What crypto is for
exploring possible worlds, on the cheap
Before we jump in, I want to say I’m nervous to publish this, because it may fall into the realm of sacrilege for a lot of people I respect in both my climate and blockchain communities. So, bear with me, I think we’ll all be able to shake hands at the end, even if you feel gross in the middle.
The future
Most people in crypto think crypto is, in some form or another, the future. After following the space (particularly the intersection of climate and blockchain) closely for the last 18 months, I think it might be better described as: the way to discover the future.
Both evolution and capitalism are quite clear about how to find the future: try lots of stuff all the time and expect most of it to fail. We have lots of structure around this idea, both financial and cultural. You can raise money from a VC for your climate tech startup, and if you wipe out, you’re not a fraud or a criminal. Your failure helps push the collective ball forward. We’re adept this future-finding thing, as long as the thing you’re iterating on falls into the realm of a product or service.
Since I started working in climate in 2020 this pathway of iterative discovery has been extraordinarily successful. Three years ago, looking at carbon dioxide removal, I truly had no idea how we’re going to pull 10Gt of CO₂ from the atmosphere every year starting in 2050. Now, here we are, amidst a Cambrian explosion of incredible, sophisticated products and services that can and will change the world across the full gamut of climate issues. Hope!
Not just products and services
Something about our era, maybe the color of the sky after forest fires or ongoing mass shootings, brings out a more revolutionary vibe. If, for example, you look out at the world and you see corrupt politicians, rapacious oligarchs, structural racism, the military industrial complex, and the petrodollar, well, you might think, we don’t need new products and services damnit! We need to destroy the power structures that brought us here and replace them with something better! But how exactly do you do that?
You could found a new religion, but it’s tough to get funding. You could try to found a commune, but those tend to get derailed by egos, shagging or property rights. You could organize a revolution at the ballot (VOTE!) but that seems to have limited effect on the rules of the game. If you want to do it big - create a new system of financial incentives, or a better way to govern, you can’t just buy an abandoned island, import citizenry, and spin up a currency and voting system. That would be insane! And, so so expensive. So, consider the current iteration time for a modern political system, or a system of financial checks and balances. It’s what, centuries? Our system, so adept at iterating on science, technology, products and services, is molasses slow when what you want to change falls into the realms of finance or governance. To whit, Noam Chomsky says our climate problems are more tractable than the problems with our financial system!
And, in a time of crisis, with people crying out to find some way, some better way, to live together and organize ourselves and our resources, up pops blockchain. Now, you might think to yourself, jeez Pete, I didn’t anticipate such a fevered intro to “The Network State” but just give me a sec. Everyone in startups and software knows that the time it takes you to do one full iteration — cycle time — determines how quickly you can improve your product or service. If what we want is a new system, then we’re going to have to find a place to experiment.
Minimum viable country
When talking to friends outside the crypto bubble, I talk about blockchains as database companies with the characteristics of small nation states. They have their own currencies, politics, and oligarchy. They want to recruit you to their nation, so they advertise all the cool people that already live there, the speed and robustness of their infrastructure, the grant-making abilities of their central banks, policies favorable to startups, the unbiased nature of their judiciary (code is law!). They have cool flags, costumes, and parties and occasionally feud with each other.
Which makes blockchains, in my opinion, a minimum viable country. And, if you’re inventing the future, a desktop version of a real nation is really useful! You can find out what happens if you don’t have taxes, or weigh people’s votes by wealth. In the case you screw it up and cause the failure of a state, instead of mass death, you just have some angry crypto investors. So while it looks to all the world like a ponzi of ponzis, what is practically happening is the speed-running of potential solutions in governance and finance. To some, every crypto failure makes it look like more of a morass, but to me it makes it look like one of the few places where people are trying to find the future.
Do we really need to do this?
Honestly, I think so. Confidence in governments worldwide is plummeting, and democracy is struggling with rising populism and nationalism. Climate change, and the environmental degradation at a more local level, are a test — managing the commons — that we are absolutely flunking. Our financial system continues to fund things that are actively destructive to our planet. We need to put $5 trillion dollars a year to work changing the world for the better, and no one seems really sure how to do that.
Honestly, this seems like an absolutely ideal time to spin up lots of lab-scale nation states where we can try on the infrastructure for making a better world. And, I’ll fully admit, not everyone in crypto is trying to make a better world. But I think the ability to iterate quickly is more powerful than good intentions long term - somehow off-chain governance evolved from theocratic despots to constitutional democracies over thousands of years. So while many in climate celebrate whenever crypto crashes, I think the schadenfreude blots out an important link in the chain. Much of our financial system is currently on the sidelines, waiting for the Next Big Way to Make Money to be proven. We can let them stand around for the next decade, or, we can spin up hundreds of shots on goal and see if we can crack important pieces of the puzzle like carbon project finance. I assure you, if banks see crypto bros making money in climate, they’ll be through the door with their Superman cape on before we can shout “$5,000,000,000.”
Do we really need to use blockchain?
Is the future on chain? I feel ambivalent. Will some banks, seeing a small explosion of climate project finance on blockchains like Ripple, ETH, Polygon and Celo (which I fully expect over the next year) feel compelled to use the infrastructure built on these chains? Yes! Will others spin up their own blockchains? Also yes. And will some dial up their favorite COBOL developers and generate their own off-chain mechanisms? For sure. Are there awesome companies doing innovative finance work while performing a dramatic shudder-cringe whenever blockchain is brought up? Without question. Will gitcoin’s extremely cool experiments with quadratic funding for public goods inspire better public funding allocation? I’d bet on it. Will gitcoin replace government? Less sure.
The key here is speed. If you have lots of time, you can just let the big wheels turn. Maybe we get a climate finance stack worthy of gigaton scale removals and conservation of the world’s precious ecosystems in five years, or 10, or maybe never. But, as with all things climate, we’re on a clock and our timeline is extremely unforgiving.
We need lots of innovation, very quickly. And, we need innovation beyond the product, service, and technology innovations our system is well designed to deliver. I would argue that finding the future of climate finance, and commons governance, is of utmost importance, and putting up with crypto’s embarrassing annoyances is well worth the payoff. We need better, hopeful, futures. Crypto can help us find them.
