Endless Thread - Tales from the Crypto | Part I: The Hype

Episode Date: September 16, 2022

In this first installment of our cryptocurrency mini-series, co-hosts Ben Brock Johnson and Amory Sivertson dive into a viral tweet about NFTs aiding Ukrainians with the war effort against Russia, as well as plans for a crypto island paradise that was never meant to be. ****** Credits: This episode was written and produced by Ben Brock Johnson and Amory Sivertson. Mixing and sound design by Paul Vaitkus. Ben Brock Johnson and Amory Sivertson are the co-hosts.

Support for endless thread comes from Mathworks, creator of MATLAB and Simuling Software, to design and develop engineered systems, accelerating the pace of discovery in engineering and science. Learn more at Mathworks.com. Support for WBUR comes from Is Business Broken, a podcast from the Mayrotra Institute at Boston University that explores questions like, why is innovation in healthcare so hard? Is ESG just greenwashing? of course, is business broken? Listen, wherever you get your podcasts. WBUR Podcasts, Boston. Where were you on the morning of February 27th, 2022? This is a great deposition now. Ben and I are grilling a guy named Jathan Sadowski. I have reason to believe that you were on Twitter. I was making a tweet that soon made a lot of people really mad at me, is what I was doing. Ah, yes, the thrill of kick-starting the social media outrage machine.

Like the Mad Hatter's first cup of tea in the morning, Loki god of mischief swinging his legs out of bed. And on what topic was Jathan about to tweet and live in infamy for? Not his opinion on the new Amazon Lord of the Rings TV series. Or making guacamole with peas? Don't do that, guys. Not the dress. No, Jathan was about to tweet about the most popular topic in Elon Musk's tweet replies.

You guessed it. Crypto. Instead of selling war bonds, Ukraine has a golden opportunity to mint NFTs of unique and important moments in the conflict. Selling these NFTs will fund defense while generating community. World War III will be Web3 native. The winner will be web three native. The winner will embrace the power of decentralized networks. You can probably divide the people who read and heard Jathan's tweet into two categories.

People who understand terms like NFT and Web3 native and decentralized networks and people like Gamery. You know, that's fair. But not anymore. I'm an expert. No, I'm not an expert. I'm crawling my way towards competency now. Yeah, me too. Sort of.

experts and non-experts on the various vagaries of cryptocurrency seemed to equally love Jathan's comment about using crypto to support Ukraine, though. Because his tweet reached the stratosphere. And at some point this tweet escaped my own kind of, you know, my own part of Twitter where people know who I am. And it got picked up by some really big accounts, in particular some really big YouTubers with like hundreds of thousands of followers.

And this is where the problem started. Because Jathan was kidding. Totally kidding. He didn't and doesn't actually think the cryptocurrency or the many technologies that the concept of digital currency has birthed should really be involved in wars. In fact? So I want to do a little word association.

When I say cryptocurrency, you say... Scam. I'm NFT. Siebertson. Oh, do I really want to say that? Yeah. Yeah. What does that make you? I'm Bitcoin Johnson. And you're listening to Endless Thread. We're coming to you from WBUR, Boston's NPR station. And for the next few weeks, we're bringing you a few key stories on that big, hairy, volatile topic of crypto.

Will we tell you how to invest in crypto? Absolutely not. Is this a definitive guide to crypto? No, no, no, no, no, no. But it is three different windows into just how weird and wild things are getting in the cryptobers. What will we call our mini-series? The Bitcoin Blues? The Dow-Tay-Chi-Ching?

Block chain party. How about tales from the crypto? Today's episode, Crypto Crazy. Just how hard it is right now to separate the concept from the hype. So cryptocurrency is a massive topic. It's also a highly technical, complex, mathematical, mind-bendingly hard-to-explain technology. Which is actually part of why Jathan was one of the first people we reached out to. I'm Jathan Siddowsky. I'm a senior research fellow in the Emerging Technologies Research Lab at Monash University.

