• Osa Iluobe

Blockchain Technologies: New Turf, Old Battles

Decentralised Finance (DeFi) has a lot of potential. Akin to the student who shows promise in the classroom, but is nevertheless susceptible to being distracted, DeFi’s future looks hopeful, that is if it overcomes the various obstacles that stand in its way. The major obstacles are mainly related to future regulation, and the old guard within centralised finance, also known as banks. However, if DeFi can shift regulation in its favour, the likelihood that it will shift the supremacy over finance away from banks and other contemporary custodians also increases. But, central to the debate surrounding the future of DeFi, and of blockchain technologies more generally, lies a relic of the past. Let’s call it ideology. This is because one’s political views are a good indicator of their views on DeFi and blockchain. This should be no surprise.

Cryptocurrency traders, aside from making money, love the fact that central governments bear no influence over the supply of bitcoin and other cryptocurrencies. They also very much dislike the fact that the central governments appear increasingly interested in what they perceive to be the wild west of crypto-markets. And they cringe at the fact that central governments are now issuing white papers of their own detailing their plans for ‘digital currencies’. The cloth that blockchain-enthusiasts tend to be cut from is techno-anarcho-libertarianism, of course, a few exceptions exist such as Sam Bankman-Fried, the owner of cryptocurrency exchange FTX. But blockchain-sceptics also exist aplenty, and their disapproval of the techno-utopianism and the anti-statist sentiments that tend to come out of the pro-blockchain camp may partially explain why. In this sense, blockchain is new turf for old battles.

The battles of old that play out on the matter of blockchain technologies can be traced back to the fact that the Austrian school of economics, of which Frederik Von Hayek among others belonged, speaks to some of blockchain's enthusiasts like Biblical prophecy. Many of blockchain's believers sing from the same hymnbook as Hayekians and Hayek himself is often thought to have coined, if not certainly popularised, the term 'decentralisation' which is one thing that every blockchain technology promises, albeit in different ways. The techno-anarcho-libertarianism that contains a fine dose of utopianism which underpins the philosophy of blockchain, (at least, this is the philosophy that many blockchain advocates project onto it), and its tenets such as decentralisation, ownership and trustless systems, has come under scrutiny from those who hold that blockchain, web3 and cryptocurrencies are bubbles of hype and not keys to the future.

Indeed, the notion that blockchain technologies and all associated with them are merely bubbles is somewhat of a fixation for sceptics. No doubt that some are aware of what blockchain intends to do, others believe it self-creates and then self-resolves problems, but for a significant number, blockchain is something of a 'can't be done must be a bubble' sort of thing. Whether this is misguided or not is another question. But, what appears to be true is that this scepticism towards blockchain and its associations such as cryptocurrencies and NFTs, is as much a rejection of the seemingly spontaneous value generated by these blockchain-based projects as it is of the perceived irrational exuberance that is driving the price of bitcoin past $50,000, NFTs past 7 figures and the zeitgeist of VC funding for Decentralised apps (Dapps).

In political terms, the urge for caution manifests itself via an espousing for government intervention and fettered capitalism. For this reason, people of this stripe are more likely to be blockchain sceptics who fundamentally disagree with attempts to marginalise government or other custodians for the promise of more liberty, security and ownership. New turf may be laid, but old battles seldom end.