Why Coinbase admitted that Apple is calling the shots

Why Coinbase admitted that Apple is calling the shots

One of the benefits of Web3, according to boosters such as Jack Dorsey, is that it is censorship resistant. Because it is decentralized, according to this argument, it is impossible to censor anyone. But it is not true that cryptocurrency is decentralized. Currently, Web3 has a bottleneck: Big Tech.

Cryptocurrency has relied on points of centralization since the days of Mt. Gox. (This hack wouldn’t have mattered so much if Mt. Gox hadn’t dealt 80 percent of all transaction volume in bitcoin sometimes). As the ecosystem has expanded, focal points, such as AWS and Google Cloud.

One problem with cryptocurrency is that the technology is quite user-unfriendly, at least for normal internet users. Thus, centralized services have emerged for the non-technical, such as Coinbase, OpenSea, Metamask, VeVe and Rarible. Meanwhile, mainstream payment apps – Venmo, PayPay, etc. – have added cryptocurrency capabilities. This is probably how the general public will get involved in crypto, assuming they do at all. These services may also be used by people who do understand cryptocurrency since even the most savvy can appreciate the user-friendly interfaces and scam protection.

To access these apps, users will go through the Google and Apple app stores. So if these centralized means of accessing cryptocurrency are going to stay in Apple and Google’s app stores, well, functionally, Apple and Google will set the content moderation terms for Web3.

For the purposes of this article, I’m going to focus on Apple because I didn’t attend the Epic Games vs. Apple antitrust lawsuit for nothing. (Epic Games vs. Google has not yet taken place; when it does, I imagine we will have much more clarity on the Google store.) Apple’s public relations team did not respond to requests for comment.

As Coinbase CEO Brian Armstrong written on February 4, “For an application to be listed in the Apple and Google App Stores, it must comply with the policies of these two companies.” That means whatever Apple and Google decide on their content policy, Coinbase will follow, Armstrong says. “Our approach is to be free speech supporters, but not free speech martyrs.(Emphasis his.) So if a “critical partner” like Apple or Google objects to something and demands its removal, Coinbase will remove it. Coinbase political communications manager Ian Plunkett declined to comment for this story.

This position has already been reported. In June 2020, some employees went out working because they wanted an immediate response from Armstrong to the Black Lives Matter protests. Armstrong finally did post support for BLM on Twitteralthough these tweets have since been deleted. The following September, Armstrong published a blog post limiting political discussions at work.

In his September 2020 post, Armstrong describes the move as “mission-driven.” After the departures, he noted in an email that “[w]We have just made the decision not to engage in broader activism as a company outside of our mission. (How? ‘Or’ What Coinbase’s Attempts for a PAC fit into that framework of ideas is unclear to me.) He offered a severance package to anyone who objected, which ended up being approximately 5% of its employees. The company’s values ​​clearly included notions that “wider societal issues” and “political causes” were of minimal importance.

This is pretty consistent with ceding moderation decisions to Apple – if you squint. Free speech maximalism is, after all, a political cause and therefore on Coinbase’s “minimally important” list. One of the reasons Coinbase has stuck around as long as it has – while its competitors have toppled – is pragmatism.

We have an idea of ​​how Apple will moderate Web3 because we already know how it moderates in its little “walled garden”:

The blockchain has an inherent moderation problem: it is immutable. So if someone encodes a text string containing the URL of a website that, for example, contains child pornography, the text string is there forever. Extracting this data requires effort and technical ability, and the linked website itself may crash, but the text string remains. It is also possible to harass people on the blockchain in posts that cannot be edited or deleted, although some level of technical skill is also required for this.

So Apple’s morals may be less of an issue for pure cryptocurrency and more of an issue for NFTs, an area Coinbase plans to tackle this year. Nudity in an NFT? This is a problem for anyone viewing the NFT and also wants to appear in the Apple App Store. I mean, we already know the good folks at Apple are terrified of being naked. bananas. God forbid them to see a real human titty.

Additionally, Apple can say which currencies it is willing to support transactions in, which is problematic for companies that want to accept payments, such as Ethereum.

Luckily for crypto enthusiasts, Apple has a pretty good incentive to let crypto apps — some, at least — stay in its App Store. One of the reasons you can’t buy a Kindle eBook through the iPhone app is that Apple takes 30% of all digital products sold in apps that appear in its store. This means that anyone trying to buy an NFT – indisputably a digital good – through an iOS app is likely to pay a premium since app developers can simply pass the charge on to users rather than sacrificing their own cut. (Amazon chose not to go this route, which is why you still can’t buy a Kindle e-book on the iPhone app).

The other side of the coin is that Apple can turn off the tap at any time. Display an NFT titty? You could be out. Trying to scam Apple on his part? You are absoutely outside.

Coinbase’s content moderation capitulation here is understandable: Apple, Google, and even Amazon are going to run the show if you try to make Web3 mainstream technology. Collectively, this group owns the stores where your app appears, the cloud servers you use for your service, operating systems, and devices. Say what you want about the distributed future of Web3, but for now, centralized Big Tech will continue to take the lead.