I'm currently living in Melbourne, Australia, but I am from Mississippi in the United States. Senior Research Fellow Emerging Technologies Lab, what does that mean? I'm very interested in trying to understand new technologies, you know, not just in the sense that they emerge from nowhere, but really paying attention to those questions of why. Why are new technologies being created? Who's behind that creation, right? And then, you know, try to then understand what are there larger implications for a society and how we live our lives.

See, great guy to talk to about crypto, because if you're like us, you're probably a little bewildered trying to follow the news. The sex industry is turning to crypto. We're talking about the falling prices for Board 8 Yacht Club NFTs that have been dominating the market.

Joining us now to talk about whether these headlines indicate that we're emerging from the crypto winter. I want to give you this video because some people are lying to you on what's happening in the market right now. Crypto Kitties is a blow.

blockchain-based game that runs on Ethereum. I'm a shake my ass. You can get on here to check my ass? It's your NFT. He didn't know it. But Jathan, a guy doing research and sometimes tweeting inside jokes about that research was about to become a part of the news. Step one.

Make a joke that both crypto enthusiasts and converts will retweet without knowing it's satire and your friends will retweet because it's satire and others will ask if you're okay. I hit the tone in such a way where there even was a little bit of doubt, I know,

and some people who have followed me for a very long time, and they were like, please say psych, please say, please say this is a joke. Step two, watch as your tweet goes so viral, people start begging you to reconsider your idea. In other words, like, you know, don't wheel this thing into existence. Don't materialize it into existence by making a joke about it. Step three?

Oh, no. And then a few days later, I happened to see the Financial Times had a headline that says, Ukraine plans to issue NFT collection to fund armed forces. Kiev moves further and embracing digital assets to raise money for the war. When I saw this headline, I did take a screenshot of my original post and a screenshot of the Financial Times headline, and I put them side by side, and I just said, well, what can I say? I'm very sorry and take full responsibility. A reminder for us all that this is a show about the blurred lines between online communities and the real world.

And a reminder that cynicism and satire aside, raising money to resist Russia's invasion of Ukraine is a completely understandable response. I cannot blame anybody in Ukraine. for using the tools at their disposal to generate a lot of money and donations from nothing. But for the most part, Jathan says his research tells him that the kind of money floating around the growing crypto universe isn't going to help Ukraine resist the Russian invasion. Or some other cause that most would agree is a, quote, good cause. It's more often about general speculation.

In other words, sure, the Ukraine thing might actually have. help raise money to fight the war, but your average example of investing in cryptocurrency isn't about saving lives. More often, it's about getting involved in a scheme. That can be a good scheme, or it can be something Jathan thinks more and more about. There's this theory called the the theory of greater fools, right? And it's this idea that if I buy this thing for $10,000, this NFT for $10,000, then there's going to be a greater fool down the line who's going to buy it off of me for $12,000. And then they're going to find somebody to buy it for $15,000. And it just goes on and on.

And that's not a really solid way to base an economy. Okay, time out. We do almost need a crypto glossary here. NFTs, Web 3, blockchain, woof. Woof is not a crypto term. Amory, I don't think. You know what I mean. Woof to all of this. Yeah. And honestly, a glossary is a good idea, or at least we could use a good explanation of the foundational principles here, even if we're somewhat familiar with them, before we get too deep into Elon Musk's Cryptobot Twitter mentions.

Oh, please, spare us from traversing that section of the Internet. Let's stick a little closer to home for WBUR. Let's hear from Neha Narula. I'm the director of the Digital Currency Initiative, which is based out of the Media Lab at MIT, and I'm in Cambridge, Massachusetts. Neha is maybe a tad less skeptical than Jathan, or at least in a different academic zone. The Digital Currency Initiative is a group of software developers, cryptographers, researchers, and we work on the technology behind digital currencies. Neha is doing this work for a simple reason. makes the world go around. Our economy, our financial systems, you know, people make decisions on where to live, on who to marry, on what to spend their lives doing based on money.

