Three Thoughts On Crypto and NFTs

This is something that should be established straight away. It might seem strange to say after having randomly gained quite a bit of money (for 14 year old) on perhaps the largest memecoin of all time (unless you consider Bitcoin a memecoin). But it really is clear to those who are either familiar with crypto and to those outsiders who know very little. The only group of people arguing against this fact are either scammers themselves or their victims who have been tricked into hoping they can “make it”. That most (in absolute number) cryptocurrencies are scams is problematic for the success of major currencies, but it is also a necessary consequence of the ease of creating new currencies, but it is at the same time not a characteristic unique to memecoins.

Creating a temporarily elevated value for something only to rugpull those who fell for it can be done with any commodity – ranging from meme stocks (like those of AMC and Gamestop), to legitimate stocks, and of course even Tulips in the 17th century Dutch republic – But memecoins are very potent in this regard. Their largely unregulated (as opposed to stocks) and entirely digital nature (as opposed to physical goods) means that they can spread incredibly quickly to otherwise isolated buyers, and they can be created and abandoned incredibly quickly.

Cryptocurrencies are an incredibly dull topic; a combination of cryptographic has functions and distributed databases that allow for decentralised and trustless transactions. Does this sound like a topic to bring up at a party? Just like how I do not talk about my love of https or of Let’s Encrypt when going on a date, and likewise I do not talk about cryptocurrencies.

The goal of cryptocurrencies in my view is to act as a form of payment that is native to the digital, interconnected world we all live in. Digital Dollars/Euros/Crowns are of course useful, but they are fundamentally ill-fitting and primarily very centralised. When sending to someone (a store, a friend, should it even matter?) you go through a multitude of service companies like stripe, visa, your respective banks, Swift et cetera all to simply send money from A to B. Bitcoin (and even Monero) is comparatively simple and transparent. That is generally a good thing since it is a necessity for allowing trustless transactions. But it is not revolutionary. Crypto will not “change the world”, it will be a back-end infrastructure change that a few companies will do better than preëxisting ones and thus perhaps gain market share.

NFTs (Non-fungible tokens) are also dreadfully boring in a good way. Today proving ownership of something requires a physical piece of paper in more occasions than you’d think. High-end artwork, real estate, and land are all incredibly valuable, and if that piece of paper is missing or destroyed¹ that is a very large problem for the owners. How does one prove ownership then? By getting everyone else to agree that you are the legitimate owner of that thing. Having everyone store a copy of that very important paper collectively is practically what an NFT is. It is not some form of digital artwork or transformational thing. It is therefore ridiculous to say that one can “steal” and NFT by saving an image; the image is not the token! Instead the NFT is merely a short contract (maybe)² pointing to an URL and saying that whoever owns the token is the owner of the contract.

I generally recoil at the mention of “community” more generally because my personality is fiercely individualist, but this ties into the above point. Creating a community around digital currencies or authentication systems is absurd. As we have established it is generally not interesting to talk about them, except as to the details of their specific implementation. Reading about the crypto community evokes similar feelings as “communities” that build up around certain free software projects (that have their own Discord server, with in-project social hierarchies et cetera). This is more a symptom of our increasingly fractured, isolated, and lonely society where desperate people look for friendship and warmth when there really should not exist any such community. The curl project is perhaps one of the most important libraries making up the modern internet – on its website it is stated that “curl is used daily by virtually every Internet-using human on the globe” – and it is developed by thousands of contributors (although the founder, Daniel Stenberg, has by far the most commits). There exists no curl community, because even though the project is very interesting and impressive it is merely meant to fulfil a task of transferring data between computers in various ways.

Similarity you are not a member of the crypto community if you are not involved in the implementation and development of crypto itself or crypto-adjacent systems – as a free-software developer, proprietary developer, employee at a bank or anything similar. Investing large amounts of money may give you clout amongst those who perform actual work, but it will not itself make you interesting — except from the perspective of being a source of capital for interesting work. Being a small-time retail investor does not even grant you those advantages; you are neither pushing development forward nor funding that development. Being some kind of “crypto”-philosopher or hype man is a fruitless effort since, as mentioned earlier, crypto is innately boring.

These three things are largely the source of all problems regarding crypto and NFT discourse. What makes it so exhausting to read or listen to is that there are two primary camps; “haters” who know so little about crypto that they are not even worth listening to, and those who are blinded by greed, loneliness, or both and see (or at least speak of) crypto as either some sort of “people’s revolution” or a guaranteed way to make 100x returns on your “investment”. Both of these groups are sorely mistaken, and the reasons for this are the ones written above.

How to solve this? I see it as primarily a consequence of general economic despair and malaise, of people hoping for a better life and for connection through some shared experience. Solving this is not the task that distributed transaction system should try to do, it is a wider societal problem whose consequences can be seen in gold hype, political polarisation, used car prices, gambling advertising, and much more. As such it is a problem for all of society to try and solve. ❦