In the crypto space, Vitalik Buterin proposed a Multidimensional Identity and demanded an end to “anonymous society.”
Vitalik Buterin, co-founder of Ethereum, recently ignited a spirited debate within the cryptocurrency community by challenging the long-standing notion of an “anonymous society” in the crypto space.
Buterin suggested that without such a framework, decentralized systems run the risk of returning to centralized control because of unresolved collusion issues. As a result, Buterin called for a more complex and multifaceted notion of identity.
From Anonymity to Multidimensional Identity
Figuring out how to handle the xrisk problem **in a largely anonymous society** is the key issue on the table: how can we have liberty in a world of basement genetic engineering.
— Vinay (@leashless) August 21, 2024
That's the hot angle: Liberty ™ meets Xrisk ™.
And Pluralism is a distraction from that work.
In the early days of crypto, anonymity was celebrated as a means to protect individual privacy, ensure financial sovereignty, and guard against the surveillance state.
Much of the early development of blockchain technology was motivated by the cypherpunk ethos, which saw a world in which people could interact in financial markets and other digital arenas without disclosing who they were, maintaining their privacy and independence.
Buterin’s recent comments, however, raise the possibility that this vision is too straightforward to handle the complexity of contemporary decentralized systems.
He contends that the concept of a “anonymous society” or a “financialized pseudonymous society” is fundamentally flawed due to its failure to take into consideration the difficulties posed by attacks on governance and collusion.
Establishing trust and accountability in systems where identities are concealed or pseudonymous can pose a challenge, thereby creating vulnerabilities that malicious actors can take advantage of.
According to Buterin, decentralized governance structures are more likely to succeed when there is a more nuanced understanding of identity, and the most stable ones will eventually become centralized.
This perspective is particularly relevant to DAOs, which are designed to operate without central authority and rely on decentralized decision-making processes.
But as these organizations have expanded, they have faced serious governance-related difficulties, especially with regard to decision-making and the influence of powerful or wealthy participants.
Buterin argues that these difficulties are partly brought about by these systems’ restrictions on anonymity.
Without a more nuanced approach to identity, DAOs risk being dominated by financialized governance attacks, in which those with the most resources can disproportionately influence outcomes.
Buterin wants to solve these immediate governance problems and determine the future direction of the cryptocurrency space by moving away from anonymity and toward a more multifaceted identity structure.
He argues that while anonymity serves as a critical check and balance, it cannot sustain the entirety of a governance cycle.
Similar to how a society cannot survive on the “energy of rebellion,” a decentralized system cannot work properly in the absence of identifiable and responsible participation.
Buterin suggests “soulbound” features, or identity traits that are more ingrained and difficult to change, as a possible remedy in this situation.
Removing Anonymous Society in Crypto: “A Genuinely Terrible Idea”
Technologist Vinay Gupta, who is well-versed in the philosophical and practical ramifications of blockchain technology, contends that Buterin’s strategy is misguided, even going so far as to refer to it as “a genuinely terrible idea.”
This "Plurality" thing, as described by Vitalik at least, is a *genuinely terrible idea*.
— Vinay (@leashless) August 21, 2024
Like just bad. It should not be allowed to take root.
Why?
It's solving the wrong problem, for the wrong people, in the wrong way.
It's building on the wrong aspects of technology, too. https://t.co/TOtv1Wa55d
He claimed that It solves the wrong problems in the wrong way.
Gupta believes that rather than concentrating on the subtleties of identity in a decentralized system, the real challenge is modifying our political and governance philosophies to address these new risks.
Gupta’s critique of Buterin’s “Plurality” concept also extends to the technology underpinning the crypto space.
He claims that the fundamental virtue of cryptocurrency is its capacity to grant people self-sovereignty through multifaceted identities, enabling them to maintain control over their identities regardless of their allegiance to any particular state or tribe.
He contends that this, allowing people to communicate in digital spaces without being limited or defined by their identities, is one of the key accomplishments of blockchain technology.
Though it goes against the original Cypherpunk vision, Gupta cautions that bringing rich, intersectional identities into this space could result in a society marked by entitlements and exclusions.
Gupta is especially against creating a society where identity is fundamental to social interactions and governance.
He contends that since identity is used as a means of inclusion or exclusion in different systems, a society like this would unavoidably result in increased monitoring and control.
He thinks that this would go against the fundamental freedoms and sovereign rights that cryptography was intended to uphold.
Rather, Gupta calls for a return to the cypherpunk ideal of a mostly anonymous society in which people can engage in digital spaces without disclosing who they are or being subjected to rights based solely on who they are.
The practical difficulties of incorporating identity into decentralized systems are also mentioned in Gupta’s critique.
He issues a warning, noting that the introduction of identity into these systems might result in even greater centralization because managing identities would probably call for some supervision or control.
This could therefore result in the very governance problems that Buterin is attempting to avoid, since identity system administrators could have an excessive amount of influence over decentralized networks.