The Breakdown - Deplatforming, Ethereum Marketing and Whether Brexit Matters for Crypto

Episode Date: February 3, 2020

Much of the Crypto Twitter conversation this weekend was dominated by talk of Twitter’s suspension of ZeroHedge. @nlw explores why the specifics of the infraction or the quality of the publication aren’t the important part of the conversation, and why he thinks we’ll see arguments for social media platforms to be turned into public utilities in the years ahead.  Also on this episode: Debates around Ethereum marketing. Does the community need to spend more resources telling the story and recruiting new users or should the tech speak for itself?  What Brexit means for the crypto community - practically and metaphorically.  The last section features comments from Ledger CEO Pascal Gauthier.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Monday, February 3rd. And today we are going to kick off by talking about social media censorship and deplatforming. It's a conversation that, while not technically about crypto, is something that crypto folks feel very passionate about, Second, we're going to be talking about Ethereum marketing. There's been a conversation happening for the last week or so around whether Ethereum needs more marketing.

So I wanted to introduce it and then give my two cents. And then finally we're going to look at whether Brexit, which went through last week, actually has any relevance for the crypto community, either actually or philosophically. Let's dive in, though, around social media censorship. Towards the end of last week, Zero Hedge published an article about a Chinese scientist that effectively claimed that this person might be the root of the coronavirus.

And it linked to publicly available information around their phone number, their email address, their actual lab address, et cetera. Twitter did not like this. Twitter saw it as a violation of their rules around targeted harassment and kicked Zero Hedge off the platform. Now, Zero Hedge is a much larger publication than just Twitter. Twitter accounts for something like 7 to 10% of Zero Hedges traffic, but it did have close to 700,000 followers and was a very prominent, well-known account. And this created a huge amount of debate and discussion, as it always does whenever an account becomes de-platformed.

There were a few different lines of the conversation. The first was whether this particular offense actually merited. banning. And there were lots and lots of different takes on that. Joe Wisenthal from Bloomberg, for example, said that he thought that having a ban for something that happened off the platform seemed perhaps a little bit egregious in terms of the actual tenor of the punishment. So there were a bunch of different takes. The second part of the debate, I think, had to do with Zero Hedge itself and whether it was a worthwhile inclusion in the public space. And there was a lot of different takes on that. Arjun Balaji, who's an investor at Paradigm, wrote, Zero Hedge once hosted well-reasoned

heterodox views, but eventually devolved into conspiratorial blog spam. The rabid defense from readers is incredible dissonance. You have to wonder how many missed the rally of a lifetime after DDOSing their brain with apocalypse porn. But then, of course, there was the opinion that, yeah, Zero Hedge may suck, but that doesn't really matter, and that's not really what the conversation is about. So Nick Carter embodied this point of view. He said, Real Talk. ZH was drivel most of the time, but I'd much rather stomach the occasional nonsense than allow Twitter to install BuzzFeed as the gatekeeper of discourse. And this, I think, gets closer to where I feel.

This conversation really shouldn't be about any one particular deplatforming. It's about the idea of deplatforming in general, and it certainly shouldn't be about just a single publication or not. The interesting question and why this is so intense is that all of our conversations about de-platforming tend to treat these private companies and the digital spaces they have created as public spaces, right, as places for public speech, when that's not what they are. They are businesses designed around the social exchange of information, and they reward extreme points of views in the algorithm that drives engagement. They push people to more and more extremes,

and they highlight and amplify more and more extreme and less and less nuanced points of view, until at some point they get to this arbitrary line, this icarus line where the extremists have flown too close to the sun and they have to be punished. The problem is that this debate is never ending, right? If we just keep talking about a particular infraction or if we just talk about the merits of a particular publication, we don't ever actually get to the real tension, which is the tension between feeling like these platforms are significant enough and meaningful enough and important enough to the public discourse that they need to be treated like public spaces where free speech is protected versus the fact that they are ultimately privately owned spaces that we are just renting time in

