Line Go Up by Dan Olson (21 Jan 2022)

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

Excerpts

5. The Unbearable Cringe Of Crypto

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.

71:50 Self-organizing high control group with toxic positivity

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.

Toxic community and a sin, deception and chosen few narrative

76:16

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


Rules must always be evaluated  for their power to oppress

96:25

[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‚Äôm a Decentralized Finance organization¬† giving out mortgages in cryptocurrency and I scour¬†your transaction history for donations to the¬† NAACP as part of my ‚Äúrisk assessment protocol‚ÄĚ.

Imagine that Nestle is able to track  unionization efforts in real time because the union is issuing governance  tokens on a publicly auditable blockchain.

Belief that world will be fairer if rules are enshrined in code enforced by computers is laughable

98:07

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.

106:46

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 ‚Äúblockchain‚ÄĚ and ‚Äúweb3‚ÄĚ 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.

Impenetrable, brittle and disproportionately empowers the dishonest

110:15

It’s a system that is at once  impenetrable and brittle, and that arrangement  disproportionately empowers the dishonest.

110:36

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.

115:48

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.

116:15 DAOs

XXX TODO

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.

Original TheDAO hack and its implications about principles and power

See also https://rufuspollock.com/2016/07/02/reflections-on-the-blockchain/

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‚Äôs positioned¬†as ‚Äúlightweight‚ÄĚ and ‚Äúreducing bureaucratic¬† overhead‚ÄĚ, 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.

121:15 All the talk about¬† ‚Äúdecentralization‚ÄĚ is a myth.

Because all the talk about¬† ‚Äúdecentralization‚ÄĚ 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 ‚Äúa bold¬† experiment in democracy‚ÄĚ because¬†a baker‚Äôs 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

123:14

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.

123:54

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.

124:57

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.

2:06:50

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).

DAOs aren't revolutionary in structure or function

127:51

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

More in this vein: DAOs are just organizations and the tech doesn't deliver anything extra

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 ‚Äúalign incentives‚ÄĚ,¬†¬† and despite the fact that Li Jin is directly¬† involved with Yield as the ‚Äúphilosopher in¬†¬† residence‚ÄĚ 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)

132:37

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 driven by the 5% against the 1% and exists in a cultural

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

134:40

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 (similar to Trump)

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 it isn't this)

2:16:43

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.

Critique of the Critique

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.

Other critiques