On the days when Bitcoin crashes, a holiday atmosphere takes
over in my corners of the internet. People tweet screengrabs of Reddit fights.
It’s always good fun to watch strangers grieve as their digital nonsense
nickels melt into slag.
It’s not that I want Bitcoin holders to suffer, really. As a
technologist and entrepreneur, I’m sympathetic to and admiring of risk takers.
But as a writer, I enjoy the sheer human-condition-revealing sport. I’m happy
to watch other people play video games without playing myself. I’ll watch
poker, but I’ve never bought a deck of cards—and when I watch football, I keep
the official NFL rulebook open on my phone. For whatever reason, I tend to like
the rules more than the game. Bitcoin is at some level just a set of rules,
defined by software, that has become one of the world’s weirdest games. And
people who invest in an unmanageable abstraction, then panic when it
underperforms, are very entertaining.
Everyone’s so excited and having such a good time, the sort
of time you have right before they invade Paris. Watching the world of initial
coin offerings over the past few years has been like watching popcorn pop.
Everything rattled around in the hot air for what seemed like forever and then
pop! Mastercoin! Ethereum! Bancor! Tezos! Then other kernels started popping,
and now we’re eating popcorn for breakfast, lunch, and dinner. Blockchain
startups visit our software agency and promise to pay in dollars, then add,
“There are, however, other ways to get paid.” Everyone is smart and
well-funded. And, yes, some blockchain startups (but never, ever the ones that
visit us) seem comical—so many graphs! Some are even deliberately so, like
Useless Ethereum Token, whose logo is a raised middle finger. “There will be no
expectation of gains,” says the UET website. Naturally, buyers have taken on
about $300,000 worth.
The people tossed around by the cryptocurrency tempest—their
only sin is belief. (Well, and greed.) But here I can only smile warmly and
sigh. I know what it’s like to believe.
I loved the web the moment I saw it, first as words on a DEC
VT320 command-line terminal and then as many-size text with pictures and bright
blue links. You could read things published in Switzerland! Or at MIT! The
ageographicality of it all! I was in college when the web happened. I’d already
used the internet for email and to download files, but here was something that
married my utterly aspirational aspiration to write with my ability to perform
repetitive clerical tasks—i.e., to program. No longer would I have to photocopy
my own zines; the internet would photocopy them for me.
After college, at night in Brooklyn, I made my own web
pages. In the morning I’d wake up, check if anyone had visited my site, then
head to my job in Manhattan making web pages for companies. Money poured in—a
bit into my bank account and floods of it elsewhere. Options, percentages, deal
flow. I worked for a 30-person company that was bought to seed a much larger
firm. The new office was on Fifth Avenue, and the new boss was from Microsoft.
She brought her small dog.
It was a world of wonder and comedy. The Super Bowl ads were
all dot-coms; co-workers were sleeping together; and before pitch meetings, the
dog pooped under the vast glass conference table. I went to a Yahoo! party that
featured a fake volcano. Manhattan bookstores were displaying Dow 30,000 by
2008: Why It’s Different This Time, not to mention Dow 36,000, and Dow 40,000:
Strategies for Profiting From the Greatest Bull Market in History, and Dow
100,000: Fact or Fiction.
Everyone jabbered about initial public offerings,
investment, and venture capital, and said “revolutionary” a lot. I knew I was
supposed to have an opinion on how the web and the capital markets interacted,
but I just wanted to write stuff and put it online. Or to talk about web
standards—those documents, crafted by committees at the World Wide Web
consortium, that defined the contract between a web browser and a web server,
outlining how HTML would work. These standards didn’t define just software, but
also culture; this was the raw material of human interaction. I could barely
comprehend the new frontiers into which I awoke each morning.
That all of this adds up to money is ridiculous, and we
should probably mock it more than we do
I first stumbled upon Bitcoin in 2009 and found it vaguely
interesting. I understood it—or rather misunderstood it—as yet another take on
micropayments, with a dash of old-school virtual currencies such as Beenz and
Flooz, plus some spam-fighting ideas. My math is trash, so the Bitcoin white
paper made no sense, but I still tried to mine a few coins, without success. I
didn’t like wasting my Mac’s central processing unit cycles on folly, so I
shrugged the whole thing off.
