Blockchain at a Crossroads

An interview with tech visionary and Metamask co-founder Joel Dietz

We are entering a new stage in the evolution of blockchain-based cryptocurrencies and particularly Ethereum, which is undergoing the long-awaited “merge,” transitioning from proof of work to proof of stake validation, which will make it much faster and more energy-efficient, although potentially less perfectly decentralized. I thought this was a great time to discuss the ever-changing world of blockchain with Joel Dietz, an open-minded, omnivorously curious thinker on technologies, economies, and system design.

As a serial entrepreneur, Dietz helped found several key initiatives in the cryptocurrency space, including Ethereum, MetaMask, the first smart contract educational channel, and the first academic work on cryptoeconomics. His research interests focus on the confluence of blockchain network topologies and swarm intelligence, especially how the principles undergirding decentralized organizations can be used to fuel global innovation. He also works on holonic philosophy, the evolution of jurisprudence, data-driven approaches to innovation, and smart city data architecture. He is the co-founder & CEO of MetaMetaverse, a fractally recursive platform of metaverses-within-metaverses ( turtles all the way down).

What was the basic story of your involvement with Ethereum and Metamask? 

The day the Ethereum whitepaper came out I left everything I was doing to work on the project because I thought it had the possibility to truly transform the way global governance operates. I had just come out of a failed startup that attempted to deliver a mostly decentralised digital ecocurrency (includng browser extension wallet and mobile apps) , which died because I couldn’t do a single micropayment without getting a very expensive money passporting license. 

So despite a fairly successful career as an enterprise software architect prior to Ethereum, I was technically bankrupt when the project started. Because I had already built a browser extension wallet in the past, it was a pretty obvious idea to me. I asked Vitalik if he would fund it from the Ethereum Foundation funds and he said yes and gave it the name “Vapor.” It was renamed twice and ultimately became Metamask after I recruited a team from Apple to work on it.  Unfortunately they never credited me for the efforts I put in or paid me back for the money I spent on getting the project up and running so I have slightly mixed feelings about it. 

Why were you initially excited about Ethereum? What useful functions did you think it would fulfill that would make people’s lives better? 

For technophiles like myself there is always the thrill of some new technology that, at least potentially, solves some broad global problem. For me the inventions of DAOs¹ (and I may have inadvertently created the first one) was the promise of cross border innovation, including solving large public-good coordination problems including ecological ones. So the premise is there. I also thought it would make capital markets and fundraising far more efficient and that appears to be mostly true (despite some major caveats). 

What are your impressions of Vitalik Buterin? How well do you know him? What do you think is his deepest motivation for Ethereum? How much was he influenced by Peter Thiel? 

I spent a decent amount of time interacting with Vitalik in the early days of Ethereum, he stayed at my place a couple times so I got to know him both as a person and as a thinker. Vitalik was always reading a lot and, although he was clearly a libertarian in 2013, I’m not as sure that he is today. I would assume that he shares a lot of basic premises with Peter Thiel though. As for what motivated him, I think he’s just a nerd at heart and likes making new technology and has a default skepticism about governments and default optimistism that nerds can build something better than exists today. 

I know Vitalik is collaborating with the economist, Glenn Weyl, an author of Radical Markets. Are they seeking a hyper-aggressive form of Libertarianism, where everything becomes exchangeable on an ongoing auction? Do you see this as a good idea? 

Hmm, I think the basic idea of their voting reform is that people have ideas that are masked, but if you create a pure market solution for voting then the system more fairly balances itself out. I guess that it is a logical extension of free market ideas. It seems to be working okay in practice but I’m not sure that it is a general purpose solution to all public good problems.  In general, I do see it as a good idea to run these sort of trials in limited fashion (such as GitCoin is doing) and then scale up as the idea is proven.

I think one key thing to understand here is that many of these new models are experimental. This is the first time we’ve been able to sit down and design new governmental models that don’t involve shuffling around mounds of paper across hundred of miles, so everything is a bit tentative and there isn’t (at least yet) a silver bullet solution that can solve all the problems. 

I’m in general much more sympathetic to building new things and testing them than protesting old stuff, especially when the protests turn violent.

