In Zeke Faux's new book, Number Go Up, Sam Bankman-Fried explains how cryptocurrency works:
A day before the start of the Bahamas conference, Bankman-Fried had all but admitted that much of his industry was built on bullshit. During an interview on Bloomberg’s Odd Lots podcast, the columnist Matt Levine asked a straightforward question about a practice called yield farming. As Bankman-Fried attempted to explain how it worked, he more or less laid out the how-to of running a crypto pyramid scheme.
“You start with a company that builds a box,” Bankman-Fried said. “They probably dress it up to look like a life-changing, you know, world-altering protocol that’s gonna replace all the big banks in 38 days or whatever. Maybe for now actually ignore what it does — or pretend it does literally nothing.”
Bankman-Fried explained that it would take very little effort for this box to issue a token that would share in the profits from the box. “Of course, so far, we haven’t exactly given a compelling reason for why there ever would be any proceeds from this box, but I don’t know, you know, maybe there will be,” Bankman-Fried said.
Levine said that the box and its “Box Token” should be worth zero. Bankman-Fried didn’t disagree. But he said, “In the world that we’re in, if you do this, everyone’s gonna be like, ‘Ooh, Box Token. Maybe it’s cool.’”
In other words, a guy at the center of crypto hype was not only more cynical about crypto than even I am, he was perfectly willing to admit it in public.
From crypto to Donald Trump, it's remarkable how eager people are to be bullshitted. They're so eager that it does no harm to explicitly announce that you're bullshitting them. Neither crypto enthusiasts nor Trump fans care. In fact, they revel in the bullshit. The more the better.
I don't think this is a new feature of American culture. Quite the contrary. It just happens to be more glaringly obvious than usual at this nano-moment in history.
For such a bullshitter to become a president is the real novelty.
Also Trump is much worse than a plain bullshitter that does it just for making money, because he wants to destroy democracy. That makes him very very different from Bankman-Fried and similars.
Now, being a sucker / mindless hero-worshiper is an identity.
People mindlessly worship Trump. They also mindlessly worshipped Obama.
"People mindlessly worship Trump. They also mindlessly worshipped Obama."
For varying definitions of "mindless" and quantities of "people," sure.
After Obama paid $25 million to settle lawsuits, that he duped ordinary folks out of $000's by attending that bogus "Obama University", you would have thought that all those progressives would have ended their mindless Obama worship. Even after Obama had collected 91 felony indictments, got labeled a sexual predator in a civil trial, and instigated a civil insurrection, the Obama worship continues unabated.
I've been saying this for years.
- Americans have an insatiable appetite for snake oil cures. If you think that stuff died out in the early 1900s, look at Ivermectin and the shit Infowars sells.
- PT Barnum is an un-official national hero.
- Professional wrestling has effectively merged with Christianity for the xian-nationalist set, which is thankfully smallish, as a percent of the country.
A lot of US Americans suffer from a weirdly aggressive, demanding form of gullibility. I grew up in middle America, surrounded by this stuff, and it freaks me out. I can only imagine how it looks to folks from a polity without it.
- Professional wrestling has effectively merged with Christianity for the xian-nationalist set, which is thankfully smallish, as a percent of the country.
I remember Hulk Hogan shouting hoarsely in post-match interviews when I was a kid that all the young fans out there should take their vitamins and say their prayers every night, but has it really been co-opted by right-wing Christians these days? I knew country music and NASCAR pretty much were, but why wrestling?
Nascar is as woke as a hedge fund manager in the throes of a cocaine binge.
Kevin's last paragraph is surely true, and the reason it's more glaringly obvious is also clear--when you can put your scam on the Internet, you can get LOTS of rubes buying into it. PT Barnum had a much more constrained publicity machine.
Crypto is a huge waste on energy, especially the "mining" bit. It would be great if it, the ledger, was a more efficient way to transfer funds--but it's not in time nor energy, which is why companies have not adopted it.
I think the true believers also equate the "box token" with money issued by governments--forgetting that you can use the latter to actually pay taxes.
They also don't seem to understand network effects. For something to replace not just the dollar (which nearly everybody uses) but also government-backed money itself (which _actually_ everybody uses), you'd have to offer something not just better on a one-to-one comparison, but so fantastically much better that people would be willing to walk away from the colossal benefits inherent in having every single bank, store, vending machine, gas pump, online shop, restaurant, etc. already being set up to accept your dollars AND the lifetime-ish of knowlege/human capital everybody has built up in understanding how their home currency works, how to transfer, bank, save, etc. it, what different goods should cost in that currency, etc.
(this is a big part of why it's taken so long for EV sales to really take off--it wasn't enough that and individual EV was about on par or slightly better than an equivalent ICE car, they had to be better enough to overcome the ~$50 trillion or so in physical infrastructure supporting ICE cars, and the even more valuable knowledge hundreds of millions of us carry around in our heads about how to fuel and maintain a gas vehicle, as compared to the fuzziness most of us have about how exactly an EV works. But now they are, and so globally it's gotten to the point where 20% of all new car sales are EVs).