effectively. There is a very uncomfortable conversation, especially for those who are the most kind of libertarian-oriented and free speech-oriented where the conclusion, I think, or at least one logical conclusion is that these platforms have become so significant to the political discourse and the public discourse that they do need to be protected as public spaces. That means more, not less regulation. And I don't necessarily think that that's what the average person who's rooting for zero hedge to come back wants, but I think that it's coherent, right? So that's going to be an interesting conversation. I believe that we're going to see some credible arguments over the next few years that the Twitters of the world, the Facebooks need to be regulated as public spaces,

is basically as public utilities. And that's going to create a lot of tension. Now, just briefly for a frame of reference for how big a conversation this was in the Bitcoin and crypto Twitter world, I, as you know, tweet all the time. I do a Twitter newsletter called Long Read Sunday, and I've been doing so for years and years. And I had this weekend my most viral tweet ever, and it was a single line. On Saturday night, I wrote Breaking News. Twitter introduces the Bitcoin emoji tag to get holders to STFU about zero hedge.

That thing has now been liked 2,000 times, retweeted 250 times, and it's just a stupid throwaway line. And there's two things going on here. One, people were very excited to see this emoji that Jack had implemented on Twitter that has the Bitcoin B. And I think that probably is the biggest part of it. But people were responding to just how much conversation

there was going on about Zero Hedge and this idea, although it was very much a joke, that Twitter and Jack were trying to buy us off and get us to shut up and focus on something else by adding this emoji. This is a big conversation, and it's a big conversation because it feels like it has implications that go much beyond Zero Hedge. So let's look at where de-platforming and this question of social media censorship is happening outside of just Zero Hedge. This morning, Balaji Shrinvasen had a tweet thread that started Digital Core and is here. It appears that folks who fled Wuhan have been digitally quarantined likely via Wii chat. Their apps don't work outside the quarantine zone. Now that's happened to 240 Uber

users in Mexico exposed to the infected. Complex issue, a thread. Belaji goes on to talk about why municipality would need to impose a quarantine and the importance of it and why we wouldn't necessarily want that sort of quarantine to be porous. However, he also talks about the fact that once that sort of power is implemented, it is almost never relinquished. Now, there are, of course, many points of view on China and social media censorship. Last night, Dovi Wan wrote about this as well. She wrote, many folks consider Chinese social media a tool of suppression. In fact, that's not the case. It's kind of impossible to completely shut down over 800 million local medicines online. During this coronavirus outbreak, various cases

emerged as how public opinion supervision actually works. So she's basically getting into how much more complex it is than, hey, China is just shutting down accounts, willy-nilly. There was also state-level social media intrigue this weekend from Canada. A new report came out making recommendations to the Trudeau government about a variety of internet issues, and one of those recommendations is that all websites that share information with the public need to be licensed with the Canadian government. This is phenomenally crazy to think about coming certainly from a U.S. perspective, just from a pure implementation standpoint, doesn't seem at all feasible. But it all comes back to these similar issues and questions of the importance of these new web platforms in public spaces and just how

they're supposed to be regulated and whether it's supposed to be more like a public utility or a public space than a traditional private company. This is the beginning, not the end, of this conversation, it's going to continue to come up. And while the decentralized social network idea may be kind of out of fashion right now, simply on the basis of the fact that we're not hot on utility tokens and we have real questions around whether tokens can actually help networks bootstrap as was the theory at the beginning of the Web 3 idea and around the time of ICOs, you're going to see, I think, inevitably, more and more and more people in the Bitcoin community, more and more people in the crypto community more broadly who want to opt out looking

for alternatives to these what I think are inevitably going to be more regulated public private space hybrids. They're going to want spaces that reflect basically how the internet has been up until now, which is free and open. So even though it's not technically a cryptocurrency issue now, I do believe it is closely related and I think it's going to overlap and I think it's going to have implications. for us. All right, now something very different. Ethereum marketing. So over the last week or two, there have been a huge number of conversations on Ethereum Twitter around this question of whether Ethereum needs better marketing. And certainly this is not just a Twitter conversation given that the marketing Dow, an Ethereum project, started a couple months ago as well. So we have Eric Conner

saying Ethereum has a marketing and awareness problem. I find it annoying how everyone wants to pass it down the line and not realize this. EF shouldn't market, the tech will speak for itself. Defy protocols shouldn't market. We aren't ready. No, it's time to be aggressive. Then you have Anthony Sasano who says, there seems to be a lot of confusion about what the term marketing actually means in an Ethereum context. Ethereum marketing is multifaceted. It's education, outreach, advertising. It's not just pumping ETH with hype posts, shilling, or selfies with CEOs. And then he goes on to write a whole thread. Brian Flynn writes, 2018, Ethereum has a tech problem.