Let’s say crypto and Ethereum worked as originally intended: How would this have any positive effect on wealth inequality and the ecological emergency? Those seem, to me, to be the two worst problems confronting us immediately, and they are linked. It seems crypto has created a new wealth-holder group (many moving to Puerto Rico to avoid taxes) and it has exacerbated the ecological crisis by using excess energy. Do you see anything going on with “ReFi” (regenerative finance) that could be effective. What is “ReFi” anyway, and what are some of the best examples of it?

Wealth equality is a very tricky issue once you factor in all people everywhere and, if you want to go the whole way, other species on the planet. Basically wealth always concentrates at certain nodal points. Sometimes it is governments, which then basically claim to be acting on behalf of citizens, and sometimes it is private individuals. What is more destructive about wealth inequality in general is the social stratification that can happen in highly unequal society, including the idea that you can’t succeed in a society if you don’t have a high pre-existing level of wealth or some other related credentials. America has gone pretty far involving this with its meritocratic ideal, but in many ways Ethereum is much farther along by being distributed and global by default. 

The only obvious way to build in social stratification into Ethereum is to make an insider crowd of people who “have an insider reach at the Ethereum Foundation” and those that don’t. Some of that has happened already (as I mentioned in the answer to your question about Metamask) but it is partially offset by the emergence of other layer one competitors to Ethereum. 

ReFi is supposed to be “regenerative finance” and the basic idea is to use some of these same tools towards existing publics good problems. I do believe that it has nice people and is a good idea, but there are several elements that prevent it from really taking off. One of them is that it’s still a relatively niche area and, like many people working on ‘commons’ style projects, tends to lack focus. Libertarianism in general has been fairly hostile to people who volunteer for public goods style projects and effectively penalises them but, unfortunately, many public goods problems have no obvious free market solution. Also there’s a general lack of honesty and transparency in the industry, including good, detail oriented critical journalism. So I don’t know if you can really build something “regenerative” in this shill heavy environment. 

Crypto-economics seems to lack mechanisms for addressing the underlying injustices of the current financial system. Recently, I wrote this piece on the IMF and the Caribbean. To a great extent, the old colonialist and even slave system has been perpetuated through economic means across the global south. Does crypto help ameliorate our situation or just make it worse? The Bitcoin experiment in El Salvador seems like a disaster. However, I understand that crypto has been helpful for young entrepreneurs in Africa and elsewhere, and also provides a means to fund activists in repressive states.

I’m not sure I accept all of your suppositions here. In general there are lots of systemic issues around the globe that preceded colonialism and using “perpetuated” seems to put the people of the global south in a permanently passive role.  In general I think crypto is basically creating a new “I can be my own state” paradigm, which is most helpful in places that have the most repressive states or the worst treatment of their own currencies. In general, anything that empowers young people and allows them to design their own future I’m in favour of.  In general, I think talking too much about the IMF makes it feel inevitable that some old people in some square office get to control the future of people in a different part of the world and even if that is the case sometimes I’d prefer to design and build something better than accepting it as inevitable. 

Ethereum needs to shift to proof of stake because proof of work is killing the planet and is too slow. But proof of stake ultimately means there is a small oligarchic group that will control the currency on some level. Or do you see anyway to avoid that? (I remember when ETH forked years ago after the first DAO collapsed, and the main holders had to stitch it back together). 

The basic idea of decentralization is that something is more secure the more different parties with different interests are involved. So far this has always involved a rather substantial amount of increased cost. Now we have proof of stake which has been fought for my many for years because of the cost savings (energy, ecological, and otherwise). I don’t know that there is any better way of doing this. I have been working to a solution to the ultimate hard problem (proof-of-excellence) for about a decade now and I think I have a solution but it may take me another couple years to roll it out. 

What about the dangers of smart contracts that could do away with the human-to-human messiness that actually often protects people from a certain level of abuse (for instance if you can’t pay your rent, the landlord can’t immediately evict you)? What do you see as some of the best uses cases for smart contracts? 

Yes this is a real risk in any process that is mostly or fully automated and, in general, the tech monopolies don’t think they need to provide any customer service and Ethereum could be considered a rather extreme example of that. I do think at some point we will get at least some versions of the cyberpunk futures that include these sort of apoolcalyptic scenarios. That said, I write this message from the Nordics which seems to be a rather comfortable and sane place and I expect it will continue to be so as well.  Certainly I don’t advocate replacing all legal systems with smart contracts and I think people who go to these free market extremes tend to be a bit nuts. 

What are your thoughts on NFTs and DAOs? What NFT art is your favorite? Do you see this as being an important development culturally?