After a massive upswing a day earlier, perhaps the world’s most popular special-purpose acquisition company, Digital World Acquisition (NASDAQ:DWAC), shed some speculative weight on the Oct. 25 session. No matter, the so-called Trump SPAC, which will take public the former president’s social media platform, is still a massive success. It also brings up parallels with Ethereum (CCC:ETH-USD) that readers may find thought provoking.
As anyone will attest, both public assets are incredibly popular. The second-biggest cryptocurrency (and by default, the world’s biggest altcoin), Ethereum commands serious respect on that status alone. While cryptos have enjoyed robust rocket rides higher, this year’s rally is different. For the first time, the mainstream — including top institutional players — is embracing the concept of the blockchain and decentralized applications.
Further, Ethereum forms the backbone of blockchain-related initiatives. Yes, Bitcoin (CCC:BTC-USD) gets most of the glory and the headlines. It pioneered the concept of trustless mechanisms to actualize peer-to-peer transfers of digital wealth seamlessly across borders. But Ethereum goes beyond the payment focus toward using trustless transactions to replace intermediaries of all natures: attorneys, real estate brokers, market makers … you name it.
Similarly, Digital World Acquisition is spiritually the Ethereum of social media. In this analogy, Facebook (NASDAQ:FB) is Bitcoin, a renowned powerful platform that’s synonymous with social media at large, just like Bitcoin is a catch-all for cryptos. And just like Bitcoin, Facebook is stale because it doesn’t facilitate dynamism in social discourse.
By dynamism, I mean the ability to broadcast strongly conservative opinions about thermonuclear topics like race, gender identity, immigration and religion and the cross-section where these and other hot potatoes converge into a maelstrom of toxicity, all while enjoying the promise of never being canceled — so long as you don’t criticize the platform.
Decentralization Isn’t Always Great for Ethereum
If you peruse the internet seeking explanations for the fundamental interest in cryptos, you’ll often hear the D-word, decentralization. From facilitating the financial structure to eventually curing cancer to sparking a true direct democracy in the U.S., many crypto advocates propose decentralized blockchains to solve many of today’s biggest problems.
Heck, you might even come across a blog purporting that blockchain can help you be a better cook.
Naturally, this enthusiasm is great for Ethereum but is decentralization truly all that it’s cracked up to be? When you consider President Trump’s SPAC, it too is asking a similar question: is censorship and restrictions on speech on popular platforms a bad thing?
Regarding the latter, I’ve gone back and forth with debates in my own head about the role of censorship in social media. But ultimately, a free-for-all platform may not be great for business. A lot of companies just want to make money, not get caught up in (or especially take sides on) hardcore controversial issues. Therefore, as a business concern, a centralized, censorship-enabled platform may work best.
Obviously, social media partners would prefer to keep their brands out of the muck. Thus, the ability for a central operator to nuke objectionable content is very attractive.
Regarding Ethereum, its proponents can talk all they want about the virtues of decentralization. But the reason why the antithesis, centralization, is so valuable (in certain cases) is because it’s tied to a powerful, governing body. For instance, wire transfers are extremely pricey compared to crypto-based transactions because the former are transactions essentially backed by the U.S. government. In other words, you have recourse if stuff goes awry.
What do you have with an Ethereum transaction? The knowledge of a distributed consensus protocol? That won’t do you much good if you need recourse over a particular issue.
Ask the Basic Question
When it comes to crypto discourse, it seems most people are always asking how to shift our centralized societies to accept more decentralized protocols. Very few, if any ask if that’s actually a good thing. Frankly, the reason why our Founding Fathers eschewed a direct democracy for the representative variety is that you can always trust the masses to be rational.
Intelligence, as you have probably seen, is a rare commodity and getting rarer by the minute.
It’s the same situation with the Trump SPAC and his censorship-free social media platform. His supporters are going on about their freedoms and the importance of being able to say anything but is that really a benefit?
The largely decentralized question-and-answer service Quora allows users to pretty much post whatever they want. Additionally, the platform encourages users to self-censor for offensive material but that doesn’t always happen. So sometimes, I inadvertently get treated to graphic photos of a plane crash, which is very unpleasant.
In many cases, censorship-enabled platforms allow intelligent centralized authorities to make decisions which are for the betterment of the whole. Sure, such centralization presents problems — what system is perfect? But going the other way for its own sake isn’t necessarily a viable solution.
Perhaps the big risk to Ethereum and the entire crypto complex is that if this inconvenient reality becomes widely known and accepted, we could suffer a valuation correction.