Now, maybe some cryptobro might argue that crypto would operate alongside traditional money (in which case, one might ask how many of us maintain separate bank acounts in, say, dollars and yuan, and speculate that the hassle isn't worth whatever benefit there is in juggling >1 currencies all the time) or that crypto is a niche market product for only certain types of people, but in that case, you've already walked so far away from the breathless "blockchains gunna do a big REVOLUTION!" hype undergirding crypto that, again, you might ask "why bother?"
We are far away from anyone even acting like crypto currencies are going to work like currencies anymore. At this point, they are investment vehicles and that is all.
ergo, back to the ponzi scheme...
Investing in the existence of a greater fool...
Investment vehicles???
The only "investment" value of currency is to hedge against deflation. Is there somebody out there -- anybody at all -- who claims that as a value of crypto?
No argument here. But people are buying and selling them to make money and that's about it.
There's a part of the psychology at work here where the bullshit audience thinks they're in on it and they can use this to turn around and get away with bullshitting others, like money in the bullshit bank, and swallowing it gets them on the bullshit wagon that might run out of control through the crowd and they'll be left standing on the higher platform and everyone else is a sucker because they're dead.
(it's a kind of xenophobia if you think that's a mixed metaphor, this is America, it's a muttley metaphor).
I think it was Carl Sagan who observed years ago that political extremism, paranoia, and belief in pseudo-science and conspiracy theories are only going to get worse as the world, and especially our economy, become more complex and tech-driven and fewer and fewer people actually understand how things work. Explaining why mRNA vaccines are effective and how FDA approval processes work is quite complicated if you don't have some passing familiarity with genetics, virology, the immune system, etc.. That ivermectin is a simple, affordable Covid treatment the government Doesn't Want You to Know About, is much more digestible, particularly if you're already convinced the government is a nefarious cabal of some kind. Conspiracy theories and scams like crypto fill a vaccuum created by ignorance and fear. If you actually know how something in politics, economics, or science work, you tend to understand why a Secret Conspiracy to fake it all, or This One Weird Trick to make you rich, probably won't.
"That ivermectin is a simple, affordable Covid treatment"
That's something that always puzzled me. What's the mechanism by which a horse dewormer would affect a respiratory virus? Do horse-paste afficianados/proponents think it's some sort of miracle cure for all sickness (equine and human?), like those nuts with their colloidal silver? Or do they have some sort of mythology about why it works for covid specifically?
It was a couple of things. IIRC, there was a study published in Australia at one point that showed ivermectin could have some antiviral properties -- in a petri dish in a lab and in very large quantities. This got spread around as "proof" that it was an effective Covid treatment. Subsequent studies to see if it could have any effect on an ongoing viral infection in your lungs, using quantities that wouldn't kill you, came up with nothing. Of course those studies, unlike the one in Australia, were immediately dismissed as a bunch of smokescreens thrown up by the government and pharmaceutical industry to throw you off the "real cure." Second, there were certain groups claiming that Covid was not really caused by a coronavirus at all, but a parasite or something, and so ivermectin would be an effective treatment.
Anytime someone who had taken ivermectin died of Covid, it was usually claimed that it was because they hadn't taken *enough*. The mind reels.
That's interesting--thanks!
"there was a study published in Australia at one point that showed ivermectin could have some antiviral properties -- in a petri dish in a lab and in very large quantities."
In a way different from how, say, windex or salt or sand might have "antiviral properties" when dumped into a petri dish in large quantities? It seems to me that a whole lot of things can kill virii, so was there anything particularly notable about this study?
I'm just really struggling with how horse paste of all things became the cause celebre among weirdos. Like, why not vitamin c, or witch hazel, or gargling bourbon etc.? There's got to be some interesting sociological research there about how conspiracy theories and quack medication beliefs propogate--maybe "invermectin" is sufficiently science-y sounding, just available enough (but not too available), and rural-associated to hit that sweet spot?
Horse dewormers won't affect a respiratory virus. But many people in rural areas of developing countries have tapeworms or other parasites that are co-morbidities for COVID, so dewormer makes the outcome of the viral infection better.
Ivermectin is used as a human anti-inflammatory.
They also make one for horses that should not be used by people.
If you need to bring down inflammation then the drug might make sense as part of treating a sick Covid patient.
We fall into the wingnut's trap when we talk about it ONLY as horse medicine.
In financial markets a lot of this is Fear Of Missing Out, and it goes in cycles. People see others making money somehow, and they just feel (not think) that they have do it too. Whether the way the money is made makes sense for them is irrelevant.