And, you know, I just realized it was really powerful. And I'd always thought up until that point that technology was one of the most powerful levers we had to change the world. And I realized, you know, in the course of going down the rabbit hole that actually, wow, money is also very powerful. And the combination of money and technology is extremely powerful. That last bit Jethin can probably agree with. Okay, here comes folks. The essential, the obligatory, the thing us public radio journalists love to do or get over and over because in point of fact, we all continue to need it. The answer to the question, what is a cryptocurrency? Cryptocurrency is a string of bits on a, on millions of computers around the

world that let you change those bits in some ways. That's it. Is that it? Some people call it a Ponzi scheme. It is something that only has value if people believe it has value, but that's true of a lot of things in the world, actually. It's not unique to cryptocurrencies. Also true of gold. Yeah. Yeah. And the housing market. Yeah. And sandwiches. Ben, I'm not sure how you got to sandwiches. Actually, Yeah, you can always get to sandwiches somehow. A special skill of yours. But that statement seemed to suggest to Neha that she needed to take another swing at it. It's a network of computers around the world that are running software.

And the software is keeping an accounting of a currency. And people can move that currency around. And the thing that's really unique here is that there is no government, there is no bank, there is no backing. it's just this network of computers that are being run by humans around the world. So it's this way of people coming together in a network to agree on the accounting behind a new currency, a new accounting system, a new ledger.

We should say that cryptocurrency and the technologies around it is really an idea that has been in our minds for a long time, right? This idea of digital credits, computer money, whatever you want to call it. I have 20,000 Republic dactaries. Republic credits? Republic credits are no good out here. I need something more real.

I don't have anything else. Credits will define. No, they won't. Credits will defy. No, they won't. Jedi mind tricks don't always work. Though it can feel like this is a Jedi mind trick. In the case of crypto, it feels like this whole thing is already a thing

that's been really established for a long time. But unless you're talking about the process of getting your credit card information onto the internet so you can use it, for many decades, digital currency was just more of a long-time sci-fi dream. And then in 2008, this post appeared on this mailing list by someone who went by the moniker, Satoshi Nakamoto. And we don't know who Satoshi Nakamoto is. We don't know if it's a he or a she or they. but Satoshi posted on this list for an idea that they had for a new type of currency called Bitcoin. And Bitcoin was really interesting because it brought together all of these ideas from e-cash and from other areas, actually, in computer science and computer systems. But they had never really been put together in this way before. This was the origin of Bitcoin, which took this idea of digital cash and combined it with complicated math to create a finite digital currency resource, one that had to be mined.

just like silver or gold with computing power. At this stage of the game, most of us are familiar with this part of the story, right? Though the fact that we still don't know the inventor of Bitcoin is, I would say, concerning to me. Same. But the early days of Bitcoin were also a bit sleepy. I mean, what can you do with an invented currency that only exists in the form of, as Neha described it, computer bits? But then what happened was in, I think it was 2010 or 2012. this guy posted on Reddit that he wanted to actually buy something with Bitcoin.

Reddit. We try to get out, but it pulls us back in, man, every time. True. Every night I have to be like, that's enough interneting for me today. But yes, Neha says the first real transaction in Bitcoin happened, basically, on Reddit. Can you guess what was bought and sold with Bitcoin? The first person to tweet your correct guess at us, that's at Endless Understatement. thread, we will send you some of the correct answer. Seriously, tweet at us, we will send you

some of the first non-bitcoin commodity bought via Bitcoin. Anyway, it took off. And pretty soon, there were other currencies based off of the same technology, Ethereum, Dogecoin. And all of a sudden, people started creating copies of Bitcoin. So there were a lot of copies out there. And of course, there's a financial incentive to do this. Because if you create a copy and you, my, a bunch of the coin by yourself first, then you have a bunch of the coin. And if you can convince people that it's going to be worth something, like it's the new Bitcoin,

then the price goes up and then you've just made a ton of money. So this happened over and over and over and over again. There are hundreds and if not thousands of copies of Bitcoin. Suddenly I'm reminded of Jathan's reference to the Greater Fools Theory. Yes, but it's also true that there's been this explosion of technologies from this. And like most technologies, they can be used for dumb stuff, but also potentially for smart stuff.

