The sleight of hand of crypto

    Cory Doctorow is doing the rounds for his new book at the moment. But because he’s Cory, he’s not just phoning it in, or parroting the same lines.

    Take this interview in Jacobin, for example. Yes, he’s talking about why he decided to write a story about crypto, but he’s so well informed about this stuff on a technical level that it’s a joy to read the way he explains things.

    There’s this kind of performative complexity in a lot of the wickedness in our world — things are made complex so they’ll be hard to understand. The pretense is they’re hard to understand because they’re intrinsically complex. And there’s a term in the finance sector for this, which is “MEGO:” My Eyes Glaze Over. It’s a trick.


    A lot of the crypto stuff starts with what a sleight-of-hand artist would do. “Alright, we know that cryptography works and can keep secrets and we know that money is just an agreement among people to treat something as valuable. What if we could use that secrecy when processing payments and in so doing prevent governments from interrupting payments?”

    After this setup, the con artist can get the mark to pick his or her poison: “It will stop big government from interfering with the free market” or “It will stop US hegemony from interdicting individuals who are hostile to American interests in other countries and allow them to make transactions” or “It will let you send money to dissident whistleblowers who are being blocked by Visa and American Express.” These are all applications that, depending on the mark’s political views, will affirm the rightness of the endeavor. The mark will think, that is a totally legitimate application.

    It starts with a sleight of hand because all the premises that the mark is agreeing with are actually only sort of right. It’s a first approximation of right and there are a lot of devils in the details. And understanding those details requires a pretty sophisticated technical understanding.

    Source: Cory Doctorow Explains Why Big Tech Is Making the Internet Terrible | Jacobin

    Jacobin reviews the creator of Ethereum's new book

    This is written in typical bombastic Jacobin style, and I’ve yet to read Vitalik Buterin’s book, but I have to say I can’t disagree with the conclusion: there is no leftist case for crypto.

    Perhaps there was in the beginning? But now it’s easy to see where it’s headed. And it’s not in any way a socialist enterprise.

    Their intentions aside, let’s try asking with seriousness: Is there a leftist case for crypto? Helpfully, Ethereum cofounder Buterin has published a book, 'Proof of Stake: The Making of Ethereum and the Philosophy of Blockchains', in which he outlines how cryptocurrencies represent a “new method of social incentivization” that will offer a new democratic “way to pool together our money and support public projects and activities that help create the society we want to see.”
    The book is helpful, but not exactly in the way Buterin thinks. It reveals how Buterin’s case is wholly, shockingly bereft of a political vision to achieve such a society, let alone a vision rooted in the most basic political and moral principles of the Left. If 'Proof of Stake' is any indication of the existing rhetoric and principles from which one could construct a leftist case for crypto, then no leftist case for crypto can be made.


    What emerges in 'Proof of Stake'... is not a clearer leftist case for crypto but a clearer sense of Buterin’s essayistic style. The instant a reader wants to hear more about this oft-mentioned equitable world of public goods that crypto can bring us, Buterin scampers back into technical discussions.


    As a writer, Buterin is the perfect embodiment of crypto as we’ve come to know it: he strays from his technical world long enough to look past the convoluted discourse and glimpse the need for a political framework, but then, whether by fright or disinterest, he returns to his comfort zone. He writes with admirable passion and unusual clarity about these technical issues that his technology is confronting, but the result doesn’t add up to anything resembling a leftist case for crypto — most likely because there isn’t one.
    Source: There Is No Leftist Case for Crypto | Jacobin

    The internet is broken because the internet is a business

    I ended up cancelling my Verso books subscription because I was overwhelmed with the number of amazing books coming out every month. This looks like one to keep an eye out for.

    Several decades into our experiment with the internet, we appear to have reached a crossroads. The connection that it enables and the various forms of interaction that grow out of it have undoubtedly brought benefits. People can more easily communicate with the people they love, access knowledge to keep themselves informed or entertained, and find myriad new opportunities that otherwise might have been out of reach.

    But if you ask people today, for all those positive attributes, they’re also likely to tell you that the internet has several big problems. The new Brandeisian movement calling to “break up Big Tech” will say that the problem is monopolization and the power that major tech companies have accrued as a result. Other activists may frame the problem as the ability of companies or the state to use the new tools offered by this digital infrastructure to intrude on our privacy or restrict our ability to freely express ourselves. Depending on how the problem is defined, a series of reforms are presented that claim to rein in those undesirable actions and get companies to embrace a more ethical digital capitalism.

    There’s certainly some truth to the claims of these activists, and aspects of their proposed reforms could make an important difference to our online experiences. But in his new book ‘Internet for the People: The Fight for Our Digital Future’, Ben Tarnoff argues that those criticisms fail to identify the true problem with the internet. Monopolization, surveillance, and any number of other issues are the product of a much deeper flaw in the system.

    “The root is simple,” writes Tarnoff: “The internet is broken because the internet is a business.”

    Source: The Privatized Internet Has Failed Us | Jacobin

    Tether and crypto price manipulation

    You’d expect Jacobin to be against crypto, but this is the first level-headed explanation of the ‘Tether controversy’ I’ve seen.

    There is no conceivable universe in which cryptocurrency exchanges should need an exponentially expanding supply of stablecoins to facilitate daily trading. The explosion in stablecoins and the suspicious timing of market buys outlined in the 2017 paper suggest — as a 2019 class-action lawsuit alleges — that iFinex, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher.

    Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment. By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors.

    This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. New investors are being lured in under the pretense that speculation is driving prices when market manipulation is doing the heavy lifting.

    This can’t go on forever. Unbacked stablecoins can and are being used to inflate the “spot price” — the latest trading price — of cryptocurrencies to levels totally disconnected from reality. But the electricity costs of running and securing blockchains is very real. If cryptocurrency markets cannot keep luring in enough new money to cover the growing costs of mining, the scheme will become unworkable and financially insolvent.

    No one knows exactly how this would shake out, but we know that investors will never be able to realize the gains they have made on paper. The cryptocurrency market’s oft-touted $2 trillion market cap, calculated by multiplying existing coins by the latest spot price, is a meaningless figure. Nowhere near that much has actually been invested into cryptocurrencies, and nowhere near that much will ever come out of them.

    Source: Cryptocurrency Is a Giant Ponzi Scheme | Jacobin