Cryptocurrency Protocols
Characteristics
Toby Shorin, Sam Hart, Laura Lotti:
"➊ Cryptocurrency protocols are made of a technically encoded architecture with a few notable aspects. Cryptocurrency protocols are open source and permissionless, meaning that they are accessible to most anyone in the world with an internet connection. They deterministically process computation, and introduce significant friction to reversing the protocol’s highly replicated state. In terms of interaction surfaces, protocol architectures are tightly constrained: they provide only limited, specially defined affordances for interaction (e.g. Application Binary Interfaces). This is one of the keys to understanding the regulatory apparatus of the protocol: participating in crypto’s regulatory regime means, ultimately, interacting with smart contracts or blockchain code.
➋ Crypto protocols are driven by global, 24/7 markets. When users interact with cryptocurrencies, they do so through the deterministic logic of hard-coded market structures—token supplies, reward functions, bonding curves, lending and exchange rates, automated market makers, etc.—which collectively compose a second regulatory regime. The requirement that blockchain states are computed by sending transactions means that certain markets and architectures, such as Ethereum, are tightly coupled. It is for this reason that many of crypto’s markets still elude legal oversight, as the law cannot reverse a processed transaction. The blending of markets and programmable code also explains the focus on incentive mechanisms as the holy grail of protocol design and the favored tool for "stakeholder alignment."
➌ And finally we have a social-normative layer, held together by a multifaceted web of on- and off-chain communication channels, what we commonly refer to as “the space.” The crypto community has been populated by a wide array of subcultures: cypherpunks, yolo traders, platform cooperativists, activists of all forms, e-girls, born-again Christians, post-internet artists, neo-rationalists, effective altruists, and accelerationists of various flavors and speeds. Each group has brought its own norms, and many have designed protocol-based projects to suit their politics. While each microculture has its own specific traits, most of them share one thing: a persistent ethos of self-managerialism and anti-institutionalism. This norm seems to be part of what attracts different groups to crypto in the first place, even turning would-be-bankers into P2P cash advocates."