[Discussion] Cryptocurrency

Cryptocurrency! Either it's going to disrupt everything and usher in a new era of artistic and consumer freedom, or it'll hasten the climate apocalypse while largely benefitting a tiny number of investors. Let's yell about it!

Someday in the not too distant future, the height of fashion trendiness will be wireless displays hanging from clothing (or piercings) that cycle through famous NFTs which were picked up for pennies after The Crash…

Robear wrote:

Depends. Can the house appreciate 10x in value in a month?

Pretty sure that short of them burning down houses can't *depreciate* 10X in value in a month, either. NFTs not so much.

Stengah wrote:

You just get the ability to prove that you own the original. Like Robear said, that only really matters for the small group of people who would actually care. You can't do anything like destroy it or alter it, like you could with a physical original though. You're only options are to continue to own it or to sell it.
It reminds me a lot of the star naming scam, where you get a fancy certificate that no one else cares about.

Except you don’t actually own the original, only what is essentially a receipt saying you own it, and should the company that created the NFT for you ever go out of business or disappear your copy of the artwork vanishes when their servers go down and you’re stuck with a hyperlink on the blockchain that points nowhere.

Follow https://twitter.com/davidgerard and see what the entire crypto scam industry is made of.

The NFT price is built out of:

Person A buys for $10000
A sells to B for $50000
B sells to C for $100000
C sells to D for $50000 (Bargain!!!)

A, B and C are the same entity.

I can't believe people are talking this much about money for superman's dog. Silly just silly.

Baron Of Hell wrote:

I can't believe people are talking this much about money for superman's dog. Silly just silly.

It's a good dog, Baron.

From the "where's me faery gold?!" department, Gizmodo reports that an Australia-based trader has collapsed and brought in a firm to deal with creditors. That firm is expected to make its initial report December 17.

There were several signs that MyCryptoWallet was not doing well over the past year. Users were often unable to access their bitcoin, according to a report from the Sydney Morning Herald in April, though it should be noted that’s an extremely common complaint in the world of crypto. Consumers who use Binance, for example, have filed complaints with the Securities and Exchange Commission several times alleging that Binance allowed them to deposit money, but not take any out.

Well, but anyone who provides a bad service will go out of business, right? What happens to the victims was never Ms. Rand's concern...

filed complaints with the Securities and Exchange Commission

LOL, the libertarians now want big daddy government to save them.

Really should've put the "Line Goes Up" video in this thread:

Bored Apes, BuzzFeed and the Battle for the Future of the Internet

To many many of web3’s most vocal proponents, the fact that Notopoulos discovered the identities of Solano and Wylie through publicly-available records that linked the men to Yuga Labs did not seem to matter; nor did the fact that Yuga Labs’ CEO had confirmed the news prior to publication; nor did the fact that Bored Apes had taken the world by storm, helped along by countless celebrity promotions; nor did the fact that Yuga Labs was seeking a $5 billion valuation and in the process of closing a $200 million funding round led by one of the most influential venture firms in the world; nor did the real power Solano and Aronow are accruing, or the way that ramifies out into the real world, or the idea that they should be at least minimally accountable in the public eye.

While a few web3 proponents saw the identification (the purported “doxxing”) as justified, many others expressed strident belief that the only thing that mattered was that Solano and Aronow, perpetuating the fantasy at the heart of web3—the idea of a decentralized world in which the ordinary and the powerful alike will only be as accountable as they choose to be—had wished to remain anonymous, and that a journalist had not respected those wishes. Such anger around the issue of pseudonymity says a lot about what the next few years could look like.

Tomorrow's culture wars will take place—are already taking place—in the world of web3.


Beware the FOMO Bullies of Technology

Here is my confession: I’m traumatized by a David Letterman clip. It’s from November 1995, and Letterman’s guest is a young, bespectacled Bill Gates. The video starts with a question from the legendary late-night host: “What about this internet thing?” he asks. “What the hell is that, exactly?”

Gates, freshly minted as the world’s richest man, gamely tells the host about the wonders of the web—but Letterman isn’t having it. He pooh-poohs a recent announcement that Major League Baseball will broadcast games over the internet: “Does radio ring a bell?”

Gates smiles and looks down before explaining that the internet will offer access to abundant information about everything. “You can find other people who have the same unusual interests as you do,” he says.

