In our winning essay, Kevin Werbach argues that big tech platforms like Facebook, Google and Amazon will not be replaced by decentralised alternatives, because few people will accept significantly worse functionality or user experience in return for better privacy. Rather, he suggests, blockchain will see mass adoption ‘behind the scenes’ in the infrastructural foundations of digital identity and hardware, and big tech will participate in the new decentralised data economy because it provides benefits for them as well.
The next 10 years will witness the systematic manipulation of human life at a scale unrivaled in history. For all the recent controversies over privacy and surveillance, the real threat is ahead of us. Unless new approaches to online identity and data management take hold, both governments and private actors will move inexorably from knowing you to shaping you. Blockchain-enabled decentralisation will develop as the only viable response to the iron logic of data centralisation.
Blockchain believers often talk as though today’s early-adopter use cases, such as cryptocurrency trading and decentralised finance, will lead straight to mass-market adoption. As the inevitable ‘killer apps’ appear, so the story goes, blockchain-based systems will conquer the mainstream. One might imagine that we’ll all soon be trading digital collectibles and relying on token-curated registries for accurate information. Governments will lose control over money, and blockchain-based smart contracts will replace court-enforced legal agreements. Uber, Facebook and the banks will wither away in the face of tokenised alternatives.
This narrative is wishful thinking. In most markets, intermediaries will endure for the same reasons they always have: they provide value. The Ubers and Facebooks – and yes, even the banks – tame complexity and produce coherent, convenient, de-risked experiences that no decentralised community can ever match. Early adopters use blockchain-based systems for ideological reasons or to get rich on cryptocurrency speculation. The billions behind them in the mainstream will not. The lock-in power of network effects creates high barriers for alternative economic systems. And the need for trust disqualifies decentralised solutions that are havens for criminals, incapable of effective compliance or vulnerable to catastrophic attacks – which, regrettably, means virtually all of them today.
Truly decentralised blockchain systems will reach critical mass not out of hope but out of necessity. Powerful actors and mainstream users will adopt blockchain as a counterbalance to digital behaviour-shaping by governments and private platforms. Dramatic innovations such as decentralised autonomous organisations (DAOs), which manage activity automatically through smart contracts, will become significant at the end point of this process, once the foundations are in place.