Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Vitalik’s 2020 Year End Thoughts from Singapore
Vitalik Buterin | Dec 28, 2020
I'm writing this sitting in Singapore, the city in which I've now spent nearly half a year of uninterrupted time - an unremarkable duration for many, but for myself the longest I've stayed in any one place for nearly a decade. After months of fighting what may perhaps even be humanity's first boss-level enemy since 1945, the city itself is close to normal, though the world as a whole and its 7.8 billion inhabitants, normally so close by, continue to be so far away. Many other parts of the world have done less well and suffered more, though there is now a light at the end of the tunnel, as hopefully rapid deployment of vaccines will help humanity as a whole overcome this great challenge.
2020 has been a strange year because of these events, but also others. As life "away from keyboard (AFK)" has gotten much more constrained and challenging, the internet has been supercharged, with consequences both good and bad. Politics around the world has gone in strange directions, and I am continually worried by the many political factions that are so easily abandoning their most basic principles because they seem to have decided that their (often mutually contradictory) personal causes are just too important. And yet at the same time, there are rays of hope coming from unusual corners, with new technological discoveries in transportation, medicine, artificial intelligence - and, of course, blockchains and cryptography - that could open up a new chapter for humanity finally coming to fruition.
The Changing Role of Economics
Economics has historically focused on "goods" in the form of physical objects: production of food, manufacturing of widgets, buying and selling houses, and the like. Physical objects have some particular properties: they can be transferred, destroyed, bought and sold, but not copied. If one person is using a physical object, it's usually impractical for another person to use it simultaneously. Many objects are only valuable if "consumed" outright. Making ten copies of an object requires something close to ten times the resources that it takes to make one (not quite ten times, but surprisingly close, especially at larger scales).
See: Life after blockchain: Why Ethereum mastermind Vitalik Buterin doesn’t want to be a founder again
But on the internet, very different rules apply. Copying is cheap. I can write an article or a piece of code once, and it usually takes quite a bit of effort to write it once, but once that work is done, an unlimited number of people can download and enjoy it. Very few things are "consumable"; often products are superseded by better ones, but if that does not happen, something produced today may continue to provide value to people until the end of time.
On the internet, "public goods" take center stage. Certainly, private goods exist, particularly in the form of individuals' scarce attention and time and virtual assets that command that attention, but the average interaction is one-to-many, not one-to-one. Confounding the situation even further, the "many" rarely maps easily to our traditional structures for structuring one-to-many interactions, such as companies, cities or countries;. Instead, these public goods are typically public across a widely scattered collection of people all around the world. Many online platforms serving wide groups of people need governance, to decide on features, content moderation policies or other challenges important to their user community, though there too, the user community rarely maps cleanly to anything but itself. How is it fair for the US government to govern Twitter, when Twitter is often a platform for public debates between US politicians and representatives of its geopolitical rivals? But clearly, governance challenges exist - and so we need more creative solutions.
This is not merely of interest to "pure" online services. Though goods in the physical world - food, houses, healthcare, transportation - continue to be as important as ever, improvements in these goods depend even more than before on technology, and technological progress does happen over the internet.
But also, economics itself seems to be a less powerful tool in dealing with these issues. Out of all the challenges of 2020, how many can be understood by looking at supply and demand curves? One way to see what is going on here is by looking at the relationship between economics and politics. In the 19th century, the two were frequently viewed as being tied together, a subject called "political economy". In the 20th century, the two are more typically split apart. But in the 21st century, the lines between "private" and "public" are once again rapidly blurring. Governments are behaving more like market actors, and corporations are behaving more like governments.
See: It’s instant – I get a message, and it’s received: Central bankers comb for crypto clues as Bahamas launches ‘Sand Dollar’
A few select quote teasers:
The researchers' eye of attention is increasingly switching focus to the challenge of governance.
We wanted digital nations, instead we got digital nationalism
People are motivated not just by earning as much money as possible in the work and extracting enjoyment from their money in their family lives; even at work we are motivated by social status, honor, altruism, reciprocity, a feeling of contribution, different social conceptions of what is good and valuable, and much more.
I have always believed is simply the fact that gold is lame, the younger generations realize that it's lame, and that $9 trillion has to go somewhere). Similarly complex forces are what will lead to blockchains and cryptocurrencies being useful.
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