Why Am I Writing About Crypto Again?
Seriously, Why?
(HI! Welcome to Caterpillar Steps, a newsletter by the writer and photographer Corbin Smith. Gap between posts sorry, etc. Writing about crypto this week because I really do not care for myself. I doubt I will employ subscriptions here, but if you like the newsletter and want to buy me a treat, you can feel free to deposit some cheddar in my Venmo account, @BigCorbs. Also please share with anyone you think might enjoy it.)
Here I am, reading an article about a CryptoGenius, talking about decentralized Web3 blockchain shit, living life, being very concerned about what his creation is being used for, but also making it completely fucking clear that doing anything to regulate this mess or bring it to heel would essentially destroy the central premise of the thing, and so yes the apes will continue, because sooner or later I’m pretty sure this thing is going to end autocracy for good.
Why am I reading it? Because I don’t like myself. Why am I writing about it? Because I don’t like you.
Vitalik Buterin, the most influential person in crypto, didn’t come to Denver to party. He doesn’t drink or particularly enjoy crowds.
This is how our portrait of Vitalik begins. It sets him in a big fucking party overflowing with money and good times, a convention of excess constructed in celebration of the ways that his life’s work has made a lot of people rich for what I would probably venture to call “Extremely stupid reasons.” But then it immediately separates him from this pack of fucking dumbasses, lets you know that the party… the party is bad, even if the source of it, well, it could theoretically be good, possibly. He thinks. He is pretty sure.
Nine years ago, Buterin dreamed up Ethereum as a way to leverage the blockchain technology underlying Bitcoin for all sorts of uses beyond currency. Since then, it has emerged as the bedrock layer of what advocates say will be a new, open-source, decentralized internet. Ether, the platform’s native currency, has become the second biggest cryptocurrency behind Bitcoin, powering a trillion-dollar ecosystem that rivals Visa in terms of the money it moves. Ethereum has brought thousands of unbanked people around the world into financial systems,
Wow “Thousands,” please don’t get me too excited about this, I will have a heart attack if I learn that an extremely small number of people can now put their money into an inherently unstable medium of exchange with nothing undergirding its value except pictures of fucking apes.
…allowed capital to flow unencumbered across borders, and provided the infrastructure for entrepreneurs to build all sorts of new products, from payment systems to prediction markets, digital swap meets to medical-research hubs.
Do people think that capital has a lot of problems moving across borders? Does it seem like global capitalism is doing a bad job funneling wealth into places? Unless your country is under sanction by the western financial system, and really even if it is, money can find its way to you if you have something to sell (Oil). There is not a lack of liquid capital out there. It just doesn’t seem to end up in the pocket of someone who isn’t already wealthy as shit. I wonder what that’s about?
But even as crypto has soared in value and volume, Buterin has watched the world he created evolve with a mixture of pride and dread. Ethereum has made a handful of white men unfathomably rich, pumped pollutants into the air, and emerged as a vehicle for tax evasion, money laundering, and mind-boggling scams. “Crypto itself has a lot of dystopian potential if implemented wrong,” the Russian-born Canadian explains the morning after the party in an 80-minute interview in his hotel room.
This unregulated asset I built that you manufacture by lighting garbage dumps on fire under a turbine? It could be used for something mighty unsavory if we’re not careful. Not me, of course. I have done everything I needed to do to make this thing safe and useful. It does not need to be regulated.
Buterin hopes Ethereum will become the launchpad for all sorts of sociopolitical experimentation: fairer voting systems, urban planning, universal basic income, public-works projects. Above all, he wants the platform to be a counterweight to authoritarian governments and to upend Silicon Valley’s stranglehold over our digital lives. But he acknowledges that his vision for the transformative power of Ethereum is at risk of being overtaken by greed. And so he has reluctantly begun to take on a bigger public role in shaping its future. “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable,” he says, reedy voice rising and falling as he fidgets his hands and sticks his toes between the cushions of a lumpy gray couch. “And those are often far from what’s actually the best for the world.”
“Reedy voice,” a powerful euphemism for “Even I, a journalist, could beat the piss out of this guy.” I also fidget my hands and stick my toes in weird places, so I can’t really give him shit for that one.
If you look around the world we live in, you will see the imprint of wealth everywhere. Big cities are managed as if they were fiefdoms of rich developers. The union movement was demolished, leaving truckers at the mercy of their employers’ panopticon and everyone else banging around for table scraps. Collective action to solve important problems gets routinely disregarded by a worldwide political class that can’t seem to exist outside of alliance to profiteers. Why would you look at the world we live in and not determine that “what is immediately profitable” controls anything that isn’t strictly regulated by some good faith party? What did you think was going to happen?