2019. Ethereum has a Ux problem. 2020, Ethereum has a marketing problem with a crying laugh face. And then MyCrypto did a poll. They said, do you think Ethereum needs marketing? 59.1% said yes. 25.1% said no. 6.6% were unsure.

And about 10%, 9.2%, just wanted to see the results. This is out of more than 1,000 votes. And then finally, Stephen from the block, wrote, Ethereum people, we need more marketing. Also Ethereum people. Debate the definition of marketing over 16 tweets, joking about Anthony's thread from before. So here's my take, and I won't take too long on this.

Obviously, I'm not deep in the Ethereum community. I'm an outside observer. But I am an interested party, and I'm particularly interested in the future of Defi. That's where actually my perspective comes from. You might think that because I run effectively a crypto content marketing consulting firm, my answer would be, yes, of course. should be marketing more. It should be pushing the story. It should be pushing the narrative. It should be

recruiting new users. And I actually don't necessarily think that's the case. Where I do think marketing matters right now is that I think that it's right for projects within the Ethereum community to be spending time thinking about the values that they stand for, what their goals are and how they tell that story, right? I think that it's a good idea to start spending resources on content that helps people who are interested to learn more and join this community of early adopters get the information they need to actually figure it out. I think basically it's the right idea to think about the type of content that can be invitational for people who want to go down the rabbit hole as it is now.

What I also think, though, is that Defi, which I believe is pretty much the core focus, or at least the single biggest focus among Ethereum projects right now is one of the most simultaneously high potential and high risk things that anyone's doing in crypto. This is huge. What these projects are trying to do is fundamentally reorganize the rules of finance in terms of how people interact with their money and what sort of intermediaries or not they need to be doing that. They are playing with long-standing legal regulatory issues and really pushing the boundaries and pushing the lines of them.

And that is amazing and it's cool and it's interesting. However, one of the things that I think makes it so good right now is that it's being live incubated by a group of early adopters who, on the one hand, are absolutely playing with live ammunition, real, real money, real resources. but they also fundamentally understand the risks, right? This is not the ICO boom where people are going out to recruit pensioners to come get in these things, which are even riskier than traditional startups because they don't have any diligence and they don't have any management, they don't have any oversight, and they don't have any rights for investors. Defi doesn't have that. Defi is growing up with people who get how early it is and who get what the risks are and who get that this is high potential and high risk at the same time. And I think that that's a good thing for Defi. I

that it would be a detriment to Defi if there were a huge push to get an influx of users in. So much that I think actually I am hopeful in some ways that the growth continues to be a steady, linear growth of people who are interested, who want to go down the rabbit hole, who are comfortable with the risks, rather than some big influx because people get all excited about making 8% or something on CDPs. I think that Defi is in the right place for what it's trying to do right now. And I think it's hard because the Ethereum community, I mean, everyone in crypto, but particularly the Ethereum community are the sort of hacker, entrepreneurial folks that want to just build, build, build, build, iterate, iterate, iterate, push, push, push, push, push.

And it's very hard to simultaneously have that mindset and a conservative mindset that says, hey, we don't need to go get the whole world just yet. However, I would say, again, as an outside observer and recognizing that I'm speaking from the outside looking in, I think that the game that is being played is a pretty fundamental generational transition. And doing it right, which is kind of happening right now, is better than doing it fast and the risks, the new risks that that brings in. So my little two cents, my little rant about whether Ethereum should be thinking about marketing now. It's obviously it's more complicated than a simple yes or no. But I think that defy is in a really good place. and I want these projects to be able to continue to experiment in the right context.