“You mean the troubled-loner chat room on the internet?” asks Letterman, chuckling.

Technologists have been sharing this clip around the internet for almost as long as I’ve been writing about technology. Back in December it went viral again as a cautionary example for all those who remain wary, if not willfully ignorant, of the alleged revolution in blockchain technology—what enthusiasts refer to as “Web3.” The start-up investor Jason Calacanis played the Gates-Letterman exchange on his livestream. “This is triggering all these discussions I used to have where I tried to explain the internet to people when I was 23, 24, 25 years old,” he said, “and that’s what I think is happening now with Web3.” Then Elon Musk, the world’s richest man circa 2022, shared the clip, along with Calacanis’s reaction to it, with his 72 million followers on Twitter.

The recirculation of this clip signals that we’re once again in that peculiar FOMO phase of a new technology push. Some view Web3 with hope and promise. But others see it as a frothy hype cycle, full of venture capitalists and tech folks bullying people into markets and ideas. It’s a moment that’s especially uncomfortable for people like me, whose livelihood depends on clear-eyed understanding of what’s real and what’s techno-utopian salesmanship. I don’t want to be a Letterman—professionally, I shouldn’t be a reflexive Letterman—but I shouldn’t be a Gates, either. I also understand that, in a certain way, even back in 1995, Letterman had a point too.


The Gates-Letterman clip is meant to put this all into perspective. “It’s easy to laugh at Letterman but in fact he was just expressing the consensus view at the time,” wrote Chris Dixon, a partner at the venture-capital firm Andreessen Horowitz and one of the most popular Web3 evangelists. “It takes optimism and vision—and years of hard work by many people—to build out the infrastructure, find the native applications, and develop the technology to its full potential.” When Elon Musk tweeted about the clip, he admitted that Web3 “seems more a marketing buzzword than reality right now,” but he also left his options open: “Given the almost unimaginable nature of the present, what will the future be?”

I don’t normally agree with Musk, but his having-it-both-ways message reflects my own deep ambivalence. Web3 does feel more like investors pumping a stock than it does an organic movement. Still, I worry about developing a mindset that goes beyond reflexive skepticism and into a kind of calcified naysaying. My career was born out of a love for new gadgets and services, and the connections and experiences they foster. Then I saw how platforms like Twitter and Facebook could influence how we saw ourselves and one another—and not always for the better.

Also, Warzel did a good interview with a Crypto true believer that was, at least, curious. Didn't answer my questions or all of my criticisms, but nevertheless, interesting.

Charlie Warzel: Aaron! Thanks for doing this.

Aaron Lammer: The last several times I’ve talked to reporters about crypto, I’ve found myself getting weirdly incredibly defensive. So I’m going to try not to do that at all!

Warzel: Let’s start there. What is it that triggers that defensiveness in you?

Lammer: I feel like you can be really interested in crypto and still be a critic of crypto. But most of crypto’s critics are not really interested in and particularly informed about crypto. Very rarely have I talked to people who’ve really, genuinely engaged with the stuff that interests me in this world. It’s a little bit like somebody saying to you, “I dunno, these websites are all scams,” and I’m like, “Which websites? Which websites have you been on?” Most of what I hear from people is, “I don’t know, man. Crypto is a bunch of bros.” But that’s describing the people that you perceive to be into this stuff and not the thing itself. It’s difficult to defend things on those terms. You can talk about the Grateful Dead and you can talk about Deadheads, and they’re related but they’re not quite the same thing.

Warzel: I think that with crypto, people have a real aversion to a specific type of culture—especially one set by a lot of players in the tech world who’ve already created companies and products and cultures that a lot of people dislike.

Lammer: Separating the technology from the culture of crypto is hard. Because some of this is cultural technology. NFTs are as much culture as technology. But I think what people are missing is that crypto is more like the whole internet than it is like one social network. It encompasses many people who are in opposition to each other. So to be against crypto as a whole is, in a way, a confusing stance. Crypto is a whole ecosystem. Spend enough time there and you’ll encounter people who, for example, are very skeptical of bitcoin. And I don’t think, when I talk to people generally, that they’re aware of how much that culture of crypto has evolved or how complex its cultural politics are.

I think a lot of people see crypto as a kind of “number goes up” thing and don’t realize how many different perspectives there are within it. It’s not all some monolith that has the same meanings and ambitions and ideas.

