There’s a well-known truth in the tech industry that all business is just bundling and unbundling.
Give this a quick read to understand:
Apple is an example of bundling for computers, taking the fragmented parts of the PC market (OS, hardware, and even chips now) and bundling their creation together in the same process. iTunes bundled all your CDs into one database; it also unbundled the CD, letting you buy one song instead of a whole album.
Opendoor bundled the real estate agent and the house seller, buying the house then selling it out of their inventory. Google’s entire business is one bundling of a huge array of services to drive time on their platform so they can sell more ads. Netflix bundles distribution (formerly Blockbuster and movie theaters) and content creation (Hollywood).
ChatGPT is unbundling Google search. It’s taking the core service of Google (search and info procurement) and siloing it into one standalone service. Unreal Engine is unbundling game creation, letting devs create and treat distribution separately (eg Activision is creation + distribution).
Amazon unbundled retail stores, allowing you to find only the products you want rather than having to enter a store (stores are bundled products).
Here are more examples of the great bundle and unbundle process:
I’d even go so far to say that Twitter and Instagram unbundled the Facebook post. Facebook came first and offered pictures, videos, and text in one post. Then competition came and stripped out the constituent parts of the FB post and made it their entire offering.
Why reinforce the bundle/unbundle framework and provide these examples:
- The concept of unbundlings/bundlings needs to be understood for my subsequent analytical framework in here. Also it’s interesting, and let’s you view tech through a cyclical lens.
- It demonstrates bundling as basically a natural law of technology and human activity. Tech seems to have this inexorable characteristic about it that reorganizes human behavior in a cyclical way that groups, ungroups, then regroups it again. It's an evolutionary process between man and technology.
- I would describe the previous examples as micro bundlings. I want to zoom out and discuss macro ones.
Viewing these cycles as a quasi evolution of human socialization that tech facilitates, what is crypto bundling or unbundling? How much do we have to zoom out to see it? In contrast with the micro bundlings previously described, crypto is rebundling two core features of human interaction that we’ve lost over decades.
Human communication used to be private as the baseline. We used to only talk in-person: meaning no one else could access your chats, and they were self-deleting. Natural communication is private, ephemeral, and between two parties by nature. Very based actually.
Then different forms of tech began to slowly alter this natural baseline of privacy, trading off privacy for scalability and/or persistence.
- Smoke signals could send messages farther and to more people (more scale), but had no privacy.
- Pen and paper allow us to transcribe our words so they were no longer self-deleting; but the permanence meant they could be viewed by unintended parties (increased persistence at expense of privacy)
- Carrier pigeons allowed distant messaging between two parties, but weren’t scalable and had no privacy (no security).
- The telegraph is the electronic carrier pigeon: better scalability and distribution, little privacy.
- The telephone allows widespread comms for billions, but with an oligopoly of providers maintaining the infrastructure. This means poor privacy and censorable.
As scale was introduced, it invariably required more centralization at the technology baselayer to facilitate higher volume (similar to blockchain trilemma-type tradeoffs).
The internet amplified hyper-scalable comms built on centralized infrastructure. The web is basically controlled by a handful corporations; and as we’ve seen first hand, privacy is essentially nonexistent. Tech companies can read your messages and censor you for ToS reasons at will, and a frivolous request from the US government means they can see them too. But, it’s insanely scalable.
Privacy is treated as a privilege if you’re good, not a right. Scalability and privacy for human communication is basically anti-correlated; you gain one at the expense of the other. We’ve achieved peak scalable comms, but at a complete loss of privacy.
Core observation and thesis:
Over hundreds of years, technology has progressively unbundled privacy from communication to provide scalability and/or permanence. The internet is the crescendo of this.
Cryptography is the rebundling of privacy and communication, while maintaining scalability. DeFi is the vector. Nature is healing.
This may seem counterintuitive, since the essence of crypto is radical transparency on the blockchain, which feels instinctively not private. But there are core features that make cryptography, in conjunction with DeFi, the rebundling of communication and privacy:
- Psuedoanonymity: you can anonymize your interactions through cryptographic privacy tools and exist in a way where people cannot tie your personal identity back to your onchain/digital presence. PGP facilitates private written-word communication, DeFi financial communication.
- Censorship: because there is no single gatekeeper that can disallow you from transacting and communicating onchain, you cannot be censored. This is completely antithetical to internet use for applications and websites (try to exist online if Google decides you’ve been bad).
Communications and financial transactions are a distinction without a difference: money is a unit of information and financial transactions are a form of economic communication. Cryptography enshrines private communication, and DeFi is the financial instantiation of this.
After years of technology and the internet unbundling privacy and security from our interactions, cryptography and DeFi are rebundling it back into human communication, while maintaining scalability and permanence. RETVRN.
Quantum computing will probably unbundle it again though. Sigh.
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