There’s no easy way to explain Bitcoin, but let me wave my
hands and try: When you go to the ATM at a store and get money to buy a
six-pack, you put in your bank card. The transaction processor verifies it
somewhere in the ether, takes a fee, and spits out cash. It’s all powered by
software. OK, deep breath. Acquiring Bitcoin is like using an ATM, except
instead of government-backed money you get proof that a computer somewhere
solved an automated puzzle faster than other computers, and instead of using an
ATM card you’re using an auto-generated token that only you have, and instead
of connecting to a bank you’re connecting to a decentralized network of
computers that collectively maintain and update copies of a massive historical
database of transactions—and that also collectively validate transactions,
using, well, math, and spit out new Bitcoins from time to time, to reward the
puzzle solvers. Slow exhale. Almost there. And instead of buying a six-pack
from someone behind a counter, you’re transferring some amount of Bitcoin to
another anonymous token. Over time, all the transactions that people make get
lumped into blocks and validated, and they get a special code that takes into
account all the codes in the blocks that came before, and thus you have it: a
blockchain. According to Bitcoin.org, the Bitcoin blockchain is about 145
gigabytes, though it will be bigger by the time you read this. You can download
the whole thing, the entire portrait of the Bitcoin economy, onto a USB drive.
That all of this adds up to money is ridiculous, and we
should probably mock it more than we do. Consider Bitcoin a grand middle
finger. It’s a prank, almost a parody of the global financial system, that
turned into a bubble. “You plutocrats of Davos may think you control the global
money supply,” the pranksters seem to say. “But humans will make an economy out
of anything. Even this!” To be frank, central banking never really ground my
gears; it’s just another one of those vast enterprises that we cower beneath,
like network TV or religion. But I can see how it would piss people off. Bits
gonna coin.
It was surprising when some of the big banks issued
guardedly positive opinions of Bitcoin and blockchains. But as hidebound as
bankers can be, more than the rest of us they see money as an abstraction. Even
if they don’t feel Bitcoins in their bones as they might feel interest rates,
it’s on an exchange, and people buy it, and it’s got moneylike ambitions. So
why not? This could get serious. You can argue, too, that cryptocurrency is a
boon to people living under repressive regimes—a Swiss bank account for the
smartphone-clutching masses.
What Bitcoin actually accomplished is the financialization
of a few genuinely joyous ideas. Shrug away the exchange rate, and you have a
set of technologies that, for one, allows you to create scarcity. At least of a
kind, because you can encode data and information into the blockchain in a way
that lets you say, “This is the first one of these particular digital things.”
It’s been applied to digital art, and you can see applications for patents,
stock photos, things like that. With copies all over the place.
What if the most important thing the blockchain offers is a
way to build culture?
In other words, the blockchain can be a form of media. The
writer Maria Bustillos is starting a magazine that will publish on the
blockchain—which means it will be impossible to take down. (Disclosure: In
theory, I’ll write for Maria, who’s a friend, and she’ll pay me in
cryptocurrency, or what she calls “space jewels.”) One of her aims is to make
it impossible for people—Peter Thiel, for example, who backed Hulk Hogan’s
lawsuit against Gawker—to threaten publications they dislike.
You could even make a distributed magazine called
Information of Vital Public Interest About Peter Thiel that would be awfully
hard to sue into oblivion. It’s the marketplace of ideas. Literally. Try
another thought experiment. Remember that anonymously created list of men who
worked in media and who were alleged sexual harassers? You could, by whispering
the allegations from one wallet to the next, put that information on a
blockchain. You could make a web browser plug-in so that whenever someone
visited a sexual harasser’s LinkedIn page, that page could glow bright red. You
could have a distributed, immutable record of sexual harassment allegations on
the internet. (Is there an economy around such allegations? Well, people do pay
for gossip. GossipCoin?)
I’m not saying this would be a good idea. In fact, I’m
pretty sure it’d be a bad one. Point is, this sort of thing used to be
prohibitively difficult to pull off at any scale, because anonymity can be hard
to protect, and platforms are hard to run and easy to attack. Now the
frameworks are coming to build such tools and make them anonymous and
decentralized, so that they might endure, and, as with all internet things,
they’ll arrive well ahead of the ethics we need to make sense of them.
Things were bad enough when people were spending Bitcoin on
illegal drugs. We have a lot of work to do.
The dot-com crash came in the early 2000s. Ghost offices
with empty Aerons. “So much money is going to money heaven,” sighed an investor
friend. As companies huddled together in the cold, merging amoebalike into new
forms of corporate life, adding then removing exclamation points from their
names, I noticed that the people who’d come from real estate, cable-TV editing,
and athlete management had left.
