The Crypto Backlash Is Booming
On the subway this morning, I looked up and saw an ad for a new cryptocurrency. More specifically, I looked up at a bright-red rectangle behind large white font reading: It’s never too late to be early.
We’re in the midst of a speculation boom that has been variously compared to the Beanie Babies craze, the dot-com bubble, and tulip mania. A year ago, the average person might never have heard the term Web3. Now we all have to watch as Paris Hilton beholds a cartoon-monkey NFT (non-fungible token) that Jimmy Fallon spent $216,000 on, then remarks, “I love the captain hat.” Stories about this new vision for the internet appear in the tech and business sections of national newspapers more or less every single day, generally with the caveat that a lot of people sincerely believe Web3 to be a Ponzi scheme, a grift, a multilevel-marketing arrangement, and a scam.
This assessment has its own, swiftly growing army of adherents. “Web3 is a Ponzi scheme” has circulated as a meme, in widely cited manifestos, and in viral blog posts. Maybe soon it will be a political slogan. (Those who have a specific disdain for NFTs have already taken up the nickname “right-clickers.”) Likening Web3 to a Ponzi scheme is useful because, unlike Web3 itself, a Ponzi scheme is easy to grasp: We all know what’s wrong with scams, and we understand that Ponzi schemes are bad. We may not get what people mean when they talk about the blockchain, but we do get the sense that we’re supposed to be their marks, and that we’re under pressure to join them or die.
Whether that rhetoric is fair—whether Web3 is literally a scam—depends on which piece of a broad ecosystem of new technologies you happen to be talking about. (Clearly scams abound; the Federal Trade Commission has gone so far as to officially announce that scams abound.) At its most basic, Web3 imagines a massive shift away from the habit of accessing the web via centralized platforms such as Facebook and Google, and toward a norm of communicating, storing information, and making payments through a supposedly incorruptible, uneditable, fail-proof system. This would conceivably give the average person greater control over their personal data and the consequences of their interactions, but for various reasons it has so far been a bit of a farce.
The term itself—Web3—was first used by Gavin Wood, the co-founder of the popular Ethereum blockchain, in 2014, in an essay now referred to as “seminal” and “classic” by crypto enthusiasts. The vitriol that can erupt anytime his neologism is mentioned—the fuel that often takes these conversations from zero to 100—comes from the creeping feeling that Wood and others’ vision of the future is inevitable, that Web3 will come about in spite of anybody’s reservations, however much it seems to be a scam. The frenzy of speculation is being met with a counter-frenzy of resentment.
The people who say that Web3 is a scam have other issues with the whole idea. In fact, they hate it for a new reason every day. I’m not exaggerating: They hate it.
When the Associated Press announced last month that it would sell some of its photographs as NFTs, the decision was described as “spineless, amoral,” and the news organization was told to “eat shit.” (Dwayne Desaulniers, who is leading the AP project, told me that he spent eight hours combing through the Twitter responses. “The volume, I was surprised at,” he said.) In the fall, when the NFL star Aaron Rodgers said that he would take part of his salary in bitcoin, he was blasted for participating in what some said amounted to an endorsement of “money laundering.” When the “fan token” platform Socios got involved in British Premier League soccer, Crystal Palace fans showed up to a game with a banner reading, MORALLY BANKRUPT PARASITES SOCIOS NOT WELCOME. On Twitter, the anti-Web3 crowd has lately been circulating a digital poster in the style of 19th-century newspaper advertisements, with NFTs Fucking Suck and Open Your Eyes, Shit-for-Brains headlining in ornate script.
A person investing in crypto or a shared future on the blockchain is said to hate Earth and support the “hyperfinancialization of all human existence.” Or they’re a greedy doofus who deserves to waste millions of dollars on digital monkey portraits while Marc Andreessen gets richer, if not an embarrassing freak who is really just looking for cover to debate age-of-consent laws. But the simple insistence that Web3 is a scam—no more, no less—remains the most consistent critique. After Kim Kardashian was sued for promoting a dubious cryptocurrency-investment opportunity on her Instagram, Ben McKenzie, an early-2000s teen-soap star (is this odd?), wrote an essay for Slate with the journalist Jacob Silverman lambasting Kardashian and arguing that celebrities who promote crypto “might as well be pushing payday loans or seating their audience at a rigged blackjack table.” Sounds bad.
