A Last-Ditch Plan to Save the Crypto Industry

A survey of headlines from the past couple of years in the cryptocurrency industry might lead anyone to believe that it is a deeply unserious business.

Hackers made off with billions of dollars, and scammers billions more. Regulators sued some of the largest crypto exchanges. High-profile businesses fell into bankruptcy. Crypto banks collapsed. Risky experimentation led to disaster. Founders were convicted of fraud. A Colorado pastor was even charged with perpetrating a million-dollar scam, so he claimed, at God’s instruction.

Blockchain, the ledger technology underpinning cryptocurrencies, now looks untrustworthy by association, as do claims that it can remodel industries like social networking and gaming, fund the arts, or power exciting new forms of organization. With regulators and policymakers closing in, blockchain advocates are running out of time to change minds about the technology. Enter Chris Dixon, lead crypto investor at Silicon Valley venture capital firm Andreessen Horowitz, or a16z, who asks the world to give blockchain another chance.

Dixon’s new book, Read Write Own: Building The Next Era of the Internet, argues that despite all the drama, scams, and lost fortunes, blockchain technology is morally neutral. He asserts that regulators must discriminate between dangerous misapplication and productive experimentation to avoid squandering the technology’s potential benefits. The book is a self-interested caution against overcaution—please don’t throw out the blockchain baby with the grimy crypto bathwater.

Dixon outlines a cultural divide within the crypto industry. One faction, which he terms the “crypto casino,” is interested only in financial speculation and includes many schemers and fraudsters. The other faction believes that blockchain is not just a form of accounting ledger, but a new computing platform that opens up horizons far grander than just new forms of financial trading.

So far, the first faction is winning. The attention-grabbing behavior of the global crypto casino, Dixon says, threatens to suffocate both the technology’s development and enthusiasm for its potential. “The casino is the flashier story. It’s fortunes won and lost. It’s scandal,” he says in an interview with WIRED. “The productive side is slower-moving. It is crowded out with all the noise.”

New technologies typically develop in fits and starts over a span of multiple decades, says Dixon, who has worked in internet software for 25 years and sold startups of his own to McAfee and eBay. Then comes a breakthrough—an iPhone or ChatGPT moment—that makes the value of the new thing undeniable. Dixon judges blockchain to still be waiting for its breakout moment. Crypto entrepreneurs can’t afford to ignore their industry’s poor reputation, he says, because it steers the thinking of policymakers towards tighter regulation. As things stand, he says, tough policies are coming “very, very quickly.” Dixon argues that should worry not just crypto dreamers, but wider society too.

Blockchains come in various forms but can generally be thought of as public records of information, hosted and maintained by large groups of people instead of by a single authority. Entries are added and verified through regular cross-checks to make the whole project trustworthy, a process incentivized with crypto token rewards. Blockchains can also support software applications that operate under predefined rules that use its entries as a kind of backbone, with crowdsourced governance provided by a voting system.

Dixon argues that society needs that technology to take off even more than does his employer, which needs to find returns on billions invested in four separate funds dedicated to crypto. The internet is being strangled by profit-hungry monopolists, and users are suffering for it, Dixon claims, but blockchain could wrest some control away from the world’s largest tech companies and return the internet to its egalitarian roots.

The book traces the following thesis: At first, the internet was open, but limited. Private companies brought interactivity to the web and grew fat on the proceeds, but that made it difficult for users to leave their networks and for competitors to enter the market. The concentration of power in the hands of Big Tech led to a process of enshittification, whereby companies deprioritize the interests of users and clip the revenue shared with content creators in favor of juicing profits.

Building internet platforms on top of blockchain, which enforces pre-coded rules changeable only by popular vote, Dixon writes, could “reverse the trend toward internet consolidation and restore communities to their rightful place as stewards of the future.” That might sound abstract, he concedes, but because the internet is “increasingly where we live our lives,” it matters who gets to set the rules. If everyone had a say, less personal data might be harvested, fewer creators might be shadow-banned, content feeds might be crammed with fewer ads, product searches might yield the best-matching results instead of the most profitable ones, and so forth.

Venture capitalist Chris Dixon argues that blockchain technology could kick-start a creative new era of the internet.

Photograph: Michael Halsband

For a VC firm like a16z, of course, the possibility that blockchain might loosen the stranglehold of incumbent technology firms also represents a fresh bite at the internet cherry. With a route cleared for new competitors, there is a greater prospect of turning the next internet startup into something big. “Keeping the internet open,” as Dixon describes it, amounts to “smart capitalism” that benefits everyone by incentivizing experimentation that creates useful new technology.

