Increasingly I think that “crypto” — meaning blockchains like Bitcoin and Ethereum, their imitators and would-be successors — is a transitional technology. I don’t think that blockchains of this style, whether “proof of work” or “proof of stake”, are going to endure and dominate in the way that their proponents imagine and hope. At the same time, I think crypto detractors are and have always been wrong to imagine there’s no there there, “anything you can do with a blockchain you can do better with a regular database”. This kind of critique has always missed the point. Blockchains are social institutions, a means of constituting authority around data that would otherwise be widely contested, given powerful and opposed economic interests in the contents. Permissionless, inexpensive, authoritative computation does indeed make possible a tremendous range of new applications and institutions that we are only just beginning to explore. But once we collectively acknowledge that, we’ll find that there are ways of arranging it that are more straightforward and powerful than Satoshi-style open blockchains, and that in practice are as reliable and effective.
In the end, I think crypto will be one of many examples of what I’ll call a “gray technology”. A gray technology starts out, often self-consciously, as a revolution and an underdog, an antagonist to an existing industry and regulatory regime. Via some combination of stealth, pretension of technological ungovernability, and aggressive self-righteousness, early proponents launch projects that demonstrate the value of practices that the existing regulatory regime would discourage or forbid. However, the result is not overthrow or irrelevance of the regulatory state, but a process of conflict and negotiation between the upstarts, incumbents organized around the status quo regime, and regulators. Eventually a new equilibrium emerges that either embraces some of the once discouraged practices, or enables alternative means of producing the newly demonstrated value without the troublesome practices.