In January 2022, I noted that when interest rates rise, Ethereum and other digital assets would look a lot more like tech stocks and lose value. Meanwhile, the dreamy alternative narratives about stores of value and new decentralised la-la lands would burn faster than Europe’s moral authority as it failed to protect Ukraine with air support.
ETH’s value can and has been diminished like any other asset class by rising interest rates and an economic downturn. Its moral value diminishes if it does not improve people’s lives as a network and makes only a few people extremely rich.
Hyper financialisation in the Ethereum ecosystem scares me. Here’s why
I also mentioned in a post pre Terra/Luna whoopsie, that the hyper financialisation in the Ethereum eco-system scares me. History shows us it rarely ends well. Just because it wasn’t an ETH-related protocol that blew up, but a stablecoin on its own chain, does not make me any less worried.
The hyper financialization of Ethereum is a process whereby financial markets, financial institutions, and financial elites have all established themselves in the Ethereum eco-system and now exert massive influence over the economic outcomes associated with the network.
I always have and always relish a price drop in Ethereum as it allows more people to participate in holding and staking the asset for the medium and long term.
The effects of crack cocaine
Crack cocaine is one of the most powerful illegal drugs producing psychological dependence. It stimulates key pleasure centres within the brain and causes extremely heightened euphoria. Compulsive use soon develops soon after the person starts using, because the substance is smoked and enters the bloodstream rapidly. Tolerance develops quickly—the addict soon fails to achieve the same high they experienced earlier.
So what has any of this got to do with a public cloud? Once you start using it you are hooked.
The effects of public cloud
Public clouds like AWS, Azure and GCP are the most powerful tools when it comes to producing useful working software that runs in production. It stimulates and reduces the cycle time from “idea to value” for businesses and governments looking to build digital products and services, and allows for an extremely heightened response to customer feedback. Compulsive and habitual use of public cloud develops soon after the business or organisation starts using it, because it makes developers and product teams highly autonomous. Fast and scalable “building” enters the organisational bloodstream rapidly.
A high ‘tolerance’ level for public cloud establishes itself, but an organisation soon fails to build to the same highs in quality and speed they experienced earlier.
As an organisation that sells its product on public cloud and as someone who has promoted the use of public cloud across the world, am I in a moral grey area? I am acutely aware of how powerful, resilient and fast you can build using cloud-native development patterns. There is, however, a hidden price.
Public cloud involves the surrender of significant amounts of business and process logic to these infrastructure and development platforms. These include cloudformation templates, lambda functions, and all the tooling and capabilities that allow functionality to be delivered at the back end, through microservices and data meshes and all the front-end magic of stuff like AWS amplify. This surrender comes without CEOs, prime ministers or even senior management or civil servants understanding it. So what happens when things stop working?
When things stop working
Nobody has a clue how to fix it. and you can’t fix it without AWS, Azure or GCP doing it. The idea of a backup to these monsters is dangerously naive due to it not being about infrastructure anymore, rather a whole development and software paradigm.
I also think there are a big chunk of unknown unknowns around this space, that I hope people way smarter than me in our defence and civilian infrastructure are thinking about, because public cloud adoption is still in its early stages. The three main providers in the West are on a path to becoming as vital as electricity and water companies.
Choosing your cloud provider is a political choice
Going for Alibaba over Azure aligns you with a US sphere of politics through your cloud provider over that of China. That is fine if you are a US business, but what if you are an Indian, Nigerian or French organisation? Or UK-based, like us, or Vietnamese?
My simple point is always this: be aware of the business logic you are giving away and make sure you give it away for every tech and value upside. You need to know that the public cloud provider you are giving it away to, is on the same side as you are.
Could Ethereum and decentralisation help?
Maybe! If you unpick the development capabilities that public clouds offer in the form of serverless, IaaS and all the other magic. If you allow it to run over a decentralised infrastructure which offers infrastructure to De-Cloud and are rewarded for it. And if all is with some networking voodoo that means you get public cloud performance, without Jeff or Jack’s businesses being involved well – that could be super useful.
Remember, blockchain is just a rubbish word for what it actually is – a shared database. If the usage data on all this De-cloud infrastructure is on a shared database that we can all see and mine insight from, there is an opportunity for real economic value creation for real people.
