2h documentary giving a detailed, critical exposition of blockchain, DAOs etc.
- 00:00:00 Preface
- 00:01:12 0. In 2008 The Economy Collapsed
- 00:07:09 1. Bitcoin
- 00:18:18 2. Ethereum
- 00:24:34 3. The Machine
- 00:39:07 4. NFTs Exist To Get You To Buy Crypto
- 00:57:54 5. The Unbearable Cringe Of Crypto
- 01:11:46 6. A Self-Organizing High Control Group
- 01:16:57 7. Crypto Reality
- 01:25:36 8. There Is No Privacy On The Chain
- 01:32:52 9. If This "Looks Like Scam" Then Every NFT Room I'm In Looks Like Scam LOL
- 01:38:29 10. Play To Earn Exists To Get You To Buy Crypto
- 01:46:39 11. We're All Gonna Make It And By "We" I Mean "Us" Not You
- 01:56:08 12. DAOs Exist To Get You To Buy Crypto
- 02:13:21 13. I Know It's Rigged, But It's The Only Game In Town
59:30 what he learnt from discord channels about the sociocultural background of participants in this space
... it’s a pretty representative sample, and I learned a lot. For example, the basic psychological profile of the average buyer is someone who is tenuously middle class, socially isolated, and highly responsive to memes. They are someone who has very little experience with real businesses and production processes, thus are unlikely to be turned off by unrealistic claims about future returns. They are insecure about their lack of knowledge, and this makes them very susceptible to flattery, in particular being reassured that the only reason for negativity is because critics just don’t understand.
Being tenuously middle class gives them enough disposable income to engage with a pretty expensive system, but also a very potent anxiety about their financial future. It goes without saying that they’re fixated on money, and they principally understand the technology as a means of making money.
Criticism of the system is typically met with confusion. Don’t you want to make money? I also learned a lot about fraud, and how to do it both on purpose and by accident.
Ed: belief equilibria with massive financial incentives are really dangerous ... (resemblance to wolf of wall street)
Tied up in all this, there's an extremely pervasive resistance to any form of skepticism that ultimately manifests as a sort of toxic positivity.
This whole section is worth quoting in full:
This is all part of a complex feedback loop. The projects, broadly speaking, lack any kind of substantial product, existing almost entirely as promises backed by nothing more than a screenshot of a roadmap and some sample PFPs.
And, again, I think it's really important to keep in mind that that goes for successful projects just as much as for rug-pulls.
There really isn't any meaningful difference between a Party Ape Billionaire Club and a Betting Kongs. Betting Kongs were never going to make a casino, even if they hadn't tanked, and despite the fact that they were running billboards in Time Square PABC is never making an MMORPG.
Both claims are equally ridiculous, but one of the two made a huge pile of money. The primary product is ultimately hype, which is both insubstantial and fickle.
Negativity, both internal and external, can have a meaningful impact on the willingness of people to buy into a project, and if buyers are tepid then you won't get a runaway sale, and if you don't get a runaway sale then that's going to turn off buyers even more, which means the secondary market for tokens will likely fail to materialize.
This is what makes enthusiasts so deeply unreliable. They have meaningful financial stake in an intangible, volatile thing that exists entirely as a collective ideoform, a story about a potential future outcome, whose value is based entirely on public perception.
You can’t trust what they have to say because they’re currently holding a hot potato, and as much as they insist that they just really, really enjoy the feeling of a burning hot potato in their hands, do they? Or are they just hoping that you’ll catch it?
This creates an environment of toxic positivity where doubt is aggressively policed by both project leaders, who have an obvious financial interest in hype since their big payday is the minting rush, and community members themselves, who have a speculative financial interest in hype.
While all of that is logical in the pure sense that there's an effect that can be explained by an incentive, the output is effectively a self-organizing high-control group.
Doubters are ostracized so aggressively that it chills all conversation about a project's actual viability. All concerns are just FUD: fear, uncertainty, and doubt.
Questions that would be utterly banal in any other investment forum, what has the team done, what assets do they have, why should anyone believe they can deliver on their promises, are treated as hostile.
And the frank reality is because there aren't answers.
This incubates a community trained to ignore warning signs and dismiss criticism, a community with internal language and customs that are explicitly incompatible with outside communications.
Skepticism is FUD from non-believers who are trying to undermine the value of your assets and manipulate a crash or trick you into being a paper hands.
It all maps onto narratives of sin and deception, a chosen-few who are privileged with advance knowledge about the promised land, which they can achieve by holding strong to the rituals and expelling all doubt.
