The Biggest Problem In Crypto According To Vitalik Buterin
Cryptocurrency is rife with problems, we know that, otherwise Bitcoin would have been adopted years ago. The good thing is, a lot of these problems can and will be addressed. When we think of problems, we think of things like hacks, security, volatility and accessibility. Regarding cryptocurrency funding on the other hand though, a founder of Ethereum, Vitalik Buterin has located a major problem in a paper, co-written by ZoÃ« Hitzig of Harvard University.
The problem, free riders.
By definition, a free rider is a person or entity that profits from the under-provision of goods. According to Buterin and Hitzig, this is an issue that plagues the development of many cryptocurrency projects, mainly those in ICO and coin offering stages. The paper; âLiberal Radicalism: Formal Rules for a Society Neutral among Communitiesâ also highlights a solution to this problem, a problem that works in a similar way to âQuadratic Votingâ, called Liberal Radicalism.
According to Coindesk:
âQuadratic Voting allows participants to vote with crypto tokens according to how much they care about an issue, Liberal Radicalism (LR) expands the same concept to how communities contribute to public goods, such as software development, cryptocurrencies and journalism. And it works by increasing the funding of projects incrementally depending on the number of participants and the degree to which they care about the issue at hand.â
Whilst free riders are causing an issue that will see funds drained out of various crypto projects, liberal radicalism aims to address this, in order to establish a format that allows funding to be increased incrementally.
According to Coindesk, Hitzig has referred to Â liberal radicalism as a real-world solution:
"This set of ideas goes from the ground up â we offer solutions to localized, real-world problems, and then demonstrate how these proposals fit into a coherent political philosophy that solves important aspects of the crisis of modern liberalism. These tensions are increasingly manifesting in discontent with existing liberal democratic systems and the rise of authoritarian populist alternatives on both the left and right."
This is an exciting cross over of crypto, economics and politics. Buterin and Hitzig are offering a very theoretical concept, one that could help to remove the free rider problem that currently cripples various cryptocurrency and blockchain projects. Of course, liberal radicalism isnât a fully trialled and tested solution yet:
âIt hasn't been fully tested in the wild and may be vulnerable to unanticipated attacks or economic quirks. Secondly, the mechanism relies heavily on identity systems, meaning that for now, it can't coexist with anonymity, which is highly important to many people in the space. Plus, certain kinds of known vote attacks could mean that LR might need people to use trusted hardware â which isn't ideal as it relates to ease of use.â
It looks like, this could be a solution to a problem we didnât even know we had.