That's why people are excited, for instance, about not just Bitcoin, but NFTs. Non-fungible tokens are very different. There, you're trying to create a digital token that is not totally interchangeable. It's actually unique. It's something sort of special. The best thing I think we've heard about NFTs

to explain what they are is that they're like pogs. Remember pogs or baseball cards? tradable, unique, digital items. It can help artists get paid and also separate people from their money. NFTs are tradable, unique digital items. It can help artists get paid and also separate people from their money. Got to take the good with the bad?

Do you, though? Do you see cryptocurrency as being the future of money, the future of the economy? Like, how far does this go? the future of everything, Amory? Well, that's what I need to know because I am not. I have zero interest in, I'm interested in crypto, like, for the purposes of understanding more about what it is, how people are using it. But my interest in crypto is like, do I need to be interested in crypto?

Is this, am I going to have to, do I need to, like, get rid of, not that I have a bag of cash, but, you know, do I need to get on the crypto train? Yeah, you'd need to get on the crypto train. So if you'd ask me that, if you'd ask me that question a couple years ago, I would have said, I don't know, it could go either way. You know, maybe this becomes something. Maybe it doesn't. Probably you should learn a little about it, you know, keep keep up with it, learn what's going on, figure out if it makes sense for you or not. But now I think, yeah, this is this is a, this train is not stopping. This train is accelerating. This train is starting to infiltrate everything. She's right. Anyone watching the last Super Bowl saw all those crypto commercials. We're putting a man on the moon. Are you out of your mind? I can't even get tuna without celery. Nobody's going to the moon ever. Like I was saying, it's FTX. It's a safe and easy way to get into crypto. Yeah, I don't think so. And I'm never wrong about this stuff. Never.

NFTs have been all over Twitter, and Neha says crypto is being used everywhere, from microloans to privacy protection online. One thing I think that cryptocurrency is doing, which is really valuable, is sort of reshaping the dialogue around internet platforms and our data and privacy and data portability and data ownership. So I think that's really interesting. Which is maybe good because there have been so many stories of people losing life savings after investing money in crypto and then getting hacked. or the third-party services they use getting hacked. These stories are everywhere. Still, Neha says, It's possible for something to be under-hyped and over-hyped at the same time.

One of the best examples of the latter, maybe, is the weirdest, truly weirdest thing I've seen on late-night TV recently, on The Tonight Show with Paris Hilton and Jimmy Fallon. Where they were talking about selling the NFT board apes, which is a collection of images, of AIDS. apes, which have been minted as custom NFTs, and an NFT of a collage she made. Well, if you love it so much, I actually want to give you the first one. I will be honored.

And I want to give one to everyone in the audience. That's the first AMNMT giveaway in the television history. We love you. If you think a commercial for digital images in the content of a late-night show in which both the host and the guest are basically hawking crypto technology is weird, Oh, it sure is, which is how we get to a thing that went so, so sideways. Every version of the internet has had the internet weirdo island. Like the Redditor community has tried to buy their own island several times. Fire Festival is kind of a version of this where it was like,

what if influences had their own island? And we know how that ended. Crypto's version of Firefest in a minute. At Radio Lab, we love nothing more than nerding out about science, neuroscience, chemistry. But, but we do also like to get into other kinds of stories. Stories about policing.

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Reach new audiences, whatever your goal, we can help. Discover how the magic is made at WBUR.org slash creative studio. Okay, for this next bit, we're going to go to take. from the Crypto Part 1, guest three. My name is Ryan Broderick. I publish a newsletter about web culture and technology called Garbage Day. And I produce a podcast called The Content Minds, which is also about web culture and technology. Ryan's a friend of the pod.

