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Jack Dorsey says most blockchains are centralized (but not Bitcoin) – Ledger Insights

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This morning, Jack Dorsey, CEO of Block (formerly Square), tweeted that venture capital firms and their investors control most of the blockchain. Dorsey has always supported the Bitcoin blockchain only and has never supported Ethereum and other blockchains.

He wrote in his tweet: “You don’t own ‘web3’.” He continued, “Venture capitalists and their Limited Partners (Limited Partners) do. You will never escape their urge. It is, after all, a central entity with a different name. Know what you’re getting into… “

Elon Musk continued, “Has anyone seen Web 3? I can’t find it.” To which Dorsey replied, “It’s somewhere between a and z,” referring to venture capital firm Andreesen Horowitz known as a16z.

An a16z partner responded to Dorsey’s reply:

Dorsey’s original tweet may have been in response to a recent Web 3 article in the Wall Street Journal titled “Jack Dorsey and the Unlikely Revolutionaries Who Want to Reboot the Internet.” Dorsey’s response is still more revealing: “I have nothing to do with ‘Web 3’. WSJ and others need names and images to generate clicks.”

Dorsey has repeatedly rejected Ethereum and other blockchains, citing a lack of decentralization. In August, he retweeted it, including a statement that “the Ethereum Foundation is funded by their primary account.”

Bitcoin did not start with an ICO, and Satoshi’s tens of billions of Bitcoin holdings are untouched. Hence it is considered a “fair release” rather than an ICO or free token drop where the founder and his backers hold a large percentage of the tokens and can use them to incentivize others to participate.

While some may dismiss this as frivolous banter among billionaires, there is a decent philosophical debate to be had and a lot of truth in Dorsey’s statement.

Problem: Crypto promotes itself as decentralized

One of the main features of the cryptocurrency is that users own the protocol and it will provide decentralization. Users may actually benefit from the high price of tokens and own a small stake, but there is no doubt that the people who reap the most benefit are the creators and their supporters.

This is how most startups have always worked and in and of itself it is not a problem. However, there is also no doubt that these founders and their supporters have a very large influence, which often amounts to a level of control. This is also consistent with traditional startups. So it sells the promise of decentralization which can sometimes seem deceptive. Although frankly users often do not care. They just want to get some tokens and increase their own fortune.

At the same time, a token economy backed by incentives stimulated a lot of development. Dorsey’s view is that it may not be a truly decentralized target.

However, a different question is whether decentralization is possible above the protocol layer? Looking at the applications on Ethereum and Solana, there are usually a small number of winning applications in the sector. This in itself is a kind of centralization. Think Uniswap in automated market making and Metamask in portfolios. In many ways, portfolio centralization is a much more important issue.

Someone confirmed that the Twitter protocol is owned by VCs, and Dorsey responded, “No it’s not, and it’s not. Twitter is developing a protocol that isn’t owned or owned by VCs, bluesky.” The latter is an open source decentralized social media initiative.

Our view is that this is what Dorsey is aiming for. Something closer to open source beliefs than the world of cryptocurrency.

Why is discussion important?

As mentioned before, Block (formerly Square) is uniquely positioned in the future of money and payments. Not because its CashApp supports Bitcoin. But because it is one of a very small number of establishments that have retail POS outlets. While these merchants may currently accept primarily Visa and Mastercard, with Square, they are likely to receive digital money and bypass the older Mastercard and Visa platforms.

But if Dorsey wasn’t around, wouldn’t it just be replacing Visa and Mastercard with a different central player, Square? The only difference is that under Dorsey’s control, Block isn’t likely to be a huge rent-seeker.

With the unique website of the Square merchant app and the founder offering more than just talk about believing that blockchain-based payments can be more inclusive, Dorsey’s thoughts on this matter are more important than others.

Noticeable: The author does not own any bitcoins and is less than 500 USD


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