I have often said that I was either too smart or too dumb to understand crypto. It always struck me as nothing more than a Jamaican Ponzi scheme like "freedom family" or "blessed is blessed" for techbros and incels. Turns out, I was mostly right, but that there is an even more sinister aspect to the whole Web3 dystopian worldview. At least at the highest levels, it's not just a grift. It is a grift that wants to watch the world burn.

This video is very long, but very engaging and absolutely powerfully researched.

Prederick wrote:

Really should've put the "Line Goes Up" video in this thread

Starting out by saying I'm 100% against Crypto in general and NFTs in specific for a lot of reasons. One of the reasons to hate it was one I tended to shrug at: the environmental impact/waste of energy argument. That was until watching the video I'll embed below, about how miners f*cked over Kazakhstan and are moving to Texas. That and watching Ted Cruz talk about how they would help the energy grid. Ted Cruz is great. If he loves it or believes it, it's easy to be confident it's a terrible idea.

the Kazakhstan part is at about 14 minutes

The bit about entire new classes of harassment and abuse is what really got me. Capitalism is still Capitalism and it's still awful.

This is a more tech-y overview of crypto and the permissionless blockchains that the use:


Although the techniques used to implement decentralization are effective in theory, at scale emergent economic effects render them ineffective. Despite this, decentralization is fundamental to the cryptocurrency ideology, making mitigation of its externalities effectively impossible. And attempts to mitigate the externalities of pseudonymous cryptocurrencies are lijkely to be self-defeating. We can conclude that:

1. Permissioned blockchains do not need a cryptocurrency to defend against Sybil attacks, and thus do not have significant externalities.
2. Permissionless blockchains require a cryptocurrency, and thus necessarily impose all the externalities I have described except the carbon footprint.
3. If successful, permissionless blockchains using Proof-of-Work, or any other way to waste a real resource as a Sybil defense, have unacceptable carbon footprints.
4. Whatever Sybil defense they use, economics forces successful permissionless blockchains to centralize; there is no justification for wasting resources in a doomed attempt at decentralization.

Alien Love Gardener wrote:

This is a more tech-y overview of crypto and the permissionless blockchains that the use:

OK. This article is pretty off base. Just to address a few of the most egregious things.

Proof-of-Stake makes this a self-reinforcing problem. Because the rewards for mining new blocks, and the fees for including transactions in blocks, flow to the HODL-ers in proportion to their HODL-ings, whatever Gini coefficient the systems starts out with will always increase. Proof-of-Stake isn't effective at decentralization.

Proof of Stake rewards go to all stakers at a fixed rate (same as interest paid on a savings account), so the Gini coefficient remains constant. In contrast to a Proof of Work system where rewards can only go to those with the capital available to finance a profitable mining operation.

The accomplished Ethereum team have been making a praiseworthy effort to overcome them for more than 7 years and are still more than a year away from being able to migrate off Proof-of-Work.

Every cryptocurrency launched after 2016 worth mentioning uses Proof of Stake. It's proven, reliable tech at this point. Ethereum's problems with migrating are related to the difficulty of transitioning a running system (basically trying to change the tyres on a Formula 1 car during a race) and poor planning than any issue with the underlying concepts.

Vitalik Buterin pointed out that lack of decentralization was a security risk in 2017, and this was amply borne out last year when Justin Sun conspired with three exchanges, staking their customers coins to take over the Steem Proof-of-Stake blockchain. Pushing back against the economic forces centralizing these systems is extremely difficult.

Justin Sun's attempt to take over Steem was, notoriously, a complete failure. The fact that the article's author seems to be unaware of this suggests that they don't really know what they're talking about.

And that's just what I saw with a quick skim read. I don't think I can read the whole thing, it'll give me a headache.

Interest paid on a savings account may be a fixed rate, but it still pays more to people who already have capital.

Follow-up to Line Goes Up, this Salon article interviews Dan Olson. I really enjoyed it. Lots of comparisons of NFTs to MLM scams.

NFTs aren't art — they're just the Cult of Crypto's latest scam

Your video is about NFTs really more than crypto, but the two are really tightly connected. In fact, you openly say in the video that NFTs exist to get you to buy crypto.

The biggest problem that's been plaguing crypto since 2009 has been a lack of things to use it on and a lack of respectability that comes out of that. It's like, "nah, it's not a currency. You don't use it to buy and sell stuff." Crypto has a long history of not being spendable. There's nothing that you can actually use it on.

