker 1: the US, started being much more suspicious of US tech companies. Now,
Speaker 1: some of that I think is, of course, is because
Speaker 1: they just they want to promote local alternatives so they
Speaker 1: can have control themselves. But some of that is also
Speaker 1: because like they are actually afraid that if the US
Speaker 1: and this other country comes into conflicts, then the US
Speaker 1: government is actually going to ruck hold them. Whereas you know,
Speaker 1: the Ethereum blockchain, for example, is less capable of doing
Speaker 1: that if say, an application was built by someone from
Speaker 1: the Bitcoin community and at ran on the ethereum blockchain.
Speaker 1: So now you're turning to the last topic I want
Speaker 1: to talk about, and it's very rich and fascinating to me.
Speaker 1: And that is what you might call the issue of
Speaker 1: pre commitment. Right, how well suited are different kinds of
Speaker 1: institutions to promising in advance that they won't mess things
Speaker 1: up relative to your settled expectations. And you already mentioned
Speaker 1: that in the context of the people who say, well,
Speaker 1: you know, bitcoin's foundational definition is it's limited to twenty
Speaker 1: one million, and a lot follows from that. Right, Therefore
Speaker 1: they say it's a fixed supply. Therefore they say it's
Speaker 1: analogous to gold, which is also a fixed supply. Although
Speaker 1: we may not have found all of that fixed supply,
Speaker 1: the fixed supply in principle exists. So what I'm interested
Speaker 1: in there're two aspects of this. I'm interested in one.
Speaker 1: Why would we believe that one kind of institution is
Speaker 1: more impervious to pre commitment than another if all precommitments
Speaker 1: are just based on self interest? Right, So if the
Speaker 1: people who were holding the bitcoin voting power chose to
Speaker 1: expand the number, and it was in their interest to
Speaker 1: do so, they would do so much in the same
Speaker 1: way that when a government decides that it's in its
Speaker 1: interests to expand its monetary supply, it has a governance
Speaker 1: mechanism or multiple complex governance mechanisms, and then it does so.
Speaker 1: And yet when he hears from people in the bitcoin
Speaker 1: world things like, well, that can ever happened here? We
Speaker 1: can't trust states to be pre committed, but of course
Speaker 1: we can trust our institutions to be pre committed. So
Speaker 1: is there anything to that? I mean, I have trouble
Speaker 1: seeing why we would be more trusting of one than
Speaker 1: the other. Sure, so I think like the important thing
Speaker 1: is that bitcoin doesn't have a concept of voting power, right,
Speaker 1: like it has miners. But at the same time, like
Speaker 1: if a minor creates a block that violates the current roles,
Speaker 1: like even if ninety percent of all the miners are
Speaker 1: going along with them, the nodes that are run by
Speaker 1: users are still going to reject them. Right Although although
Speaker 1: your whole, your whole parable shows that they could just
Speaker 1: hive fork off and replicate, they could exactly so that's
Speaker 1: why such genius. Right, Yeah, that's very true. But at
Speaker 1: the same time, like that action does have a cost, right,
Speaker 1: Like if it was a an actual voting system, then
Speaker 1: like you know, once the vote happened and fifty one
Speaker 1: percent approved the motion and change the source code, well
Speaker 1: you're kind of screwed, right, yeah, well, or or at
Speaker 1: the very least, like the shoe is on the other foot.
Speaker 1: And like the burden of overcoming the coordination problem, which
Speaker 1: is a really really high burden like basically falls on
Speaker 1: the side of the dissenters. But in the case of bitcoin,
Speaker 1: the burden of overcoming the coordination burden for anything controversial
Speaker 1: falls on the side of the people that are trying
Speaker 1: to make the change. Right. That's true in a revolution
Speaker 1: as well, Right, the burden is on the people who
Speaker 1: want to make the revolution typically right, but there are
Speaker 1: also ways to rapidly change policy in a state that
Speaker 1: don't require revolution. May I just say about that often
Speaker 1: people who study states. I had Francis fo Kiama on
Speaker 1: the show the other day, and this is something that
Speaker 1: he writes about extensively, think that the capacity to make
Speaker 1: changes legally is actually a crucial part of the anti
Speaker 1: fragility of states. In other words, it's thought to be
Speaker 1: one of the best ways to avoid the decay of
Speaker 1: a political order, to ensure the possibility of negotiating change
Speaker 1: within the framework of law. And when you can't do
Speaker 1: it anymore, you get rigid, and when you get rigid,
Speaker 1: you tend towards decay. So that seems like a good
Speaker 1: feature rather of the very possible. It's also like states
Speaker 1: and blockchains also do very different things, right, Like blockchains
Speaker 1: are like software constructions that relatively are interacting with a
Speaker 1: simpler world. You know, States have to deal with just
Speaker 1: all sorts of problems and they have to act strategically
Speaker 1: in the face of external threats. So it's possible that
Speaker 1: the kind of like the correct balance between agility and
Speaker 1: ability to just kind of credibly stick in one place
Speaker 1: is just different between the two contexts. And that's fine.