The irony is that despite all of Buterin’s cachet, he may not have the ability to prevent Ethereum from veering off course. That’s because he designed it as a decentralized platform, responsive not only to his own vision but also to the will of its builders, investors, and ever sprawling community. Buterin is not the formal leader of Ethereum. And he fundamentally rejects the idea that anyone should hold unilateral power over its future.
The problems are bad but any solution to those problems? Can’t even entertain that. I made this platform that only seems to respond to wealth, but I don’t want to do anything to it that could possibly make it less receptive to wealth, even though I wanted it to do things that mitigated the influence of wealth. I have really thought this out.
Which has left Buterin reliant on the limited tools of soft power: writing blog posts, giving interviews, conducting research, speaking at conferences where many attendees just want to bask in the glow of their newfound riches.
Posting. I have been posting.
“I’ve been yelling a lot, and sometimes that yelling does feel like howling into the wind,” he says, his eyes darting across the room.
I don’t understand why my posting isn’t changing anything. It’s really frustrating.
Whether or not his approach works…
It won’t. I say this as a habitual poster who has never seen my posting affect anything of importance. It’s a hobby, for sure, but it’s not a useful one by a wide mile.
…may be the difference between a future in which Ethereum becomes the basis of a new era of digital life, and one in which it’s just another instrument of financial speculation—credit-default swaps with a utopian patina.
Say what you will about credit default swaps: they were honest about what they were, a craven hustle tool to make money out of nothing so its “Creator” could use it to buy a crotch rocket. Is there just a set amount of money out there that has to be invested in something that doesn’t have any attachment to real assets? Is some money suicidal, crying out to be wiped out in some dumb bubble?
Three days after the music stops at ETHDenver, Buterin’s attention turns across the world, back to the region where he was born. In the war launched by Russian President Vladimir Putin, cryptocurrency almost immediately became a tool of Ukrainian resistance. More than $100 million in crypto was raised in the invasion’s first three weeks for the Ukrainian government and NGOs. Cryptocurrency has also provided a lifeline for some fleeing Ukrainians whose banks are inaccessible. At the same time, regulators worry that it will be used by Russian oligarchs to evade sanctions.
“Will.” C’mon man, Iran uses crypto to evade sanctions all the time. It’s the only source of real monetary value it has! Don’t get me wrong: I think that feature is value neutral, considering the length and depth of the grudge the United States has against the Iranians, the absurdity of the sanction scheme we have imposed on them, and the lack of room it leaves for diplomatic contact.
But, and I don’t want to sound like a NATO Zombie here, I DO think that the sanctions against Russia are good, because they’re invading a sovereign state for no reason. America has also done this. If someone could have imposed sanctions on them, they should have. But they couldn’t because America sits in the middle of the global economy. Honestly man all this shit really is so fucked that I suppose I do understand why you might want to create a decentralized financial system to try to release hegemonic control over currency and wealth from state actors. But when you create something with no democratic levers, it’s just going to be appropriated by the wealthy, who all have a massive stake in the maintenance of the current system, which makes them wealthy in ways that I can’t even materially imagine.
Especially easy to create illicit, easily tradable wealth stores when you “Create” crypto by burning energy, which Russia has a bunch of, sitting around in the dirt waiting to get fed to server farms. Before Bitcoin was an unstable asset that was valued because it has value, it’s only tangible use was buying heroin. Why does this fucking guy, these fucking guys, why do they think an unregulated monetary exchange tool is going to not be used to skirt sanctions? How many other tangible uses does it even have? Please don’t say exchange fee free banking, because:
A. Exchanges charge out the ass, because you need wealth to to build one and wealth tends to not do things that don’t undergird and expand itself.
B. Banks are supposed to be stable, which cryptocurrency is not.
The war is personal to Buterin, who has both Russian and Ukrainian ancestry. He was born outside Moscow in 1994 to two computer scientists, Dmitry Buterin and Natalia Ameline, a few years after the fall of the Soviet Union. Monetary and social systems had collapsed; his mother’s parents lost their life savings amid rising inflation. “Growing up in the USSR, I didn’t realize most of the stuff I’d been told in school that was good, like communism, was all propaganda,” explains Dmitry. “So I wanted Vitalik to question conventions and beliefs, and he grew up very independent as a thinker.”
Not so independent that he read the work of Karl Marx, where he would have been exposed to the idea that wealth itself is a primary mover and shaker in “The construction of history,” and “The management and regulation of itself,” I guess.
In 2011, Dmitry introduced Vitalik to Bitcoin, which had been created in the wake of the 2008 financial crisis. After seeing the collapse of financial systems in both Russia and the U.S., Dmitry was intrigued by the idea of an alternative global money source that was uncontrolled by authorities. Vitalik soon began writing articles exploring the new technology for the magazine Bitcoin Weekly, for which he earned 5 bitcoins a pop (back then, some $4; today, it would be worth about $200,000).