The dot-com worker became a figure of fun, a jargon-spouting
twit who’d driven the economy off a cliff. Which, fair. Myself, I barely could
make rent ($590 a month!) with freelance writing jobs in 2002, but I remember
that era with far more joy than I’d experienced during the boom. People sought
each other out via email lists, gathering at apartments in still-obscure
Brooklyn neighborhoods, with beer and snacks as the price of admission, to
discuss XML, navigation taxonomies, topic maps, and site architecture. We wrote
about these subjects on our websites, each of us a writer, designer, and
manager of our own little vest-pocket worlds.
Stuff started happening again. Someone released an online
game called Game Neverending, and people played it. It fell on hard times, and
that was sad, but then the same team released Flickr. Google bought Blogger.
Heat and light returned. And bit by bit, the software industry insinuated
itself into every aspect of global enterprise. Mobile happened, social networks
exploded, jobs returned, and coding schools popped up to convert humans into
programmers and feed them to the champing maw of commerce. The abstractions I
loved became industries.
Bitcoin will crash because of course it will. Bubbles burst
People feel compelled to make predictions about blockchains.
Here’s mine: The current wave of coins will eventually ebb, because it’s a big,
inefficient, unholy mess. It’s more ideology than financial instrument, and
ideology is rarely a sustainable store of value. Plus, transactions are slow
(everyone says they’re fixing that), and you shouldn’t have to use an aluminum
smelter’s worth of power to make new currency.
Most things that the blockchain promises to do can be done
more easily with other technologies, including good ol’ fiat currency. But I
know a mind virus when I see it.
Here’s what I finally figured out, 25 years in: What Silicon
Valley loves most isn’t the products, or the platforms underneath them, but
markets. “Figure out the business model later” was the call of the early
commercial internet. The way you monetize vast swaths of humanity is by
creating products that people use a lot—perhaps a search engine such as Google
or a social network like Facebook. You build big transactional web platforms
beneath them that provide amazing things, like search results or news feeds
ranked by relevance, and then beneath all that you build marketplaces for
advertising—a true moneymaking machine. If you happen to create an
honest-to-god marketplace, you can get unbelievably rich.
In the past, building a market required users, products, all
that mess—farmers taking their plump pigs to market. What we have now is a
means of spinning up any number of auctions, a method for the mass manufacture
of middlemen. This is the destiny of Silicon Valley. And with ICOs and Bitcoin
exchanges, we have a marketplace to value marketplaces. What in Galt’s name could
be wrong with that? We’ve never (surveys vast tracts of empty Florida homes)
had trouble before.
America understands new abstractions by financializing them.
It’s how our culture absorbs information. Taxicabs, spare bedrooms, public
education—we see markets everywhere. Bitcoin and the blockchain came
prefinancialized, intended as a replacement for central banking. But what if
the most important thing the blockchain offers isn’t a replacement for money
but a new way to build culture?
I know what it’s like to hold a software idea in your head
and see its possibilities arrayed before you like mysterious eggs. Some are
rotten, some empty, some contain perfectly adequate chicks—but every now and
then, given enough processing power, one could hatch a dragon.
Whenever I hear people talk about Bitcoin’s limitless
future, I think about Dow 100,000. I first saw it in the old Borders bookshop
at the World Trade Center. A few years later, the store was destroyed, and the
book title was a sad joke. The markets lost interest in tech for years. Today
all the Borders are gone, too.
Bubbles are melancholy things—swirls of lies and optimism
used to hide a million unrealized yearnings. Bitcoin will crash because of
course it will. Bubbles burst. The real estate and athletics management people
go home, and the believers remain, meeting up, planning new markets. It could
take years, it could take a decade, but the blockchain freaks have a world in
their heads, and they won’t rest until it’s real. That the rest of us live here,
too, is the least of their concerns. Some of the things they’ll do will be
magical, community-building, economically thrilling. Others may keep us up at
night.
Still, I can’t help but look on in envy. Not for the
believers’ possible wealth, because that will elude most. (Even in a
distributed money platform, wealth has a way of finding only a few pockets.)
I’m jealous that they’ll experience it all: the crash, the rejection, and then
the slow rebuild as they learn the difference between toys and tools. They get
to participate in the screaming edge of culture
