The Blockchain, Codified Meritocracy, and the Laissez-faire Ideals of Web3

“Who controls the past controls the future: who controls the present controls the past,” —George Orwell, 1984

In 2012 my wife and I almost bought a house. The contract was signed with one condition: Our home inspector needed to give it a pass. He did not. The house, built that same summer, already had a significant mold problem, and it was setting sharply to one side. “The builder did not provide a sound foundation,” the inspector explained. “The only way to fix this is to either lift the whole house up and redo the foundation, or tear it down and start over.”

We did not buy the house.

Watching the #web3 space evolve, I feel like bringing in that same inspector to take a look. And I fear he’ll come back to once again tell me “The builder did not provide a sound ideological foundation. The only way to fix this is to either build a whole new ideological foundation underneath, or tear it all down and start over.”

Who determines the truth of the blockchain?

Much has been written about the truth problem of the blockchain, most recently by Cory Doctorow in “The Inevitability of Trusted Third Parties.” Suffice it to say, while the blockchain promises “trustless” transactions and decentralized oversight, in reality truth is determined by 3rd party arbiters: the people with power to add things to the chain.

The #web3 community, in particular artists, women, minorities, and people belonging to historically excluded, oppressed, marginalized, and harmed groups, are being sold on the idea that the “next web,” powered by the blockchain, will allow them to “take power back” from big corporations and banks and “have a say” in what the future looks like. It’s a compelling story, and a world I think most of us would like to live in. It’s also the same story we told ourselves as we built what would become the surveillance capitalist nightmare later dubbed “Web 2.0.”

At the core of the promise of #web3 is power to the people, through decentralization enabled by the blockchain: Everyone can see what’s happening on the blockchain, there is no centralized authority operating as middleman, and as a result, everyone has an equal say.

It’s a wonderful idea. It’s also not what’s happening. In reality, control over the various blockchains are being centralized as we speak, because the blockchain is built on the principle of meritocracy: Decisions are made by those who show up. And those who show up are the people with the money and power to show up. The same people who control Web 2.0.

Web3 enthusiasts will counter this by saying the community is growing, diverse voices are entering the space, and that naysayers are just gatekeeping this new technology to take control or don’t understand what’s really happening.

So here’s what’s really happening:

Traditional blockchains like Bitcoin and Ethereum (until very recently) use a Proof-of-Work (PoW) model to determine what gets added to the blockchain. The entity spending the most energy to add a new block wins the bid to add the new block and adds the new block. That is exactly how insane as it sounds: Burn energy by having a computer do meaningless math to add something to a ledger. But it works, assuming everyone has equal access to mining. Which of course is not the case. Mining is therefore controlled by the people with the most money and the most power (literally). Decisions on the Proof-of-Work blockchain are made by the people who show up, and all power is held by the few who can win this energy arms race.

Enter Proof-of-Stake (PoS), an alternative consensus model where anyone who wants to add something to the blockchain must stake the value of what they are adding so if they lose the bid, they lose something of equal value. Sort of like if you want to buy something on credit you have to put up something of equal value as collateral until the credit is paid back. Again, it works, but it puts the power in the hands of those who can afford to win the arms race of staking, ie. the people who show up with the most (literal) money and the most power.

So while the promise of blockchain is decentralization of everything, the reality right now is that decentralization is limited to the distribution of the blockchain. Power is still centralized in a few hands, and those in power are reaping the majority of the financial reward from the system.

Meritocracy is a dystopia

“Meritocratic hubris: This is the tendency of winners to inhale too deeply of their success. To forget the luck and good fortune that helped them on their way. It’s the smug conviction that those on the top deserve their fate and that those on the bottom deserve theirs too.” –Michael Sandel

One of the most difficult challenges the open source community has yet to overcome is the realization that meritocratic rule is a dystopian model. The idea that hard work is an equitable path to power is absurd and divorced from reality. Handing power to those privileged enough and wealthy enough in time and money to contribute to anything is dangerous, because it hands power to the privileged.

I submit the core ethos of the blockchain ideology is that meritocratic rule is the only true form of rule. And thus, everything built on the technology of blockchain accepts this ideology as the truth.

You see it in how we talk about NFTs and DAOs: Get in early. Those who buy tokens now will have more power later. Build your merit and become a future leader.

This is what led to BDFLs and enormous inequities in open source, and what will lead to centralized power and enormous inequities in #web3. Unless we stop now and build a more sound foundation for the new web to stand on.

The core problem is simple: The blockchain is a computerized manifestation of absolute Laissez-faire economics – “an economic system in which transactions between private groups of people are free or almost free from any form of economic interventionism such as regulation and subsidies.” Bitcoin is a currency specifically designed to evade responsibility, regulation, and taxes. Thus anything built on this technology adopts the same Laissez-faire principles. The builders of these technologies did not provide a sound foundation for everyone but the privileged. So when the rest of us enter the space, we can’t be surprised when the privileged take control.

Building the next iteration of the web on this ideological foundation will result in a web that leans heavily to the right right from the start And no amount of spirited conversations in DAO Discord channels will change it.

If we want to build a decentralized web 3.0 where power is distributed equitably and we all have a role to play, we need to first scrutinize, then discard, and then build anew the ideological foundations of the technology stack we are building it on. Otherwise the promise of #web3 will be reduced to a finely distilled liquor of the most extreme libertarian techno utopian ideals of Web 2.0, wearing a cool crypto jacket.

Cross-posted to LinkedIn.

By Morten Rand-Hendriksen

Morten Rand-Hendriksen is a Senior Staff Instructor at LinkedIn Learning (formerly specializing in AI, bleeding edge web technologies, and the intersection between technology and humanity. He also occasionally teaches at Emily Carr University of Art and Design. He is a popular conference and workshop speaker on all things tech ethics, AI, web technologies, and open source.