The Freelancers Union really needs to crack down on this Bitcoin Weekly, those rates are disgusting. Anyway, how could you watch the 2008 Economic meltdown play out and say “You know what this world needs? Less monetary regulation. The Federal Reserve, the SEC, and the Justice Department have too much power to regulate the flow of capital into whatever dark and dank and stupid corridor it wants to wander into! Without them BEARING DOWN on the system, this simply would have never happened!”
This gets back to the fucking apes. For those who don’t know, the Apes are built on the Ethereum blockchain, which we are discussing here. The apes are so fucking dumb, the construct behind them is stupid at best and an obvious money laundering front at worst. The apes were behind a rise in the Ether price even though they’re stupid (He even acknowledges this!!!) and maybe a little criminal, but because this thing is unmoored from any regulation or authority whatsoever, we just have to accept that the apes are a part of this because otherwise we would be subjecting Ether to regulations, and then those regulations would end up creating a bubble that would decimate a bunch of wealth and shred the function of the economy. Oversight is the problem, when you think about it.
Even as a teenager, Vitalik Buterin proved to be a pithy writer, able to articulate complex ideas about cryptocurrency and its underlying technology in clear prose. At 18, he co-founded Bitcoin Magazine and became its lead writer, earning a following both in Toronto and abroad. “A lot of people think of him as a typical techie engineer,” says Nathan Schneider, a media-studies professor at the University of Colorado, Boulder, who first interviewed Buterin in 2014. “But a core of his practice even more so is observation and writing—and that helped him see a cohesive vision that others weren’t seeing yet.”
Oh yeah, this is REALLY cohesive. I am startled by how this Etherium thing all just fits together. Coherent fusion of ideology and technology. This big unregulated pile of servers churning away at math problems all over the world, when you look at them in total, you can see a very elegant picture of the future.
As Buterin learned more about the blockchain technology on which Bitcoin was built, he began to believe using it purely for currency was a waste. The blockchain, he thought, could serve as an efficient method for securing all sorts of assets: web applications, organizations, financial derivatives, nonpredatory loan programs, even wills. Each of these could be operated by “smart contracts,” code that could be programmed to carry out transactions without the need for intermediaries. A decentralized version of the rideshare industry, for example, could be built to send money directly from passengers to drivers, without Uber swiping a cut of the proceeds.
Am I on FUCKING DRUGS!? Why would someone in possession of a pile of capital be incentivized to be a non-predatory lender on a platform with no regulations!? Why would anyone with the resources to build a decentralized Uber do it if they WEREN’T GOING TO PROFIT FROM it!? Why would someone be a middleman out of the goodness of their heart!? Who would be responsible for anything that went wrong with a decentralized platform? Would drivers be solely liable for any accidents that happened, subject to any lawsuit someone wanted to bring over poor service? Once again: how do you look at ridesharing and determine that the main problem here is “Too much regulation?”
I will concede blockchain could be good for wills, as it is a capable verification system. I have occasionally wondered if using the chain to verify RAW photo files en masse could be a bulwark against deepfaking scams. Whether that chain would even exist if someone wasn’t profiting off it is a bit of a wrinkle. But, uhh. Solutions?
In 2013, Buterin dropped out of college and wrote a 36-page white paper laying out his vision for Ethereum: a new open-source blockchain on which programmers could build any sort of application they wished. (Buterin swiped the name from a Wikipedia list of elements from science fiction.) He sent it to friends in the Bitcoin community, who passed it around. Soon a handful of programmers and businessmen around the world sought out Buterin in hopes of helping him bring it to life. Within months, a group of eight men who would become known as Ethereum’s founders were sharing a three-story Airbnb in Switzerland, writing code and wooing investors.
Always with the dropping out of college with these people. If you are thinking about building a tech start up project thing, please just go to grad school instead. Honestly man Elizabeth Holmes might have actually made strides in that algorithmic blood testing thing if she just, like, learned about biotech, and this guy might have changed the world economy for the better if he had some sophisticated or concrete ideas about how money worked.
How did they afford a long term three story AirBnB? Oh, because they were building something that would make them money? Hey, wait a sec…
While some of the other founders mixed work and play—watching Game of Thrones, persuading friends to bring over beer in exchange for Ether IOUs—Buterin mostly kept to himself, coding away on his laptop, according to Laura Shin’s recent book about the history of Ethereum, The Cryptopians. Over time, it became apparent that the group had very different plans for the nascent technology. Buterin wanted a decentralized open platform on which anyone could build anything. Others wanted to use the technology to create a business. One idea was to build the crypto equivalent to Google, in which Ethereum would use customer data to sell targeted ads. The men also squabbled over power and titles. One co-founder, Charles Hoskinson, appointed himself CEO—a designation that was of no interest to Buterin, who joked his title would be C-3PO, after the droid from Star Wars.