Speaker 1: I mean, the question that I want to close with then,
Speaker 1: is one that I really fascinates me, and I see
Speaker 1: it again and again and again as I talk to
Speaker 1: sophisticated people in your blockchain universe or in crypto land,
Speaker 1: and that is there seems to be this impulse towards
Speaker 1: what I would call almost like a conservative preservationism, a
Speaker 1: worry that the reason we can't trust, say, governments, is
Speaker 1: that they do stuff too frequently, you know, too riskly
Speaker 1: that facilitates the interests of vote majorities, and that we
Speaker 1: need to draw a line against that. We need to
Speaker 1: have principles and rules. And in that sense, it sounds
Speaker 1: in libertarianism, the idea that you know, we have some
Speaker 1: basic fundamental rights and we ought to stick to those
Speaker 1: and we don't want to live in a world where
Speaker 1: the government can just wish away our rights. And that
Speaker 1: makes sense to me. And here's the punchline. But if
Speaker 1: your account of legitimacy is true, and I believe you
Speaker 1: convince me that it is, then I don't see how
Speaker 1: decentralization in the blockchain fulfills those libertarian aspirations, because it
Speaker 1: just pushes them up one level to the level of
Speaker 1: the voting members, the people who structure the governance, and
Speaker 1: they don't literally have to vote, they just have to
Speaker 1: have the capacity to do what you said in the
Speaker 1: steam Hive story of just forking off and replicating. And
Speaker 1: so if that's the case, then this world it's no
Speaker 1: worse than but it not obviously better than a world
Speaker 1: of centralized platforms when it comes to including governments, when
Speaker 1: it comes to these kinds of pre commitment to certain
Speaker 1: core principles, I think the main part of my answer
Speaker 1: to that is that I'm a marginalist and not an absolutist.
Speaker 1: Like I think, even if you can't get a one
Speaker 1: hundred percent of the way towards satisfying some principle or
Speaker 1: or idea or systems of values, you could still make
Speaker 1: a huge gain by getting thirty percent or fifty percent
Speaker 1: of the way there. And like I do think that
Speaker 1: what I call the laws of physics that exist in
Speaker 1: the in watchannel onto and the way that a kind
Speaker 1: of the coordination problems tilt against someone making wanting to
Speaker 1: make radical changes, even though radical changes are still possible
Speaker 1: if they can overcome those coordination problems. Just the facts
Speaker 1: that users run notes just means that you have to
Speaker 1: consult users at all. Like I do think that those
Speaker 1: things are improvements. I definitely don't claim that watchings are
Speaker 1: or can be one hundred percent immutable systems, no matter
Speaker 1: how hard someone tries to be. I think, just going
Speaker 1: back a bit to your earlier analogy, it's with like
Speaker 1: tech companies and how a tech company is, like they
Speaker 1: do end up changing a lot. I think my answer
Speaker 1: there is just that like there are if we look
Speaker 1: at the tech universe, like there are already things that
Speaker 1: are more immutable than tech companies, right, and that is
Speaker 1: programming languages, right like Python. You know, it took decades
Speaker 1: to move from Python to to Python three C plus plus.
Speaker 1: I think it's still backwards compatible with what was there
Speaker 1: like tens of years ago. So there are also things
Speaker 1: that are decentralized in that sense, right, and like programming
Speaker 1: languages are a good example. So the way that I
Speaker 1: kind of I guess view the way things should be
Speaker 1: is that intuitively, things that are more general purpose and
Speaker 1: that are more abstract, it's less likely that they are
Speaker 1: going to need to change rapidly because the goal of
Speaker 1: them is to be general purpose, right, Like with a
Speaker 1: programming language like Python, like you can build anything in
Speaker 1: response to it, Like Python did not even have to
Speaker 1: change in a response to say, the emergence of the
Speaker 1: blockchain world. But things that are closer to the application layer,
Speaker 1: they do need to adapt. There's more need for centralization.
