Smart Contracts for the Rich, Smart Contracts for the Poor - Why the Crypto Industry Has Trouble Progressing

I've been keeping busy with the various projects related to teia.cafe and music projects on Tezos as a whole - currently the TEIA DAO is in the process of "reviving" text mints from typed.art (and adding MIDI mints while we're at it) and after running into several issues that were legal in nature, I had somewhat of an epiphany - it's that the crypto industry has struggled with making progress with the general public not because external challenges, but internal ones.

What do I mean by that? Well, the issue is that since the last bull run (starting around late 2020 or so) there's been a shift in the ecosystem's incentive structures (especially in regards to fundraising) that has set back the industry's growth in ways that have become very difficult to dislodge. The result? Well, aside from the market itself crashing, there's also the problem of most of the dApps that has been created in the last few years - and there's no polite way to say this - but just not being very good.

The problem isn't really the lack of resources (tons of money has been poured into crypto projects), talent (there are plenty of talented people in the space), or even adoption (maybe it's not fully "mainstream" yet but there are enough people to form an ecosystem). The main problem is that the focus of the industry itself got misaligned in ways that most people didn't notice. There are many factors involved, but in this article I will focus on one example that I believe that best represents what the problem is at its core: nobody actually has the means (or desire to) to change the status quo.

Lawyers for the Rich, Lawyers For the Poor

As the header says - this is basically the problem of the crypto/blockchain industry at its root: the understanding of law, and how to apply it in a digital context in a way that makes sense. Aside from being a store-of-value (which is something that crypto actually does very well in a provable way), the next most powerful feature of blockchain systems is the smart contract - the ability to create, maintain, and enforce agreements and transactions at scale.

We do know that smart contracts do work - if implemented correctly. But the execution of it - more specifically, the infrastructure that ties the contracts together - is what has been lacking the most. Smart contracts were designed to replace the work of accountants and lawyers, and the biggest opportunities with the technology still are within those two realms. But if we take a step back and look at who has been leading the charge in regards to these changes, it starts to make a lot of sense why progress has been so slow. And to put it simply:

• Poor people (including broke artists) cannot afford to hire accountants/lawyers, so they don't know what the needs are, or what improvements need to get made.
• Rich people (including successful artists) hire accountants/lawyers to do that sort of work for them, so they don't know what the needs are, or what improvements need to get made. They also have no need for smart contracts since their needs in those areas are also taken care of.
• The accountants/lawyers themselves have the expertise knowledge, but they are the target of disruption and is not likely to be cooperative.

The last point is especially important, because it's the elephant in the room that people often don't talk about. For the Tezos community, this should hit close to home because there were many people in executive positions (including the former president of the foundation) that came from those backgrounds - and if human nature still stays true, people will never go against their own interests, at least in the long-run.

To be fair, the idea that someone with expertise in the area that you're trying to build products in does make a lot of sense - at least on paper. But I do think the community as a whole was naive about people's willingness to disrupt themselves in this kind of way. The ask is unreasonable, and the positions were probably better suited for people who don't have a stake in the idea of disruption, in it of itself.

With a few seats having changed since the peak of the market, there has been some signs of improvement in the Tezos ecosystem, at least in terms of the initiatives from the "official" sources. (Up until then the main complaint has been that the initiatives have been bewilderingly self-destructive and largely a waste of time/resources - but this would explain why, too.)

We're still early, as people often say. And yes, this is true. But it is also important to identify why we're early, so we have some means of progressing, going forward. A much needed lesson in incentive management, perhaps - next time, we need to put some distance between the players that stand to gain and the players that stand to lose.

We need this type of knowledge to build proper smart contracts, too - and the industry as a whole seems to be just getting started, as of now. It's still anyone's game to figure out.