When I set out to make a platform for a new technology that would operate unregulated in the world market and be useful for the manipulation and transfer of capital, some of the other guys I was working with were under the impression that we were doing it for profit? Can you even imagine.
The ensuing conflicts left Buterin with culture shock. In the space of a few months, he had gone from a cloistered life of writing code and technical articles to a that of a decisionmaker grappling with bloated egos and power struggles. His vision for Ethereum hung in the balance. “The biggest divide was definitely that a lot of these people cared about making money. For me, that was totally not my goal,” says Buterin, whose net worth is at least $800 million…
You know man, I don't like to be one of those guys who points out someone’s colossal material windfall and claim it’s the main reason they did something. Koch Industries are continuing to work in Russia because they are rent-seeking vampires, yes. But they really are sincerely psychos who believe that the ongoing mechaniations of capital should not concern themselves with the morality of operating in a country that is in the middle of committing some really atrocious war crimes, that capital itself fills all moral vacuums as a positive good in and of itself. In the same way, I believe that this thin dude (And a lot of tech weirdoes) really does think that his little unregulated creation could still change the world for the better, but also he probably enjoys being rich to some degree and it’s really hard to believe that at when he was making this thing did it never occurred to him that he would like to make money off of it.
Still it’s very funny to read an article where he says “I hate the apes” when the apes made him insanely wealthy. Who is your ape you hate?
…according to public records on the blockchain whose accuracy was confirmed by a spokesperson. “There were even times at the beginning where I was negotiating down the percentages of the Ether distribution that both myself and the other top-level founders would get, in order to be more egalitarian. That did make them upset.”
Buddy the incentives in play with Etherium were sitting with you in the room where you were creating this thing. It just NEVER metastasized into a broader object in your fucking mind? Is it possible you’re not as smart as you think you are? That this whole thing is doomed to fail as a utopian project because the world you built it in is not already a utopia?
Yet almost everyone who has a full conversation with Buterin comes away starry-eyed. Buterin is wryly funny and almost wholly devoid of pretension or ego. He’s an unabashed geek whose eyes spark when he alights upon one of his favorite concepts, whether it be quadratic voting or the governance system futarchy. Just as Ethereum is designed to be an everything machine, Buterin is an everything thinker, fluent in disciplines ranging from sociological theory to advanced calculus to land-tax history. (He’s currently using Duolingo to learn his fifth and sixth languages.) He doesn’t talk down to people, and he eschews a security detail. “An emotional part of me says that once you start going down that way, professionalizing is just another word for losing your soul,” he says.
If I were worth 800 Million dollars, most of which is invested in easily transferable Cryptocurrencies, I would probably not tell people that I was extremely easy to kidnap but hey maybe I just don’t trust people that much.
God this guy trusts people so much. Look at this list of shit he is interested in. The whole point of Sociology is tracking the ways human beings operate in incentive systems. The ways that people operate in free-trade global capitalism have structured how the world is. Why would you think that introducing another object of market speculation on a platform people could use to start platforms that could make them money would be the thing that could free us from the world as it is if you read anything about how it came to be this way?
I’m tired of writing this now but I have to address the end.
To Buterin, the worst-case scenario for the future of crypto is that blockchain technology ends up concentrated in the hands of dictatorial governments. He is unhappy with El Salvador’s rollout of Bitcoin as legal tender, which has been riddled with identity theft and volatility. The prospect of governments using the technology to crack down on dissent is one reason Buterin is adamant about crypto remaining decentralized. He sees the technology as the most powerful equalizer to surveillance technology deployed by governments (like China’s) and powerful companies (like Meta) alike.
If Mark Zuckerberg shouldn’t have the power to make epoch-changing decisions or control users’ data for profit, Buterin believes, then neither should he—even if that limits his ability to shape the future of his creation, sends some people to other blockchains, or allows others to use his platform in unsavory ways. “I would love to have an ecosystem that has lots of good crazy and bad crazy,” Buterin says. “Bad crazy is when there’s just huge amounts of money being drained and all it’s doing is subsidizing the hacker industry. Good crazy is when there’s tech work and research and development and public goods coming out of the other end. So there’s this battle. And we have to be intentional, and make sure more of the right things happen.”
I am worried that a tool with practically no guardrails might be exploited by bad actors, but employing any guardrails would make me a bad actor when you think about it, so I didn’t install any guardrails and that’s just the way it is. We have to be intentional with this anarcho-capitalist tool with no meaningful regulatory backbone. And by ‘We’ I mean ‘Everyone else, who is mostly using it to get rich quick,’ while I gently scold them.
But hey: at least this shit is going to end soon, because even an explosion in its utility doesn’t seem to effect its price. The Market: only wise enough to reject a bad idea AFTER it has sliced its veins open with it.