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Next month, the Crypto Policy Symposium 2022, a first‐of‐its‐kind conference encouraging crypto criticism and featuring notable industry skeptics, will be held in London. Whether a “hater of the year” award will be presented remains to be seen. But notwithstanding the conference’s contrarian billing, it has the potential to be an inadvertent credit and boon to crypto innovation. While nothing says you’ve arrived quite like having a conference organized about you by your critics, at a deeper level, subjecting a new class of technology to an adversarial stress test is essential to its long‐term health.
Perhaps contrary to the assumptions of some of the Symposium’s organizers, that the marketplace of ideas, when paired with the open‐source nature of crypto technologies, can serve to improve the ecosystem organically should be taken as an argument against imposing heavy handed and poorly tailored regulations on the industry.
Feedback from outsiders is essential. For instance, crowdsourcing the task of hunting down vulnerabilities is an integral part of software development, hence the ubiquity of bug bounty programs that compensate white hat hackers for reporting exploits. While the cryptographically secure distributed ledgers at the heart of cryptocurrencies, such as the Bitcoin blockchain, have a history of resisting hacking, crypto applications such as bridges (for communicating across blockchains) and smart contracts (for programming self‐executing transactions) have proven vulnerable to heists.
Therefore, there’s plenty of room to enhance threat detection and cybersecurity best practices in crypto. Because major crypto projects are based on open‐source code, which supports iterative improvements by users all over the world through permissive copyright licensing, a rising tide of security standards could help lift all boats. For that reason, one hopes the issue of crypto cybersecurity will get a substantive hearing during the Symposium (although it’s not clear from the schedule that this will be a focal point).
For some skeptics, protecting the crypto space is not exactly the primary goal due to perceived negative externalities of the ecosystem in terms of its environmental footprint, potential to facilitate regulatory arbitrage, and risk of being too useful to criminals. For its part, the Symposium is slated to explore crypto’s environmental impact, financial safety ramifications, and intersection with the law.
These are important subjects, and those more bullish on crypto also have been working on them. For example, it’s estimated that the Ethereum “Merge”—the highly anticipated culmination of a multi‐year process to upgrade the software securing the network—would “reduce Ethereum’s energy consumption by ~99.95%,” according to the Ethereum community.
Progress born of criticism is not foreign to crypto. In many respects, it’s foundational to a technology conceived as an alternative to an incumbent financial system and that fundamentally supports ongoing upgrades to projects’ core protocols, or “forks” in programming parlance. For example, debates about how to improve Bitcoin’s transaction speed have resulted in incremental updates to Bitcoin software (so‐called “soft” forks), as well as technical schisms that created competing cryptocurrencies, such as Bitcoin Cash (“hard” forks).
Directly engaging with hard‐hitting critiques also has been a feature of the crypto space. Earlier this year, cryptographer Moxie Marlinspike authored an incisive blog post questioning from both a technical and consumer product perspective the claims and viability of crypto‐enabled decentralized web applications. Ethereum co‐founder Vitalik Buterin responded candidly that several aspects of Moxie’s critique were correct about “the current state of the ecosystem … but they are missing where the blockchain ecosystem is going,” as work is underway “based on some of the most cutting‐edge and advanced cryptography out there: Verkle trees, ZK‐SNARKs of the EVM, BLS signature aggregation and so on” to build out capabilities.
Time and the market will tell who’s right. Or at least they should be allowed to. Open debate and competing visions of software development are positive‐sum means to weigh whether crypto will live up to the potential its proponents see in it. The rub, however, is when regulatory interventions bias outcomes by stunting an industry’s natural development. Ironically, certain proposed interventions have threatened to pull crypto away from more environmentally conscious innovations, for example.
According to Symposium organizer and outspoken crypto critic Stephen Diehl, among skeptics “[t]here are two different schools of thought: [o]ne that says that [crypto] will burn itself out and collapse, and others who think it needs to be actively curtailed.” A strong version of the latter approach could see restricting experimentation itself based on a precautionary principle that counsels tourniqueting crypto’s development in the face of its uncertain future.
It’s one thing to make one’s best analytic arguments for why individuals should be circumspect about a novel class of asset and technology; it’s quite another to actively prevent those same individuals from accessing an instrument that approximately one in five Americans by some measures have chosen to use for diverse purposes, from trading to sending remittances.
A better option is to tailor policies to actual risks, paying discerning attention to where crypto technology serves to mitigate potential harm. If the Symposium helps with sensemaking on this front, good. Crypto’s own history shows that novel perspectives can be valuable when new technology is introduced. However, if the conference devolves into calls for policymakers to put their thumbs on the scale without regard to crypto projects’ specific profiles, this will stand in stark contrast to efforts to build and improve new tools through constructive engagement with free and open criticism.
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