The end product is a self-organizing high-control group
[Ed: The utter naive delusion of crypto decentralization enthusiasts]
Rules must always be evaluated for their power to oppress.
This is a blind spot to crypto enthusiasts because they just assume that they’re the early adopters, they’re the ones who will have power, they’re the ones who will get to set the rules, and they’re the ones who will do the oppressing.
Consider that any token that can be used to grant access can also be used to revoke it. Like, let’s say that I create a hangout spot in one of the Metaverse contender platforms,
Decentraland, and we call it the Ahegao Alpaca Oasis. The Oasis has a back room that only allows registered players to enter, meaning you need to have your metamask linked to Decentraland in order to get in.
This type of gate is typically used to create VIP areas, places where only people who hold a specific token or class of token can enter. Only people with official Ahegao Alpacas can enter. But, as is well known, within the lore of the Metaverse the Ahegao Alpacas have long been at war with the Bored Ape Yacht Club, so rather than checking for an Alpaca token, I check for Ape tokens, and then forbid entrance.
Or maybe I just make my game artificially more difficult for them, or inflate my prices.
Now imagine that instead of running a hangout spot in a video game, that I’m a Decentralized Finance organization giving out mortgages in cryptocurrency and I scour your transaction history for donations to the NAACP as part of my “risk assessment protocol”.
Imagine that Nestle is able to track unionization efforts in real time because the union is issuing governance tokens on a publicly auditable blockchain.
The belief that the world will be fairer if the rules are enshrined in code, enforced by computers, and made extremely difficult to change or circumvent is laughable.
It’s not merely naive, but categorically ahistoric. This is where a lot of my resistance comes from.
You can create specialized crypto chains that have a negligible environmental impact, but the force of that model is culturally destructive. The current system sucks, but this is just a worse version of the current system. It doesn’t even stop there. It’s tokens all the way down.
I think the thing that normies don't get about NFT bros is their dedication, the staggering volume of capital they already control, and how deeply rooted they are in the culture of the people who operate the platforms we all use every day, and that alone is a good reason for people to pay attention.
They have a lot of money and a lot of clout that they can use to try and make Fetch happen. This is something of the splitting point. Basically the future shakes out in one of two broad ways.
One is that some new technological buzzword comes along and “blockchain” and “web3” lose their sway over investors, the stream of new buyers dries up, and the early investors cash out as best they can, popping the whole bubble.
The other is that they’re successful, and cryptocurrency is able to crowbar its way into enough corners of our lives that it becomes unavoidable, we’re all forced in some way to maintain a crypto wallet to manage whatever coins and tokens become necessary for participation in society, providing early investors with a captive audience and steady flow of capital.
It’s a system that is at once impenetrable and brittle, and that arrangement disproportionately empowers the dishonest.
One of the ironies of all this is that any legitimate artistic or anti-capitalist uses of the underlying technology are contingent on the tech remaining niche.
112:52 An environment that demolishes consumer protections and transfers tremendous amounts of explicit power to the wealthy.
Union busters and gig economy evangelists love crypto, they love DeFi, they love smart contracts, and they love NFTs.
And why wouldn’t they? It’s an environment that demolishes consumer protections and transfers tremendous amounts of explicit power to the wealthy.
This is crucial! This is virtual worlds all over again (as per my 2016 piece) - people think they are reinventing democratic governance and guess what they run straight into power and inequalities all over again.
The meat of Calvin’s incident [nft influencer getting scammed and then getting opensea to ban sale of that art on their platform] is the way in which the platforms that interact with the chain are being deputized by users to be the de facto authority not on what the chain says, but what the chain means. It is just a recreation of existing power structures within the new environment.
That open-endedness is actually important because while the claim is that these machines will further democratize the internet, the technical complexity that they add, the new specialized programming expertise that they require, concentrates a lot of power in the hands of the people who can build the templates that in turn enable non-programmers to actually use it.
It’s just laying the seeds for the future recreation of the status quo. The Facebook/Google/Amazon dominated internet arose because the technical cost of building a modern website rose far beyond what the vast majority of amateurs could manage, so everyone moved to templates, and then to services, and finally to platforms.
This doesn’t even reset the clock on that, the technical cost of creating a DAO is already far beyond any casual amateur, in part because all of this is being built by programmers, and in part because of the stakes. The only thing this stuff is truly good for is managing on-chain assets. A DAO program can see the state of the chain and interact with it, so the DAO humans can vote on what should happen to those assets and then the DAO program can automatically act on the results.
But that raises the stakes. Because a DAO can see and interact directly with on-chain assets there’s the risk that via bad programming or unforeseen exploits a malicious actor can use a DAO to access all kinds of stuff.