He's been on before. And he is deep into the world of crypto. He's got lots of examples, good examples, and yikes. I did see a dating app only for NFT owners the other day. So that's about as grim as you can get, I think. I thought that was going to be your optimistic one. Well, I've joined it, and now I'm very excited to be there. So when I say cryptocurrency, what springs to mind?

Libertarians. Okay. And this is how we get to Cryptoland. But before we maroon ourselves on that island, another glossary term, Dow, decentralized autonomous organization. And the way it works is think of a typical corporate structure of a company or a startup. But imagine if that existed on a chat program like Discord. And instead of buying shares of a company, you bought what are called tokens,

which are little blockchain pieces of code that represent an ownership stake. And so a DAO or a Dow can start with a crazy. idea and as long as you get a bunch of people to buy in via tokens, which they can share and sell amongst themselves, you can raise a lot of money really fast. An example of a Dow from earlier this year appeared mysteriously and at light speed. And it was for this thing called Cryptoland. The story of its meteoric rise and fall is quite a yarn. Can we sit at your feet cross-legged while you tell us the story of Cryptoland?

So Cryptoland was a great idea that was not, no, Cryptoland was a very, very bad. A long time ago, far, far away. Crypto land was a very bad idea organized by a small group of Web3 developers. They decided that they were going to sell essentially timeshares on a island that they did not own yet in Fiji. They put together this lofty prospectus and average. advertised different crypto-themed real estate opportunities that people could buy into. Now, the way these Web 3 developers, wait, Web 3... Supposedly in the next version of the World Wide Web. We're in Web 2 right now,

and people say that Web 3 is a decentralized version of the web, powered by all these cool technologies created around cryptocurrency. Right, right, right, right, right. Okay, so these Web 3 developers created a Dow, decentralized autonomous organization and that organization was going to buy an island in Fiji

and when I was like I was looking into it and when I was blown away by was that there are multiple versions of the same project all in different states of failure which I think is amazing I mean I just say a tale of this old of time right in a way it's like I and my friends

would like to buy an island that is going to be awesome because we're awesome and we're to make it awesome and it's going to be great. Right? Like that's, I feel like I have made that plan before. It was probably when I was like 11. But this idea got really far along.

There was also a marketing video, which was one of the, you talk about creating internet cringe. Yeah. That was the worst thing I've ever seen. There were a lot of bad videos in the internet, but this one had a talking, Bitcoin walking around. Sir, welcome to Crypto Land, the hodlers of last resort. Oh, brilliant.

Hey, stacking sounds like crazy, right? And he was animated, and it was all about, I mean, it just showed like a really grim, a really grim view of life. Like, imagine if you lived in a tech convention 24-7. That's kind of what it looked like. You know when they're doing a tour of the self-contained theme park facilities in very Jurassic Park movies and you get this feeling that something is definitely seriously wrong. It was kind of like that. All the other King Cryptolanders have been arriving from all corners of the world.

When we get to the blockchain hails, you're going to understand what I meant by a first-class crypto lifestyle, man. CryptoLam was supposedly the brainchild of two enthusiasts, Max Oliver and Helena Lopez. The project manager supposedly represented the interests of a hotel group. The video promised 60 exclusive plots of land in the blockchain hills that could be bought with NFTs. There was a Vladimir Club, which is a reference to an online user from Crypto Legend, who bought enough Bitcoin to become a millionaire a hundred times over. It was billed as a place for Cryptoheads built by Cryptoheads,

with beaches, 360-degree views of the island and ocean, and an economy totally run with Crypto-Rexam. Crypto was everywhere, as was the cringe. There's a weird, like, reimagining of a song from Greece in there. Do you guys remember that part? I still don't understand why that happened. Like, why of all musicals was it Greece? I just don't get it.