So NFTs effectively get built as a thing to spend crypto on. The two end up being unextractable from one another. NFTs, they're literally built on top of cryptocurrency. They literally share the same technological foundation. NFTs were basically these goods being wheeled into existence in order to provide something crypto can be spent on.

Honestly, again, it reminds me so much of multi-level marketing schemes, where there's always some "product" that's being propped up. There's the LuLaRoe legging, there's the Amway cleaning products, but that's not really what these companies are selling. That's just vaporware to get people to lure other people into the system.

The product exists to sell the culture and the culture exists to get people to buy into the ecosystem and buy the starter pack and sign up and develop a downstream and recruit, recruit, recruit.

I think people accurately recognize that just by watching people get involved in crypto. You watch an artist who starts selling NFTs, and over the course of months, their artwork itself shifts and it starts becoming more and more about crypto itself. We see those shifts in the people around us and the people who get involved in it, it's like it becomes the singular thing that they talk about. It very much mirrors the same cultural trajectory of somebody getting involved in multi-level marketing.

Different currencies have different GINI starting points and trends (different wealth economy). Some go up, some go down, some are relatively stable.

Mixolyde wrote:

Interest paid on a savings account may be a fixed rate, but it still pays more to people who already have capital.

But everyone's wealth stays proportionately the same because it increases at the same rate. After receiving interest a billionaire is still 'only' exactly 1000x richer than a millionaire.

Obviously this still advantages people who are wealthy enough to have savings, but this is a problem with capitalism in general, not with proof of stake in particular.

Right. That means that most (but not all) cryptocurrencies do nothing to address economic inequality.

Not through staking/mining rewards at least, but I think giving marginalised groups access to the financial system is a way to reduce inequality.

jontra wrote:

But everyone's wealth stays proportionately the same because it increases at the same rate. After receiving interest a billionaire is still 'only' exactly 1000x richer than a millionaire.

But in this example, the actual wealth-gap between those two has widened dramatically.

Never mind the random person who didn't have millions/billions to invest in the first place

jontra wrote:

Not through staking/mining rewards at least, but I think giving marginalised groups access to the financial system is a way to reduce inequality.

Based on the videos and articles on this page it's difficult to conclude that crypto is the answer to wealth inequality.

JLS wrote:
jontra wrote:

Not through staking/mining rewards at least, but I think giving marginalised groups access to the financial system is a way to reduce inequality.

Based on the videos and articles on this page it's difficult to conclude that crypto is the answer to wealth inequality.

To be fair, there is exactly one article on this page that speaks with someone who is not extremely crypto-skeptic, at best.

Yeah go talk to Ted Cruz about the potential of crypto

Jonman wrote:

But in this example, the actual wealth-gap between those two has widened dramatically.

Not really. If everyone's bank account is getting credited with 10% interest every year, then the currency is getting devalued by 10% every year as well. So the billionaire's $1,100,000,000 is in real terms worth the same as their $1,000,000,000 last year (and the millionaire's $1,100,000 is worth the same as their $1,000,000 last year). In real terms their relative wealth has remained the same.

It's no different with a crypto-asset. Ethereum's issue rate is about 4% a year so in theory everyone's holdings are being devalued by 4% a year unless they are a miner and are collecting the mining reward. Proof of stake makes this a little fairer by making those rewards more accessible to everyone, instead of only people who own a crypto mining operation.

JLS wrote:

Based on the videos and articles on this page it's difficult to conclude that crypto is the answer to wealth inequality.

I find that most mainstream critics of crypto don't have a good grip on how things work technically, and the criticisms are really more motivated by the fact that a lot of grifters and libertarian kooks have gotten super rich off this stuff.

I mean, I dislike those people too, but they're certainly not representative of what's really happening with the tech and the kinds of people who are doing the real building. Unfortunately, they are who the mainstream focuses on, mostly I think because getting widespread attention is an important part of a grifter's skill set.

For example, everyone who I consider a credible blockchain expert finds the monkey avatar NFT bubble kind of amusing and stupid, but I keep seeing articles like those above asserting that this is all part of some monolithic 'crypto cult'. In reality I think anyone who paid more than $10 for one of those things is brand new to crypto, and possibly new to the concept of money in general.