That's my take on that. All right, and speaking of takes, one last little thing to round out the show. Last week was Brexit Day. The UK has actually left the EU, and there will be, of course, many, many more negotiations, months and months and years and years of trying to now negotiate a new type of relationship. And because of that, knowing exactly what the impact is likely to be in the short term is a little bit difficult. I even asked on Twitter on Friday, and the opinions that I got back were things like Peter McCormick saying, I doubt anything will change. Jamie Burke from Outlier Ventures saying, for crypto at this stage, not much,

will depend on general alignment with European financial services regulations, which is still up in the air. Doesn't seem to be much interest at the top for this right now, sadly. And there are a few other folks who reiterated this same point. However, it seems to me that when you have this sort of major economic shift, there are almost inevitably going to be some implications. And so I asked Pasquale Gauthier, the CEO of Ledger, to actually dig into this question for us. The company is based in Europe. Pascall is based in Paris. This is a conversation that they've been having frequently enough that in fact they did a campaign about taking back control at Canary Wharf in London on Brexit Day itself.

And so I asked him basically two questions. First, I asked what the implications are likely to be for crypto companies in the UK or in Europe, if any. And second, is there a larger philosophical connection point between crypto or Bitcoin and what's happening with Brexit? So let's listen to what he had to say. Hey, this is Pascal Gautier, CEO at Ledger. So I'm being asked like a few questions recently about Brexit and what it means for European entrepreneurs and crypto entrepreneurs or crypto communities and how the British and European crypto communities looking at Brexit and the implications. So number one, I would say that probably it's a little early to tell because there are big negotiations that will take place between now and the end of December. So we will be waiting for these to happen before like knowing exactly what it means for crypto communities. business in general. But what can be said, though, is since the UK is no longer part of the EU,

there will be two potential regulations in Europe competing against each other, which gives probably in the long run a choice for European entrepreneurs to set up either in the UK or in continental Europe. Some of the European observers are worried that the UK will become what they call Singapore on Thames, Singapore in the Thames River. So, probably very liberal economy, tax-friendly and business-friendly. So let's see what it means in the long run for businesses, but typically you go from one single market with one rule, and especially on finance and crypto, the European community has a tendency to do a lot of regulation. And so maybe the UK will take a more liberal approach and less regulation going

forward. Maybe that's an option. We'll see what happened in the future. The second question I'm being asked a lot recently is if there is a larger philosophical connection between the debates around Brexit and crypto as a social, political or economic force. You know, actually recently at Leisure, we've done like an advertising stunt or a peer stunt the day of the Brexit where we bought some advertising in London right in the middle of Canary Wharf using the sentence, take control for real. That is something, that is a quote that has been used during the Brexit campaign to say that the UK people will take back control leaving the EU. And so we use that in our advertising stunts. But actually, we believe that philosophically the two events are dramatically opposed because we believe that Bitcoin is about being global. It's the promise of one currency for the planet. It's the promise of financial equality or equal access to a financial system wherever you are on the planet.

and regardless of how rich or how poor you are, where Brexit is probably more of getting back into my country with my border, so it's less inclusive, it's less of a global approach. So we believe that even if the same sentence can be used, taking back control, we believe that it means absolutely two different things. And so philosophically, I think the two events are quite opposed. if you want to take back control as a country and sovereignty and having the strong grasp on your economy, taxation, currency, it looks like it's opposite values from Bitcoin, which is,

again, global and much more inclusive. Really interesting answers here. I think that ultimately it's going to be a wait and see when it comes to the real practical. And I think that there's going to be a lot of different takes, given this big, diverse community of opinions and opinionated people that makes up Bitcoin and crypto around just whether Brexit is somehow connected or inversely connected to the larger crypto movement. But I appreciate Pascal's thoughts and hope you found them interesting as well. All right, guys, kind of a long one for a Monday, but so much interesting stuff happened this weekend. I thought it was worth digging in a little

little bit more. Welcome back to the breakdown for this week. I will catch you again tomorrow. Cheers, guys.