Blockchain researcher and journalist Nathan Schneider argues in a recent essay that much of what is happening in the blockchain ecosystem is happening not because the technology made it technically possible, but because the technology made us forget it wasn’t impossible. It gives us an interesting model for how any technology changes the world, one that emphasises the role of culture and narrative, but it nonetheless misunderstands quite how culture influences the impact of technology.

An example of his argument comes through gig economy platforms like Uber, which does exactly the same as a normal taxi company, but through a different technological process (i.e. they have an app instead of a phone number). This new tech created a narrative that the usual rules didn’t apply, even though very little had actually changed. We saw this narrative appear in the media, our conversations with one another, and in popular culture — plus, we echoed it ourselves. Cultural narratives affect how everyone sees the world, including regulators, who were slow to apply the same employment standards to Uber that they applied to the rest of the taxi industry.

In essence, Schneider argues that what matters is how a new technology changes the narrative of what we think is possible, more than how it changes what is actually possible. Switching from ‘phone number + taxi operator’ to ‘Uber app + algorithm’ does not make anything new possible, but simply by being new, it creates a narrative that things could (or should) be done in a different way.

Hence, the unregulated ‘crypto wild west’. Over in the non-web3 world, Airbnb were blocked from distributing company stock to their contract workers.

In web3, on the other hand, the Ethereum Name Service (ENS), which offers a ‘nickname’ service for blockchain wallet addresses, distributed half a billion dollars’ worth of company assets to their customers.

The only real difference was that ENS did it via blockchain. In practice, these two actions are the same, but blockchain created a narrative that things could be done in a different way, which regulators went along with. Even after blocking Airbnb, ENS faced no regulatory action.

What Schneider gets wrong is where ‘narrative’ comes in. He suggests that new technologies create a narrative that things can be done differently, and that when it comes to creating change in the world, he argues that the cultural narrative is as powerful as actual technological progress. His suggestion is that both of these features play a similarly important role; they lead equally to the creation of new ways of doing things, like Uber and ENS.

Almost all of what happens in web3 has come from what blockchain technology actually made possible.

In arguing this, I think that Schneider exaggerates how important cultural narratives are in the early days of a technology. He goes as far as to suggest that “web3 is the opportunity we have had all along,” implying that much of what happens in web3 could have been done without the blockchain.

But whatever we mean by the ‘web3 opportunity’ here, almost all of it has come from what blockchain technology actually made possible.

For example, in the web3 ecosystem, the concept of artist royalties is very prominent, compared to most of the art world, where it is not (excluding the most famous artists).

Schneider points out that the concept of paying royalties to a painter or a musician has existed (and has been law) long before the world invented blockchains. “No NFTs required,” Schneider writes. What really matters, he continues, is simply what individual people choose to do. Schneider argues that royalties are big in web3 not because new technology made it possible, but because new technology reminded us that it was possible. “What was always possible for humans to do, but never quite feasible,” he writes, “can happen all of a sudden if it can be made to seem the inevitable result of technology.”

I agree that ultimately, what matters is individual people and the incentives they face. But change happens on the margin. The next step to a world in which royalties are common is not by persuading people to pay royalties when they don’t want to. The next step to a world in which royalties are common is by making royalties easy for those who already want to pay them, but for whatever reason, don’t.

Schneider does cite one paper to illustrate how “resale royalties have been in use … since the 1920s,” but even that paper argues that “blockchain technology radically alters risks of incomplete contracting and lowers transaction costs.” In other words, at a technological level, blockchain makes royalties easier, and that means that they are going to become more common, because it makes it marginally easier for those who already want to pay royalties.

Indeed, there is an enormous list of startups trying to transform how royalties are paid, from paintings to film music. As Keatly Haldeman told us in an interview with Culture3, “the royalty system is broken … It takes nine months to receive your money and it can take two or three years to get paid from foreign sources. It's just a nightmare.” With his blockchain platform Dequency, royalties can get paid in 9 seconds, rather than 9 months.

Blockchain has not suddenly persuaded people to start paying royalties when they don’t want to. It just made it easier for those who were already amenable to the idea.

However, narratives play a much larger role later in the development of a technology. Schneider writes that technology can make the impossible look inevitable, but in that pull quote above, what I find most interesting is what is absent: the importance of culture and narrative in ‘making it seem inevitable’.

New technology, like Uber's, creates a narrative that the old rules no longer apply, but it doesn't decide what the new rules are. So how exactly would technology make something, like the payment of royalties, seem inevitable?

The most obvious way is by fundamentally making that thing easier to do. Royalties become more established because more people are paying them than before, thanks to blockchain. Withholding rights from your employees became more common when their manager was an algorithm in the Uber app.

The initial uses of technology can set the tone for how that technology is used in the future. A technology exists, people begin using it for a set of purposes, and then more innovation and entrepreneurship occurs, inspired by the purposes that people are already using the technology for.

So, the initial uses of a technology influence how that technology evolves in the future. But it is a weak influence. For one, most people are unaware of how early technologies are initially used, and in this model only those able to build new products are able to influence how the technology develops — a stronger influence would be driven by more people. Indeed, early users might also be very different to how most people would eventually want to use that technology, rendering early ideas less popular in the long run.

Instead, cultural narratives play a critical role in how technologies evolve. By permeating through our media, pop culture, and our own interactions, cultural narratives spread more quickly and more widely than knowledge of the actual capabilities of a technology. And as Uber demonstrated, they also are far more dynamic than regulations and politics.

In 2020, Netflix hired their first Sustainability Officer, Emma Stewart. Her job isn't just to ensure that Netflix itself is a sustainable stakeholder in the world, but to embed the cultural narratives to make the world itself more sustainable. In practice, for example, that looks like making electric cars visible in every Netflix feature film, in order to normalise electric cars for millions of people.

It's worth noting that culture is a very different influence. Culture changes what the world expects from technology, and it's up to others to deliver on the expectation, say, of electric cars. However, culture also influences the entrepreneurs who will deliver that expectation, though this rarely comes via mass culture. For example, Neal Stephenson's 1992 book Snow Crash defined how a generation of technologists envisioned the metaverse.

As the author Toni Cade Bambara has written, “the role of the artist is to make the revolution irresistible.” By setting the tone for where technology could and should develop in the future, culture is a critical force for understanding how technological progress turns from something which rips up the rules, to something that defines our next step. Technology creates a thousand futures, culture determines which one we take.

“What was always possible for humans to do, but never quite feasible, can happen all of a sudden if it can be made to seem [like] the inevitable result of technology.”

— Nathan Schneider