Speaker 1: There is potentially need for kind of bounded centralization where
Speaker 1: you include some decentralized components, but they're more to keep
Speaker 1: the centralized party honestly than to kind of shackle than one.
Speaker 1: So things that are closer to the user can be
Speaker 1: more centralized, and that's fine Ethereum. I guess I view
Speaker 1: it as being a little bit more like a programming
Speaker 1: language than or taking the role of something like a
Speaker 1: programming language, than taking a role of something like Twitter.
Speaker 1: But at the same time, like blockchains are their own category, right,
Speaker 1: Like I think, you know, blockchains, like they take some
Speaker 1: of the properties of a languages, some of the properties
Speaker 1: of companies, you could say, some of the properties of states,
Speaker 1: but they also like they are not each any of
Speaker 1: those things individually, right, Like they are I think this
Speaker 1: new construction that's only really possible now that we have
Speaker 1: this second all of these advancements in technology and cryptography,
Speaker 1: and like there's a lot of opportunity to build interesting
Speaker 1: things on top of them, and like the legitimacy that
Speaker 1: blockchains provide by being what I call this kind of
Speaker 1: credibly neutral environment. Like I think there's a lot of
Speaker 1: potential for people to build even centralized services that talk
Speaker 1: to each other, that sit on the same blockchain. There's
Speaker 1: value that I think can come out of those things.
Speaker 1: But at the same time, like, I'm definitely not a
Speaker 1: proponent of the idea that sort of blockchain like designs
Speaker 1: are something that's intended to take over every sector of
Speaker 1: how the world operates either, Like I think they're just
Speaker 1: a new thing that we've invented in like, we'll see
Speaker 1: how they interact with everything else. So we've created in
Speaker 1: the world the telch You don't need me to thank
Speaker 1: you for the tremendous value that your creativity has created
Speaker 1: lots of spaces, But what I do want to thank
Speaker 1: you for is writing and talking about the things that
Speaker 1: you do in the worlds that you're creating in such
Speaker 1: an accessible way. I've learned an enormous amount from reading
Speaker 1: your blog, post, your work, and also just for engaging
Speaker 1: in this sort of open minded, engaged, analogical way. I
Speaker 1: think it's tremendously valuable for those of us who are
Speaker 1: not crypto natives. And sometime sometime in the future we
Speaker 1: can talk about language. I mean, I think linguistics as
Speaker 1: a backdrop here is fascinating because sort of what you
Speaker 1: were just saying at the end there the relationship between
Speaker 1: language and governance you know, we do all of our
Speaker 1: governance through language, right, but language itself is gradically decentralized.
Speaker 1: There are efforts to centralize that they never go very well.
Speaker 1: You know, there's definitional, there's something very rich there. Yeah, no,
Speaker 1: some do. Yeah, you know, language is definitely fascinating. Like
Speaker 1: I think in some ways that might even be one
Speaker 1: of the kind of closest things to a blotcha in
Speaker 1: a historical context, right like absolutely, yeah, yeah, open source,
Speaker 1: but with fixed units, with some connection, depending on if
Speaker 1: you're a Chomsky and or not, some connection to some
Speaker 1: underlying biological principles and rules. Deep divide within the field
Speaker 1: about whether these are primary, like there's a language unit
Speaker 1: in the brain, whether they are alternatively socially constructed. I mean,
Speaker 1: you know, it's totally rich for everything that we were
Speaker 1: talking about, and you should write about it, and we
Speaker 1: should talk about it some other time. I mean I
Speaker 1: would love to talk absolutely, I would too. I learned
Speaker 1: a huge amount from this conversation, so I really want
Speaker 1: to thank you for that. No, thank you very much.
Speaker 1: I'll learn a lot too. We're in our third season
Speaker 1: of Deep Background, and according to my producer Molaboard, we've
Speaker 1: interviewed more than a hundred people on the show. I
Speaker 1: have to say that although it would be a terrible
Speaker 1: idea to play favorites among them, I was about as
Speaker 1: excited by my conversation with Vitalic as I have been
Speaker 1: at any time in all of the interviews that I've done.