The risk is directly proportional to the value of the assets kept on-chain, and remember, again, that evangelists want to put everything on-chain. The hilarious thing is that this has already played out once before.
The hilarious thing is that this has already played out once before. In fact it played out with the first DAO ever built, called The DAO.
This whole story unfolds over the course of three months in 2016, from April to June. The DAO was an Ethereum-based venture capital fund that aimed to use code to create an investment firm without a conventional management structure or board of directors, a scheme that’s positioned as “lightweight” and “reducing bureaucratic overhead”, but really it just translated to an attempt at minimizing human liability for the actions and behaviours of the fund.
This unparalleled expression of greed made the major speculative players in Ethereum so horny that during the April and May presale they funneled 14% of the entire volume of ether into The DAO’s central wallet.
Now, because The DAO’s underlying code was open source, experts and malicious actors alike were able to pour over it for vulnerabilities, and, indeed, vulnerabilities were found. However, because at the end of the day fleshy humans are the ones actually pushing buttons and making decisions, the actual leadership of the nominally-leaderless DAO, horny for money and prestige, decided to launch in late May anyway.
Three weeks later The DAO’s programming was exploited and the attacker was able to transfer 1/3rd of The DAO’s funds into a holding wallet, about 5% of the entire Ethereum economy, valued at the time around 16 to 17 million dollars.
Now, because this threatened the bottom line of capital holders, the Ethereum project as a whole, the entire thing, was almost immediately forked in order to undo the hack and protect the interests of the wealthy.
Ethereum Classic, the arm of the fork that didn’t undo the attack, persists to this day, though it’s notably less popular despite being demonstrably more principled.
Because all the talk about “decentralization” is a myth.
It’s just words.
At the end of the day the guys in charge, the guys who built the system to serve their interests, are still in charge and keep a killswitch in their back pocket.
Crypto is barely a decade old and organizations deemed too big to fail already exist.
**The whole fiasco laid out the truth from the word go: calling a DAO a revolutionary structure is smoke and mirrors, it’s just voting shares.
You might as well call Apple “a bold experiment in democracy” because a baker’s dozen individuals make the decisions instead of just one.
An eloquent layman's explanation of incomplete contracts -- and why it means DAOs are not revolutionary at all, at best there like payroll software
Now, all of these hypotheticals [e.g. DAO member dying] are technically addressable, you can build contingency systems that can account for them, but then you need to consider contingencies for those contingencies, because what if someone uses systems intended for dealing with deceased or absentee members to expel people they just don’t like?
And, again, you can only use code to enforce interactions that the programmers make enforceable via the code.
ConstitutionDAO, a hastily set up scheme to bid on one of the few remaining original copies of the US constitution, already ran aground most of these problems as the project failed to win the auction and is now trying to issue refunds, a thing that the slapdash machine was never intended to do.
The reality is that most organizations with any meaningful social complexity, even tiny organizations like video game guilds, are too complex to properly express in code.
There’s too many contingencies and contingencies for those contingencies and contingencies for those contingencies to account for, so rather than trying to turn social interactions into code the DAO is marginalized into only handling code-appropriate tasks, like bookkeeping, digital signature verification, and on-chain asset management.
But that’s not a revolutionary new way to organize people, that’s just a productivity tool. The DAO can have a process for voting on actions, but the moment the outcomes of those actions move off-chain, i.e. into the real world, the DAO program is powerless. The program can’t make humans execute the decisions of the group, that’s still an analog problem.
The whole thing very quickly runs into an incentive wall where it’s just faster and easier to solve problems verbally, via abstract trust relationships and promises, to the same end results.
This is why it’s so common for DAOs to not actually have any of the inner machine that would actually make them into what they claim to be: it’s easier to just not. Taken as a whole DAOs aren’t some revolutionary new model, they’re a tool built onto the side of cryptocurrency that only has meaningful advantages when interacting with cryptocurrency as a tool for speculative trading and managing financial instruments.
The rest is just a gimmick, a slow, inflexible tool for executing straw polls.
Incredible section where Inuyasha DAO "member" (founder?) straight up claims they have no liability for e.g. trademark/copyright infringement because it is:
Yeah so trademarks. Um, it's possible that InuYasha trademark could become scrutinized. However, we're a decentralized autonomous organization officially, and the token is launched on the Ethereum blockchain so there is really no going back. I'm just a community member. I'm not the owner, there's no single entity that has ownership of this.
But how is this different from any company (or a cooperative). Imagine they were saying: "hey we're not liable because there is no single entity that has ownership - there's just all these shareholders (or members)". We'd be rolling on the floor laughing!
