When you spend time with cryptocurrency, you often hear the word "decentralization." This word describes a form of governance, but it also means something more: it is the ideal that every blockchain project strives for, and which has an almost religious status. And that can be a problem.
I was reminded of this recently while speaking with Jesse Walden, co-founder of Variant, a venture fund that recently hired noted crypto attorney Jake Czerwinski to help the firm and its 30 or so portfolio companies navigate the treacherous regulatory waters for US blockchain to navigate. projects. This task often includes developing a "progressive decentralization process," they said.
This term reflects the reality that nothing is centralized all at once and that the process must take place gradually. “The ongoing problem in this space is that teams try to accelerate the first two steps: product creation and then decentralization. For many products, getting early leadership is important when looking for product-market fit,” Walden said. I
It's nice to hear conversations like this. After years of covering cryptocurrency startups, it's disappointing to see projects constantly trying to claim they're decentralized, or push decentralization rules because they're trying to test the legal framework, not because their product will benefit from it. The motivation behind this is rarely explained by a Satoshi-like ideal, but rather by a desire to get rich quick by throwing some bad tokens on the market.
As Walden says, I was happy to admit that some designs are simply not suited to decentralization and that historically "corporations and democracies are the best structures we've come up with for human decision-making." This kind of pragmatism and maturity is often lacking in an industry where "centralization" is often used to justify poor product design and hide ulterior motives.
Of course, this does not mean that projects cannot be created without a central gatekeeper or authority. Bitcoin proved this a long time ago, and as Walden pointed out to me, there are other successful examples of decentralization, such as the giant DeFi platform Uniswap. Satoshi's vision is alive and well and people understand it, although it is much more difficult to implement than most people admit, and centralized governance is the only practical solution that some blockchain projects should not even attempt.
Overall, the conversation with Variant was a welcome one, although the media has been covering the trial of Sam Bankman and Freed for several weeks now, the crypto industry is still evolving. Speaking of SBF, I took the time to write a proper review of Michael Lewis's Going Infinite - a book poised to tarnish the legacy of a famous author, but also contains many new details important to anyone who follows the industry closely. . Good weekend.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
This story originally appeared on Fortune.com.