How Crypto Builds Communities
Why in web3, we all need one another.
We all long for a sense of kinship.
It's a desire inherent in humans (and perhaps, even animals). We like to belong to a group for a sense of identity, ranging from different faith systems to specific personality types to even what topping we want on pizza (Team Pepperoni over here).
But it makes sense, right? The lives of our hunter-gatherer ancestors most likely depended on it. It was the way to ensure order, safety, and human continuity.
In my time traversing many worlds of Web3, I have noticed an intersection between the concept of blockchain and community, which is worth exploring, especially in a day and age that seems to encourage individualism (re: online savagery), and significantly since blockchain fundamentally promotes self-sovereignty.
Here's what happens when the virtual meets a real but understandable human need.
How Crypto Builds Communities
Last week, we touched briefly on what blockchain implies:
"Transactions that are encoded digitally in a chain of blocks and linked to one another irreversibly (like a public ledger)."
For these transactions to become encoded, they need to be verified that they happened. This is where cryptographic proof comes in.
This over-simplified analogy describes it best:
Imagine me, you, and a couple of friends go for dinner at a fancy new restaurant. Halfway into drinks and conversation, the waiter brings the bill. You decide to pay for all of us to get the heck out of there because it's getting dark, and we can sort out the individual billing later.
You're the king/queen of being organised, so you make a spreadsheet for who-owes-what and who's paid. But because we all handed over our cash to you on the drive back, we're all witnesses and can vouch for (i.e. verify) payments. Well. Except for Dayo, who fell asleep the moment we entered the car.
It doesn't matter, though. The majority of us saw it. At least 51% of us can confirm (this is important).
But this method is effectively centralised because one person gets to keep the copy. If everyone suddenly forgets the split or Dayo decides to play smart and claim that he only drank a glass of water, we all need to trust your spreadsheet as the single source of truth and hope that Dayo won't charm you to move some numbers around.
In a decentralised blockchain system, this gets more sophisticated.
The spreadsheet is (theoretically) maintained by everyone. Everyone validates each entry before it's confirmed, and information about the entry is encoded in the ledger irreversibly and published for everyone to see in real-time.
Today, transactions made on the blockchain (where cryptocurrency exists) are authenticated using various consensus mechanisms.
Consensus mechanism is a set of rules that decides on the legitimacy of contributions made by the various participants (i.e., nodes or transactors) of the blockchain.
While there are different mechanisms, such as proof-of-work (PoW) with Bitcoin, and proof-of-stake (PoS) with Ethereum, the largest blockchain networks now involve contributions from hundreds of thousands of participants (called nodes). These nodes work on verifying transactions, either by solving complex mathematical equations in the case of PoW or by 'staking' crypto-assets in the case of PoS.
The popularly known 51% attack is when one person/computer gains control over a majority of the network's computing power. In one of the few instances of the-more-the-(actually)-merrier ever, this becomes less likely over time because the more nodes join in to participate in validating transactions, the more resources and effort are needed to override the entire network.
But beyond "communal" computer connections, community also plays out through more visible human output, like in the case of decentralised autonomous organisations (DAOs).
DAOs are member-owned communities without centralised leadership, most often based on ownership of crypto-assets called "governance tokens".
How does this differ from a traditional organisation?
With most organisations as we know them, some principals have ownership via shares, which then delegate control to a Board of Directors that govern the activities of agents (managers), who act on account of the principals (shareholders). This introduces the popular principal-agent problem in Economics.
With DAOs, apart from control being democratised and transparent to the public, they're also more group-centric. Based on the weights of token ownership, members get to vote on operational decisions or decide what the next project or collaboration should be.
But while not without its own controversy (as with anything really), I find it compelling — this dynamic where there is no conflict of interest between principal and agents because both roles have been collapsed into one and distributed across many.
A slight but nonetheless relevant point is how the blockchain brings together communities of like minds.
For example, very private individuals may prefer more privacy-oriented cryptocurrencies like Monero.
Although an argument could be made for how a percentage of those folks could be on the other side of the law, the possibility of misconduct is not exclusive. Government authorities have often made their case against cryptocurrencies by attacking the philosophies of specific communities like these to make broad claims. One, for example, is that cryptocurrencies facilitate crime.
That's an elephant in the room that we'll explore in another essay.
By principle, the blockchain network relies on others to function, as there is no network without a person and many others.
Others to accept this technology, others to create awareness, and, as concluded earlier, others to verify. And isn't that what community essentially is?
Somewhere we can all work together and live happily ever after.
What could possibly go wrong?
The Dark Side of Community
And perhaps in a utopian world, this story could end as it is.
Unfortunately for you and me, that's not the case.
Communities are not without their flaws. Because as usual, humans tend to extremes. And this strong concept can lead to alienation of what (or who) is considered 'the other'.
In their mildest form, these can be cliques. It's like secondary school all over again. Cool kids over there, and then there are the others. And no, we won't even make eye contact unless there's that class assignment we all need to turn in unanimously.
This is how sub-communities within the blockchain ecosystem can get toxic quickly — the human factor.
In their mild form, these could look like fraternities. Each full of pride for their group and cheering for it to progress ahead of the competition.
At its most extreme, this can be likened to tribalism or nationalism.
It's a not-so-subtle reminder of what the dark side of any community can become.
Bitcoin maximalists immediately come to mind. These individuals believe Bitcoin is the ultimate, so other alt-coins can suck it. Vitalik Buterin, the co-founder of Ethereum, defines it this way:
"A simple desire to support Bitcoin and make it better; such motivations are unquestionably beneficial...rather it is a stance that building something on bitcoin is the only correct way to do things and that doing anything else is unethical."
Of course, this can lead to violence and vitriol, usually online.
It's tempting to form a negative outlook about the industry from the toxicity largely seen online on platforms such as Twitter — be it trolls or trash-talkers. But these are not peculiar to the crypto space. It's in almost every facet of life and society.
And as Professor Brooks suggests, it is pointless to try to appeal to the better nature of trolls.
But while the majority of the crypto community reports a net positive, there's always room for improvement.
Here's the more significant point:
Community is central to decentralisation (pun may/may not be intended).
It's the only way to ensure continuity since there isn't a monopoly. This is good because it means there's no single agent to appropriate all the benefits — economic, ideological, or otherwise — as is now endemic of Web2 with big-tech. Elon Musk's recent bid to take control of Twitter exposes the vulnerabilities of centrally-managed communities.
In Web3, thanks to the blockchain, active members can act as owners and advocates both online and offline. Members form a network based on aligned interests, e.g., the broad crypto community aligned on the goal of financial autonomy. Smaller sub-networks also emerge around other things, e.g., greener blockchains, NFTs, Layer-2 scaling solutions, etc.
The success of any blockchain relies on these communities expanding and surviving. The blockchain's promise of self-sovereignty removes the need to rely on one person, including yourself; the blockchain forces you to rely on everyone else.
I guess it truly does take a (global and diverse) village.