Speaker 1: What excited me was to see the talk's mind at work,
Speaker 1: to see its speed and its creativity, and to have
Speaker 1: the opportunity to play a little bit with him in
Speaker 1: banging around ideas that have been the focus of much
Speaker 1: of my own work and that I developed in a
Speaker 1: context completely unrelated to crypto and the blockchain, and to
Speaker 1: see that in some potential way, these ideas of legitimacy
Speaker 1: may in fact be central to the way that this
Speaker 1: new world is developing. I was deeply struck by Vitalis
Speaker 1: parable of Steam and Hive and his core takeaway, namely
Speaker 1: that on the blockchain and in the crypto space, everything
Speaker 1: depends on the acquiescence of the participants in the collective undertaking,
Speaker 1: and if they get up and decide to change it,
Speaker 1: eliminate it, or imitate it and recreate it, they can
Speaker 1: do that. This parable opens up some deep and fundamental
Speaker 1: questions about what crypto and blockchain are good for and
Speaker 1: what they might or might not be able to contribute
Speaker 1: to the broader world. I myself am only beginning to
Speaker 1: develop my thoughts on this topic, but listening to Vitalic
Speaker 1: made me suspect that the benefits that people are described
Speaker 1: as the benefits of the blockchain have a lot to
Speaker 1: do with the benefits of decentralized governance that we associate
Speaker 1: with democracy, as opposed to the historically significant benefits of
Speaker 1: autocracy or monarchy, which are more closely associated in the
Speaker 1: blockchain world with the dominance of central powerful platforms controlled
Speaker 1: by a single corporation and often headed by a single
Speaker 1: powerful founder CEO. If this analogy turns out to be
Speaker 1: valuable and useful, and Vitallic seem to think that perhaps
Speaker 1: it could be, it will help us to see that
Speaker 1: some of the advantages of the distributed blockchain might be
Speaker 1: real and significant, because there are some kinds of decision
Speaker 1: making and some kinds of development of businesses and opportunities
Speaker 1: that might work better in decentralized ways. Yet simultaneously, there
Speaker 1: may also be circumstances where centralized governance is preferable even
Speaker 1: to the users than decentralized governance. And what's more, there
Speaker 1: could be hybrid models, much like modern governments, where there
Speaker 1: is a central national government, but that government then enables
Speaker 1: people to create all kinds of different sorts of applications,
Speaker 1: like private companies, against the backdrop of the state's ordinary
Speaker 1: centralized operations. Most fundamentally, however, if it's the case, as
Speaker 1: Vitali says, that legitimacy is the key concept on the blockchain,
Speaker 1: then we always have to keep our eye on what
Speaker 1: happens when legitimacy erodes, is recreated and is reshaped. Events
Speaker 1: that occur in governments, both through gradual changes sometimes and
Speaker 1: also through revolutionary changes. Those revolutions may be rare, but
Speaker 1: when they happen, they move around a lot of wealth,
Speaker 1: they unsettle a lot of settled expectations, and they can
Speaker 1: lead to tremendous improvement as well as tremendous disorder. It's
Speaker 1: far too soon to draw conclusions about any of these subjects,
Speaker 1: partly because in the world of governments, where people have
Speaker 1: been talking about concepts like legitimacy for at least twenty
Speaker 1: five hundred years, we still don't have definitive answers but
Speaker 1: the idea that there may be some points of contact
Speaker 1: between the worlds that we have known and understand and
Speaker 1: the new worlds that are being created by people like
Speaker 1: the talk is to me hopeful, interesting, and potentially of
Speaker 1: tremendous value to trying to figure out the world around us.
Speaker 1: I hope you had as much fun in this conversation
Speaker 1: as I did. Until the next time I speak to you,
Speaker 1: be well, think deep thoughts like Fatalic does, and have
Speaker 1: a little fun. Deep background is brought to you by
Speaker 1: Pushkin Industries. Our producer is Mola Board, our engineer is
Speaker 1: Ben Talliday, and our showrunner is Sophie Crane mckibbon. Editorial
Speaker 1: support from noahm Osband. Theme music by Luis Gara at Pushkin.
Speaker 1: Thanks to Mia Lobell, Julia Barton, Lydia Jean Cott, Heather Fain,
Speaker 1: Carli Migliori, Maggie Taylor, Eric Sandler, and Jacob Weissberg. You
Speaker 1: can find me on Twitter at Noah R. Feldman. I
Speaker 1: also write a column from Bloomberg Opinion, which you can
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