Remember that crypto/blockchains are nothing more than a distributed, append-only database that has various ways to maintain consensus. There is nothing magical about this, and the only benefit of a decentralized database is that the government can’t easily shut it down if it isn’t controlled by a centralized entity. So unless your application is illegal, why take the efficiency hit of a decentralized solution when a centralized solution is always going to be easier and more user friendly?
I’ll quickly point out the huge flaws in some of the big talking-points used by crypto advocates:
- Digital scarcity: it’s true that on a given blockchain things are scarce, but anyone can make a new blockchain or fork an existing blockchain, so there’s actually no scarcity unless everyone collectively agrees on which blockchain is the “official” one. You might create an NFT on one blockchain, but I can create the same NFT on a different blockchain. No one is going to enforce which one is legitimate unless the government steps in and picks a blockchain to consider official. At that point, why do we need a decentralized blockchain in the first place rather than a government-approved centralized database.
- Cutting out middle-men: it is unfortunate that the internet has become so monopolized by the large platforms who are making most of the money in the space rather than letting content creators keep most of the profit. Crypto-advocates claim that blockchains allow content creators to profit from their work directly without giving large cuts of the money to the large platforms. But if we wanted to solve this problem, we could do so without blockchains. In theory, anyone can make a new benevolent platform that is more equitable in how much profit goes to the content creators. However, in practice, it isn’t so easy to compete with the big platforms. Any new decentralized platform will have the same struggles as a centralized benevolent platform would have in taking on the big players. So blockchain doesn’t actually solve anything here. In fact, being decentralized makes it even harder to compete since it adds complexity and there is no central authority to direct the platform, slowing down any decision making.
- Removing single-points of failure: a supposed benefit of having a distributed database is that it isn’t reliant on a single centralized entity to keep it in service. This is another case where distributed blockchains don’t add any value. A centralized database can also be made public so that it can be backed up by anyone with a computer. If a database is still providing a useful function when the centralized creator goes down, someone else can take over hosting that database. Furthermore, a blockchain isn’t guaranteed to stay in service forever either. Blockchains take a lot of storage space on a lot of computers, and if there aren’t many people using that blockchain anymore, why would anyone keep hosting it?
To conclude, there’s nothing a decentralized blockchain can do that a centralized solution can’t do better. Any of the supposed benefits that crypto will bring can be done without crypto, and if they haven’t been achieved yet, its because there is a market problem, not a technological problem. The ONLY reason anyone would want to use a decentralized blockchain is to avoid the law or to satisfy some ideological perversion against centralization.
The number may go up today, but so long as crypto has no fundamental value, it will always remain a ponzi scheme that could collapse at any time.
Bitcoin’s organic growth
— Kenneth Dredd (@KennethDredd) October 16, 2021
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.