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Cambridge University: Cryptocurrency, Web3 and the Metaverse

In March 2022, the Bennett Institute for Public Policy at the University of Cambridge released a policy brief, Cryptocurrencies, Web3 and the Metaverse. Some of the policy issues raised by the increasing adoption of cryptocurrencies. The report explains the ideological origins of the crypto movement, provides a basic introduction to cryptocurrencies, blockchain, Web3, NFTs, and the Metaverse, and discusses related policy implications.

1. Origin of ideas

The crypto movement grew out of liberal criticism of the state in the 1970s, arguing that central banks were illegal and government taxation was a means of protection. In the 1990s, the spread of digital technology gave liberals hope that the power of the state over the individual could finally be transcended in cyberspace. The subsequent technological development of cryptocurrencies was in part an attempt to realize the vision of the liberation of individuals from the tyranny of the state.

Two books were particularly influential: Neil Stephenson’s novel Snow Crash (1992) and The Sovereign Individual (1997), nonfiction by James Davidson and William Rees Mogg books. Both works envision an extremely unequal future in which the nation-state has largely died out. Instead, small private city-states compete to attract the richest and most talented, choosing the jurisdiction with the currency, laws and security arrangements that best suit them. In Avalanche, people outside the elite of autonomous jurisdictions spend most of their leisure time in a virtual world called the Metaverse, which offers milder conditions than reality.

Echoes of these books are often heard in the discourse of major figures in the contemporary crypto movement such as Balaji Srinivasan, Elon Musk and Naval Ravikant. It would be a mistake to assume that cryptography is inherently libertarian, or that all crypto advocates share these ideological commitments. Nonetheless, the origins of cryptocurrencies help explain why the ideas of radical decentralization, institutional disintermediation, and individual empowerment…

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