Yeah. You might miss the mark on your marketing video, but this was for devotees of new technical. that are generating millions of dollars in digital currency. So it's got to take a little more than that to take out the concept of Crypto Land, the cryptocurrency utopian island of Fiji. True. And remember when Ryan Word associated Bitcoin with libertarians? Well, one of the things about crypto that continues to be complicated is that digital currencies

and their surrounding technologies can be associated with politics that might feel a little fringe. You know how people sometimes talk about how communism is great in theory, but terrible in practice. Well, crypto enthusiasts can often fall into this civil libertarian spot on the political spectrum, or even anarchists. And there are some areas where those kinds of political ideas do not have great answers. Things started to spin out of control when a Twitter troll found out about it. and he tweeted at the Twitter account for Crypto Land and asked them what the age of consent laws would be on the island, which is a common internet troll for any sort of libertarian-leaning communities.

If you really want to destabilize a bunch of free market enthusiasts, a bunch of men who don't want to be told what to do by the government, you can ask them what they think age of consent laws should be in their fictitious libertarian paradise. And this had that exact effect on CryptoLand. The Twitter account tweeted something to the effect that they wouldn't discriminate in terms of age with like a winky face. It was later explained that the person running the Twitter account didn't speak English as a first language. It didn't totally understand what they were answering.

Whether or not that was a valid excuse, the community that had sprung up around Cryptoland devolved into a shouting match between people who were horrified at the suggestion. that there would be no age of consent, and people who, on principle, wondered why there should be on their free market libertarian crypto island. Cryptoland went the same way as that very unsuccessful influencer festival, Firefest. It turned into a bit of a dumpster fire, the island, which was priced at $12 million, still for sale. It's actually kind of a bummer, because I do think that, like, cryptocurrency, Web 3, blockchain, all this stuff isn't perfect.

No technology is perfect. But it is interesting. And like I've spoken to a lot of developers who have said, like, I really wish I could actually mess around with this stuff because it would be fun. But the social capital that you lose by publicly engaging with Web 3, with blockchain, with crypto is just not, it's just too much. It's so polarizing. For Neha, this kind of thing is unfortunately just going to happen in the topsy-turvy world of

crypto. People will get taken advantage. of. There will be a lot of scams. And I'm really, at this point, I don't know, I don't know if anyone could do anything to stop it. But, you know, there are probably people who will invest money that they can't afford to lose in cryptocurrencies and they will lose a lot of money because it's very risky. That said, I've only seen use of this technology grow. Like, it's just, it's not worth betting against the rise of technology. And that's why a lot of people are betting on the rise of this technology.

Small fish, big fish, schools of fish. They're swallowing the bait, hook, line, and sinker. And even though people like Ryan Broderick are detailing a host of failures of groups of crypto enthusiasts to get their own private crypto-utopian islands,

people are also finding real-world examples of where this mentality is taking hold in a big way. From the little players... You've got to think of all the jobs that this is bringing. I mean, it's like a gentrification on steroids type thing.

Like there's all kinds of foreign money coming in to build things. To the big ones. I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. That's next week on Tales from the Crypto. Endless Thread is a production of WBUR in Boston. Want early tickets to events, swag, bonus content, the coordinates of My Crypto Island, a picture or a screenshot maybe of Amory's board,

Ape NFT. You can join our email list. You'll find it at WBUR.org.org slash endless thread. This episode was written by yours truly, Ben Brock Johnson. Co-produced and co-hosted by me, Emery Severson. Editing help from Jeb Sharp and the rest of the team, Dean Russell, Norrisax, Quincy Walters, Grace Tatter, our web producer is Megan Catell,

mix and sound design by the illustrious Paul Vicus. Endless Thread is a show about the blurred lines between digital communities and tweeting war funding propositions from the blockchain hills. If you've got an untold history, an unsolved mystery, or a wild story from the internet that you want us to tell, hit us up. Email endless thread at wbUR.org.