Saving Schrödinger's Cat

Crypto vs Common Sense

Many years back I read a story called “Johnny Mnemonic.” It was a cyberpunk story in which people move confidential information from one place to another inside their brains. They are paid for this service, but the catch is, they have to purge some of their memories to accommodate the data they are carrying. It kind of redefines disk cleanup.

Recently, anyone not living under a rock is probably aware of all the hype concerning cryptocurrencies and non-fungible tokens (NFTs). The phenomenon has grown to the extent that celebrities like Matt Damon are now hawking these products. It is estimated that 16 percent of Americans have invested in some sort of crypto. The crypto phenomenon is clearly blowing up in a big way and whether it is here to stay remains to be seen.

While I am certainly a crypto-skeptic, I am not here to get into the technical aspects of crypto. WDC is a writing website after all, and what I would rather do is examine narratives. After looking into both the hype and criticisms of crypto, I found narratives that have endured since the beginning of time. Those narratives include cynicism about the systems of the world, desperation about our own situation, and to what extent we sacrifice our own humanity to improve it.

First, a quick history lesson. In 2008, the economy crashed. It crashed for many complex reasons, and affected many different people in different ways, but it left a lasting impact on our culture. The dot-com bubble had already imploded seven years before, and the few people who thought that the investor class had learned their lesson were quickly disabused of this notion. The so-called Masters of the Universe were no smarter than the common man when it came to making financial decisions. But what really stuck in the common man’s craw was when the government came to bail out those Masters of the Universe and left everyone else out in the cold. This was the moment when everyone realized just how unfair and rigged the financial systems were in favor of large institutions and how upward mobility was increasingly unlikely for anyone not already born into a gated community. In this environment of distrust, stagnating wages and exploding CEO pay, enter the blockchain. This is the technology which is the foundation for cryptocurrencies, NFTs and other related technologies.

Blockchain-based technology is being widely touted as the answer to the inequities of the traditional financial system. Here is a system that is supposedly decentralized, not controlled by any government or big bank, something with a low cost of entry which has no institutional gatekeepers. It is the libertarian dream of an unregulated financial network where no one is beholden to anyone else. It started with bitcoin but soon exploded into thousands of different entities. They had strange names like Ethereum, Binance and Doge. Billions of dollars poured into these entities. Because of its decentralized nature, it is difficult to calculate the value of the market, but some put it at four trillion dollars. Clearly this crypto phenomenon is not something to be ignored. Finally, here was something for the common man to put his sweat and toil into, something he could control, something where he called the shots. Finally, here was an equalizer against the titans of finance.

But something was wrong. It started at first with idle criticisms about crypto. Could you buy a cup of coffee with it? Could you buy gas for your car? Could you pay your electric bill with it? The answer was, “No, but you can store value in it, like an investment! Get in now before it goes to the moon!” Of course, this means that cryptocurrencies are not really currencies, but investment securities, like stocks. But wait a moment! Aren’t securities supposed to be backed up by something real, like a business, or real estate, or gold? The answer was usually, “The value of fiat currency, like the dollar, is made up too! And by extension, so is the value of stocks and bonds!” But you can spend a dollar. That means crypto is nothing more than a security backed by… nothing at all. We have a word for this type of investment; it starts with a “p” and rhymes with “Fonzie.”

It seems that the only way for anyone to get rich with crypto is to sell it someone else for a higher price, the Bigger Fool theory in action. And this seems to be what’s happening now. Cryptocurrencies and NFTs took a huge hit earlier this year. Soon after, crypto-related interests bought expensive ads for the Superbowl. Why? One term used in crypto spaces is something called a “whale.” This is usually an individual (or maybe institution) which owns a huge percentage of the available cryptocurrency, to the extent that they can actually control the market. A recent estimate puts .01% of bitcoin holders in control of 27% of bitcoin. Starting to see a pattern here? The same pattern we see with Wall Street? These whales need to prop up the market and sell their assets to the unsuspecting public while they can. Cue Matt Damon.

At the beginning, I mentioned the story of Johnny Mnemonic, and here’s where I bring it full circle. When the whales dump their assets after hyping them to the moon, the little people will be left holding the bag, and they will be scrambling to recover their value by selling their own assets to whoever they can convince to buy them. We’ve seen this before with less-common crypto, and there is no reason it couldn’t happen with the more established crypto. No doubt many small investors are starting to see the flaw in the system, but they will do everything they can to get their value back. To what extent will they push their failing products onto others? What lies will they tell, what trickery will they resort to, how many friendships will they betray to balance the books? I have already started to see this happen, both in online spaces and in real life. I don’t know whether this behavior will be the exception or the rule, but I suspect that enough this will be yet another thing that frays the social fabric we all live in. Trust in institutions is already dangerously eroded. Will trust in people soon follow? Johnny Mnemonic is told in a dystopian future where corporations control everything. The people who move data in their brains, must give up memories to do so. But memories are arguably what make us human, what define us. They are the record of the sum total of our lives. The data-movers must give up some of their humanity to do what they do. Now that we are living in a time when anything can be commodified, where all interaction becomes a transaction, recorded in perpetuity on the blockchain to be bought and sold, how much of our humanity are we giving up to enter this brave new world?

Johnny Mnemonic is a cyberpunk-genre story. Cyberpunk at its core is a commentary on the consequences of runaway, unchecked capitalism. I think that in recent years we have seen two facets of these consequences in real life, one when institutions overreach in their greed, and one in where individuals fail to consider the consequences of their actions toward others. This is the narrative that repeats itself over and over, with various overlaps. In the real world, we can already see how the flaws of smaller systems (crypto) have their seeds in larger ones (traditional finance), and how the dehumanizing factors of large systems that treat people as nothing more than assets and liabilities can manifest in smaller ones when those participating in the system forget that there are real flesh-and-blood humans on the other end of that transaction. The cyberpunk genre examines all aspects of these systems and how people try to navigate them. Cyberpunk may be the most prophetic of all the genres, as many things depicted there have shown up in real life in one form or another, such as the internet, social media, corporate ownership of DNA, and others. But while the genre addresses some systems as being inherently flawed (such as blockchain or capitalism) the main flaw in any system is almost always shown to be human.

I know this whole article is somewhat of a downer, so I will end on a hopeful note. A conversation about blockchain is raging online, with more pushback against the hype coming from crypto-skeptics. I don’t know if blockchain has a place in the future, but I do know that the issue of crypto and NFTs is going to be hashed out in the online arena, possibly gladiator-style. Cyber-sleuths are calling out more scams for what they are. Even a few celebrities have refused to get on the crypto bandwagon, such as Keanu Reeves, who expressed his contempt for the whole enterprise. But let’s not forget that behind all of the crypto-hype are humans desperately seeking financial security, sometime with the full knowledge that they are exploiting others, and sometimes not, following the age-old narrative of people whose moral compasses get bent, and end up getting swallowed by another exploitative system. As always, the biggest bug in the system is human, and no flashy technology can change that.

https://www.salon.com/2022/02/16/nfts-arent-art--theyre-just-the-of-cryptos-late...