This raises an important point that a large amount of explaining the bubble is regulatory arbitrage in an era with very imperfect global governance esp of the internet (take Binance which seems to have been banned in numerous jurisdictions and yet just keeps going).
Unless your goal is a grift, there’s nothing truly revolutionary about their structure or functionality.
Aside: 2:08:28 Nice example of LiJin spinning hypotheticals
The DAO itself is just a mechanism of an organization, and more often than not its involvement is little more than tech fetishism. So most actual DAOs don’t resemble anything like a flat hierarchy.
In fact the ability to buy and sell voting power, and the hierarchy that results, is seen as a strict advantage in that it allows emotionally uninvested members to make money and gives them a thing that they can reward people with that will “align incentives”, and despite the fact that Li Jin is directly involved with Yield as the “philosopher in residence” Yield is neither structured like a labour union nor does it have ambitions to be one.
Pro web3 thought leaders get social traction by promising technofetishtic community is solving big societal problems -- but they are liars. This is just shareholding and corporatization (in extremis)
The point is that thought leaders like Li Jin, who get a lot of social traction by promising that their technofetishistic community are solving big societal problems, are liars.
They love the pageantry of democracy because it allows them to pretend to be democratic, because they can paint their detractors as being undemocratic.
It’s all hollow handwaving and technobabble to distract from the fact that it’s just shareholding. It’s the corporatization of everything, the conversion of the entire world into claves governed by power granted via token possession and enforced by machines that allow humans to wash their hands of the outcomes.
02:13:21 13. I Know It's Rigged, But It's The Only Game In Town
This section is a brilliant cultural analysis of what is happening. How the crypto/web3 bubble is intimately connected to our growing inequality, our growing insecurity. How in some bizarre way it can seem like this is your chance both simultaneously to make it (in the rigged system) and stick it to the man - to the wallstreeters and billionaires. It reminds of Mr Frisbee and Mr Trump in the Open Revolution
The fact that tokens representing ape PFPs are useless, yet somehow still expensive, isn't an overlooked glitch in the system, it's half the point.
It's a digital extension of inconvenient fashion. It's a flex and a form of mythmaking.
And that's how it draws in the bottom: people who feel their opportunities shrinking, who see the system closing around them, who have become isolated by social media and a global pandemic, who feel the future getting smaller, people pressured by the casualization of work as jobs are dissolved into the gig economy, and want to believe that escape is just that easy.
All you gotta do is bet on the right Discord and you might be air-dropped the next new hotness. It could be you plucked out of the crowd on Rarible and bestowed a six figure price by an elusive Emerati music producer.
Get a BAYC in your wallet, hodl like a good diamond hands, and enjoy that yield. ... This is your chance to stick it to Wall Street and Venture Capitalists, as long as you pay no attention to the VCs behind the curtain.
The line can only go up.
It’s a movement driven in no small part by rage, by people who looked at 2008, who looked at the system as it exists, but concluded that the problems with capitalism were that it didn’t provide enough opportunities to be the boot. And that’s the pitch. Buy in now, buy in early, and you could be the high tech future boot.
Our systems are breaking or broken, straining under neglect and sabotage, and our leaders seem at best complacent, willing to coast out the collapse.
We need something better.
But a system that turns everyone into petty digital landlords, that distills all interaction into transaction, that determines the value of something by how sellable it is and whether or not it can be gambled on as a fractional tokens sold via micro-auction, that’s not it.
A different system does not inherently mean a better system, we replace bad systems with worse ones all the time.
We replaced a bad system of work and bosses with a terrible system of apps, gigs, and on-demand labour.
So it’s not just that I oppose NFTs because the foremost of them are aesthetically vacuous representations of the dead inner lives of the tech and finance bros behind them, it’s that they represent the vanguard of a worse system.
The whole thing, from OpenSea fantasies for starving artists to the buy-in for Play to Earn games, it's the same hollow, exploitative pitch as MLMs. It's Amway, but everywhere you look people are wearing ugly-ass ape cartoons.
His explanation of why platform dominance e.g. of Amazon, Google, Facebook etc is a bit off ... (tendency to monopoly is built into platform systems which information and esp networked systems naturally have in abundance). See https://openrevolution.net/platformnomics
118:28 The Facebook/Google/Amazon dominated internet arose because the technical cost of building a modern website rose far beyond what the vast majority of amateurs could manage, so everyone moved to templates, and then to services, and finally to platforms.
- Jonathan Mann thread on twitter: https://twitter.com/songadaymann/status/1486118084322762752. Basic thesis: I largely agree and maybe there is some good stuff in there so don't throw the whole thing out.