In practice, though, attempts to deliver a blockchain version of the internet have run into their own challenges. Take decentralized autonomous organizations—the token-based voting structures that Dixon proposes will let users “share in control” over internet platforms by giving them veto rights on any changes. Since the idea was first tested in 2016, DAOs have proven inefficient and overly bureaucratic and function as democracies only in theory. In practice, participants struggle to agree on which changes to propose, don’t turn out to vote, or blindly follow someone else’s lead, defeating the purpose of the decentralized model. Democracy can flip into plutocracy if a single party accrues enough voting credits, which gets easier when voter turnout is low. a16z itself holds large amounts of voting tokens in a number of blockchain projects.

The poor usability of blockchain-based software also weakens another pillar of Dixon’s case. He writes that the technology could allow revenue to be shared more equitably between social platforms and the content creators that populate them, by giving creators the power to observe and reject unfavorable changes to the terms of the relationship. However, as figures like Moxie Marlinspike, creator of secure messaging app Signal, have argued, the clunkiness of blockchain might simply drive people toward new intermediaries that can make things simpler, replacing old rent-seeking gatekeepers with new ones.

Dixon acknowledges these shortcomings and more in his book. But he insists that the emergence of even an unpolished alternative for governing internet platforms is a step forward. Blockchain is “messy and imperfect,” he says, but the alternative is worse. “We are going to have an internet that is siloed off. That is a depressing, dystopian outcome, and we are heading to it quickly,” he says. “I think people should care.”

In choosing to couch his case for blockchain in the perils of the status quo, rather than exclusively in the technology’s merits, Dixon takes a different approach than a16z founder Marc Andreessen. In an essay published in October, “The Techno-Optimist Manifesto,” Andreessen asserted that “technology is the glory of human ambition,” and that those who stand in the way of its development are complicit in a “mass demoralization campaign” premised on outmoded socialist ideas. The manifesto was applauded by some technologists as a “breath of fresh air,” but critiqued elsewhere—including by The New York Times, Financial Times, and WIRED—as overwrought, blinkered and even dangerous.

Dixon claims that he and Andreessen are largely aligned, believing that “a lot of our problems can be solved by building, as opposed to being afraid of technology.” In the book, he reserves a few barbs for the “establishment” and its “myopic” dismissal of blockchain, and also jabs at the press, which by “cherry-picking the worst examples of an emerging technology” engages in a “disingenuous form of criticism.” Yet where Andreessen is unyielding, Dixon leaves room for doubt: The internet has been “hijacked,” he says, and blockchain just might represent the best way to “build our way out of it.”

The opportunity for blockchain to play the role that Dixon proposes—to help rebalance the economic relationship between internet users, creators and service providers—is under threat, he claims. The crypto industry’s casino culture is to blame. “The excesses of casino culture have provoked a backlash, including reactions from regulators and policymakers that can be counterproductive,” writes Dixon.

A number of countries are forging ahead with comprehensive, crypto-specific regulatory regimes, like the EU, whose landmark Markets in Crypto Assets (MiCA) legislation is due to take effect in December. The US is lagging somewhat behind, with only narrowbills having been proposed in Congress to date. In the absence of new policy, two US financial regulators, the Securities and Exchange Commission and the Commodities and Futures Trading Commission, are sparring for jurisdiction over crypto. The result is broad uncertainty about the legal classification of blockchain-based tokens in the US and the rules that crypto companies must follow.

Dixon says he agrees with regulators on some things but fears their clumsy execution. “The right approach would be to tamp down the casino. The current approach is doing the opposite,” he says, with legitimate entrepreneurs afraid to build new products but scammers going mostly unchecked. Recent high-profile crypto disasters, like the fall of crypto exchange FTX and its founder Sam Bankman-Fried, Dixon fears, will lead US policymakers to assume that future legislation should be even tougher.

Dixon doesn’t expect everyone who picks up Read Write Own, he says, to fall head over heels for the utopian blockchain vision. But he hopes they recognize that regulatory overreaction could choke off ideas that could rejuvenate the internet and everything built on it—that is, more or less everything. “This is a critical moment. I don’t think we can wait much longer to think about designs that could return us to the original promise of the internet,” Dixon says. “Something has to be done, right?”