Thoughts on the medium term of crypto tech

I'm bearish on crypto tech over the medium term

If you’ll indulge this departure from AI, here are some quick thoughts that I have about the future of crypto tech, at least as it pertains to its presence in the United States. I add the constraint of the United States for a reason: it is the country with which I am most familiar, and my bearish stance on cryptocurrency and related technologies is informed, at least in part, by regulatory and legal issues in the United States.

I see two big obstacles to crypto tech adoption in the United States: (1) usability; and (2) political/regulatory/legal.

Usability

I don’t see much evidence that cryptocurrencies or decentralization-related technology is easy to use. A lot of crypto-technologists will blanch at that claim, and point out all of the innovations in user interface design over the past ten-plus years. It may be true that cryptocurrency has become easier to use, but that does not mean it is easy to use. People heavily involved in the cyrptocurrency community tend to significantly overestimate the cognitive capabilities of the mass market. This tends to put a rather low ceiling on the number of users, relative to mass market technologies like, say, smartphones, email, web browsers, or even ChatGPT.

This naturally raises the question of what the solution is. To that question, I don’t have a great answer: I am not a user interface expert. It may be the case that blockchain and decentralization technologies are fundamentally incompatible with ease of use. If that is the case, then the cryptocurrency community should be honest about it, and honest about the prospects for mass adoption. If that is not the case, then the community ought to figure out how to make the technology easier to use.

Regulatory/legal/political

The cryptocurrency community commited a possibly fatal tactical error over the past ten years. They tried, on advice of assorted lawyers and lobbyists, to engage with regulators on questions of securities law. Rather than engaging with regulators, they probably should have been making the more abstract argument that ensuring that this technology has a place in the United States is a vital national security interest to the United States. Ex post reasoning is of course easier than ex ante reasoning. The cryptocurrency world now finds itself in the position of being told by the government that its continued presence in the United States is a national security-related issue. That does not augur good things.