Broken Things Crypto Can Solve
·The Blockchain Hammer
When you get into crypto, everything else starts looking like it can be fixed with crypto. This was the thinking that drove the “Blockchain not Bitcoin” meme of yesteryear, an idea the market disproved in the 2018 crypto crash. Just because that wave of scammy ICO’s tried to solve problems that didn’t exist (or at least, tried solving problems that could have been done using a simple relational database), that doesn’t mean there are fundamentally broken systems that are ripe for disruption.
Lately I’ve experienced many such broken things, each ranging in the magnitude at which they affect us. I pondered their points of failure and posited where gains in efficiency and decentralization could be made, where blockchains could solve at the application layer.
Let’s dive in.
Estate Transfer
The last thing someone who’s recently lost a loved one wants to do is deal with the convoluted probate court system. Yet, it’s the one of the first things they have to do.
A Gallup poll estimates that less than half of Americans have a will. It’s also common for brokerage, bank, or retirement savings accounts to either have outdated or no beneficiaries. More often than not, this is due to factors beyond the user’s control, like institutions switching custodians, as beneficiary information is often lost in this transition. Leaving the responsibility to financial institutions to custody and maintain the assets you’ve worked for your entire life is a huge mistake. If you’re alive and have things worth giving to loved ones when you die, I suggest you don’t do this.
Probate court is exhausting and painful. It can take several months, even years to resolve the transfer of assets. Not only is it painfully inefficient, it’s also expensive – on average this costs several thousands of dollars. It all adds up to a massive wealth transfer from people to the legal system stemming from countless inefficiency and an elaborate bureaucracy.
Thankfully, smart contracts offer an alternative foundation to build from. A Dead Man’s Switch can be encoded with smart contract code. After all, it’s just code executing on a virtual machine performing one simple function: if Alice doesn’t respond after some length of time, give Alice’s money to Bob. There already are web3 apps that have emerged to fix this very problem such as Sarcophagus.
Ethereum gas fees are a drop in the bucket compared to legal fees. The most expensive transactions done on Ethereum are cheaper than even an hour of a lawyer’s time. Although it won’t entirely fix the human layer, smart contracts can streamline the execution layer.
This is contingent on people’s willingness to self-custody their assets. Perhaps not everyone wants to trade added on inconvenience for cryptographically assured guarantees. But for those who want these assurances, there ought to be this option. Figure out the UX later!
For my future kids’ sake, I hope to live through the day in which smart contracts massively overhaul the legal system.
Renting a Car
Have you ever lost your credit card right before having to rent a car on a Sunday morning? I wouldn’t recommend it. It’ll only make you jaded at how antiquated the rails beneath our financial system are.
This happened to me right as I was about to embark on a 3 week road trip around the southwest. Even if you have enough money in the form of a prepaid debit card or even cash, most rental car services won’t accept it. It turns out, rental car services require credit cards these days in case you incur costs that exceed your security deposit, from parking tickets to having your car broken into by a bear.
This also happened on a Sunday morning, just about the worst time to need to talk to the bank. In other words, I had to wait until the next business day to start the process of getting a new card, which must also be physically delivered, because banks still need humans to do things.
It’s not a money issue, rather it’s the permission to be trusted by the financial system at all times. It’s easy to take for granted in well-off societies that credit cards are a financial privilege. This anecdote could have happened to the roughly 20% of Americans who doesn’t even own a credit card. We’ve built up this elaborate credit system that allows us to make sophisticated transactions by trusting intermediaries, only for it to be inaccessible to many people.
Can crypto actually solve this? Suppose someone without a credit history but has enough cash to cover reasonable expenses wants to rent a car or even take a loan. DeFi protocols already let you do this provided you have enough collateral to cover the loan. No credit checks or silly plastic cards required!
I yearn for the day when trustless payments not only become the norm, but they become integrated within the vast majority of systems. Until then, I’ll make sure to never leave my credit card at a kiosk while checking in ever again.
Music Censorship
A black metal show I recently went almost got canceled because a domestic terrorist group threatened to smear the venue. The booker had to change the venue and kept it secret until the day of the show. The morning of the show, the venue was revealed to be a random dive 40 miles from the original venue. Although the show went on, this struggle to defend a harmless form of expression, passed on to those who just want to enjoy it, shouldn’t happen in a free society.
Metal has had a long history of facing censorship, from the PMRC restricting access to songs with supposedly explicit themes back in the 80’s, to the recent trend of bands getting deplatformed - if not for often dubious interpretation of racist themes in their music, just for being associated with groups with alleged ties to racism. It’s a similar accusation that the bitcoin community faces, when the irony is that both communities span numerous borders and cultures. Whether it’s from a government committee or a mob, the metal genre and its fans are constantly mischaracterized and attacked. This is why I think metal could benefit from censorship resistant platforms that connect artists directly with fans.
More bands should accept bitcoin. It’s the best way free expression can be rewarded without censorship trade-offs. Or if you want to get wild: imagine if that show sold the tickets as NFTs, and had the option for people to attend in the metaverse. Now, I’d much rather watch the show in a sticky dive bar with a bunch of metalheads than through a goofy headset, but the latter is much better than being shut out completely.
But couldn’t you just livestream the show? Yes, but those livestreaming platforms can be are intermediaries that can be attacked. It’s the same vulnerability that the Canadian truckers faced with GoFundMe and other centralized crowdfunding platforms. The fewer intermediaries that can be attacked, the more robust the system. In an ideally decentralized and censorship-resistant platform, these vulnerabilities that arise from middlemen don’t have to exist.
Free speech is metal. Censorship is for wimps and posers.
These aren’t just tech problems
I don’t think there are pure technological solutions to the fundamental problems above. If it was that easy, they’d be solved by now. And even if there’s a blockchain solution for them, I doubt it would become the only option. Centralized systems are fine and there are needs for them. Nonetheless, they are far from perfect.
Blockchain tech is disruptive because of its ability to seep into other institutions. DeFi will continue to disrupt the financial system, NFTs are just beginning to reshape the artist-fan relationship, and I believe that the creaky old foundations that power legal systems desperately need upgrading.
Will integrating crypto into these issues actually solve these problems fundamentally? Maybe not. But it’s worth trying to fix what’s already broken.