The anger at Web3 carries echoes of the fury over the subprime-mortgage meltdown almost 15 years ago. The gross behavior that event exposed and the government bailouts that came after helped motivate the early embrace of bitcoin, which was compellingly described as a financial system based on “proof,” rather than the sort of “trust” that had just gotten the world into a huge mess. Now, ironically, the same historical event serves as the grounds for Web3 backlash. “I have seen one fool’s-gold rush from up close in the lead-up to the 2008 financial crisis,” Michael Hsu, a bank regulator in the U.S. Treasury Department, said in a September speech to the Blockchain Association. “It feels like we may be on the cusp of another with cryptocurrencies.”
Last year, when a bunch of Reddit users spent weeks juicing GameStop stock just to mess with everyone—and when the New York Young Republican Club responded by staging a baffling reoccupation of Wall Street—they were thinking back to the 2008 crisis. (The bailouts were “still a plot point,” Paige K. Bradley argued in a report for Artforum. “People are pissed off.”) So too are Web3 resisters in the highly active Reddit forums r/CryptoReality and r/Buttcoin. In the latter, crypto enthusiasts are stereotyped and mocked as “the millennial male versions of MLM huns hawking diet shakes on Facebook” and parodied in posts with titles like “Are we living in the future? (Bought snacks with $USD).” But they are also framed as the villainous engineers of a portended collapse who are shoving us all into a future that is really history repeating itself.
An r/Buttcoin moderator, who asked to remain anonymous for fear of harassment and doxing, admitted that swapping bit for butt is juvenile, but told me I could not possibly know how annoying it is when “crypto bros” spam Reddit with their links and say that anybody who disagrees with them is a fool. (The longest-running bit in the r/Buttcoin forum is commenting “this is good for bitcoin” underneath any piece of crypto-related news that should ostensibly be disillusioning, in imitation of the crypto bros’ unflagging faith.) The moderator also said the forum serves as a public archive of the crypto bros’ predatory behavior.
“It’s not a question of if the market is going to collapse; it will collapse,” he said. “And when that happens, there’s going to be a lot of people that are going to pretend they were victims. And there’s a large group of us that feel we can’t let them get away with that. There shouldn’t be any bailouts for these people.”
The pandemic changed the way Americans think about scams. A few years ago, when Donald Trump was in office and the Theranos founder Elizabeth Holmes was awaiting trial, grifting seemed to be the default mode of conduct in a society built on self-interest. The New Yorker writer Jia Tolentino described it in her 2019 best seller, Trick Mirror: Reflections on Self Delusion, as “the definitive millennial ethos.”
We were tickled by scams, found ourselves begrudgingly awed by them, and indulged a morbid curiosity in their inner workings. But somehow, the relentless misery and staggeringly unequal outcomes of the past two years have brought an unexpected correction to this mindset. A new exasperation has taken hold around the billionaires, out-of-touch celebrities, and dubiously talented influencers who couldn’t find it in themselves to act in good taste while others were suffering, and who were insulated from the worst of the pandemic by the money that kept rolling in. Calls rang out for crackdowns on all the liars, hypocrites, and opportunists exploiting desperation.
[Read: How the pandemic stoked a backlash to multilevel marketing]
The most online stretch in human history surely played a role in this reversal. On social networks, anti-scamming movements have escalated through likes and shares as quickly as the scammy movements themselves. Anti-scammers appear motivated by frustration with the way things work—and with the fact that they had no say in their arrangement. Likewise, with Web3, the anger seems to come from the knowledge that regular people may be unable to excuse themselves from the possibly tragic ramifications of a movement they neither pursued nor supported. “If it’s just a dot-com bubble, it sucks for the people who invested,” Hilary Allen, a law professor at American University, recently told Vox. “But if it’s [like] 2008, then we’re all screwed, even those of us who aren’t investing, and that’s not fair.”
When I spoke with Wood, the co-founder of Ethereum, and asked him whether he was surprised by the recent pushback against Web3, he seemed unfazed. People are just afraid of change, he said, and that’s okay, because, as with any major societal shift, Web3 will be brought about in waves. “First there’s the builders,” he said, “the people who are building the next generation of stuff.” Then there’s a broader group of influential people who “think quite deeply about how it is that they’re living their lives.” If this second group buys into a coherent argument as to why the major societal shift is to their benefit, they will “largely drag along the rest of the population.”
The being dragged along is what people really, really resent. And that resentment is becoming a force of its own.
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