When the bubble bursts people lose general faith in all kinds of enterprise, not just bubbles. That's why we have bad depressions, which may not be easily cured with monetary or fiscal policy. Fiscal policy succeeded after Covid partly because there was no financial and general-faith collapse.
"Fiscal policy succeeded after Covid partly because there was no financial and general-faith collapse."
Sort of. I think a better way to put would be that fiscal policy succeeded for the same reason it always does, which is that it mostly doesn't rely on the current level of faith in enterprise at all.
The great thing about fiscal policy is precisely that the government just directly spends money, rather than (as with monetary policy) influencing the price of money in the hopes that other people will (borrow and) spend. Fewer moving parts, fewer contingencies & dependencies, more direct contact with the problem.
Even when the government simply cuts checks, the proceeds of which are immediately saved by panicky consumers, it's a more direct expansionary mechanism than monetary policy: Satisfying those elevated savings desires provides a much faster route back to renewed investment than "pushing on the string" of cheap credit when almost no one has the stomach for starting up new capital projects.
+1
Of course, fiscal policy has terrible disadvantages as well, chief among them that it shows Big Government works.
When they finally get around to declaring an official climate emergency can they ban crypto-mining as a massive waste of energy and carbon producer?
There are some efforts underway to do just that. They are more focused on stopping cryptomining from being used as a way to support otherwise-uneconomic fossil burners.
For example, a coal plant might be able to economically supply power to the grid during peak demand hours (early evening in the summer; early morning in the winter) but it's not competitive during the lower-demand hours when the less-expensive generation is all that's needed to meet aggregate electricity demand. But, a coal plant can't spin up and down on an hourly-basis--it takes as much as a full day to go from a cold start to actually generating and a similar time to get back to shutdown (frequent cycling of inflexible power plants is also not great for wear and tear--similar to city versus highway miles on a car). So, since you can't make money running an asset for 24-to-36 hours just so you can sell electricity for a few hours, your thinking power company plans to retire the dirty coal plant.
But, what if you could keep your plant running all the time, and sell power to the grid when the market wants it, and then just power your own local cryptomining server farm the rest of the time? You could avoid costly startups and shutdowns, avoid maintenance-inducing cycling, and maybe an otherwise uneconomic fossil plant gets to continue operating (and polluting!) for years to come. Plus you support a weird "money" system favored by fools, weapons/drug smugglers, and ransomware collectives! Everybody wins, except for people who breathe air and enjoy a stable climate.
The collapse in crypto prices has dashed cold water on this sort of enterprise, but there are still a lot of power companies trying to implement it.
dear God I had no idea!
I think part of what is behind this kind of thing is the sort of dumbass "knowing" cynicism about all institutions that pervades our culture. You know, the kind of attitude that so many people reflexively adopt when talking about politics. "Oh, sure, Hilary Clinton. She's not dirty at all . . ." Everyone is so certain that all politicians are dirty, that the government is constantly lying about everything and inept to boot (but also in control of everything). It's not just right wing conspiracy nuts who adopt this pose. It's also common among so many people on the left and among virtually all independents.
So if everyone is lying and all institutions are broken, why not try to get in on the con?
Juvenile cynicism --the first refuge of the scoundrel.
Juvenile cynicism is what gave us first Trump, then the elevation of three absolutely terrible judges to the Supreme Court. Of course we told the 'far-left' Bernie Bros that this is exactly what would happen if not enough people voted for Clinton and of course now they're royally pissed when that we throw that in their face whenever they question our judgement.
I'm reminded that half a century ago it was said, in the context of nutrition, that "Americans Love Hogwash."
https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1753-4887.1974.tb05179.x
An eleven-year child enters the uncomfortable phase of adolescence as puberty. They feel uncomfortable in their changing t body and are convinced and "affirmed" by social media they must be a different gender. Let's put them on puberty blockers, which will permanently alter their body before they are capable of understanding the implications. That is a very modern bullshit that is ruining lives.
Please don't feed this troll.
I am struck by the old saying "you can't cheat an honest man". Seems like we might have a shortage of honest people.
"I don't think this is a new feature of American culture."
No indeed. It's neither novel nor particularly American. It is, however, fantastically dangerous. Here's Hannah Arendt discussing the same phenomenon as it manifested itself in inter-War Europe:
"A mixture of gullibility and cynicism had been an outstanding characteristic of mob mentality before it became an everyday phenomenon of masses. In an ever-changing, incomprehensible world the masses had reached the point where they would, at the same time, believe everything and nothing, think that everything was possible and that nothing was true.
The mixture in itself was remarkable enough, because it spelled the end of the illusion that gullibility was a weakness of unsuspecting primitive souls and cynicism the vice of superior and refined minds. Mass propaganda discovered that its audience was ready at all times to believe the worst, no matter how absurd, and did not particularly object to being deceived because it held every statement to be a lie anyhow.
The totalitarian mass leaders based their propaganda on the correct psychological assumption that, under such conditions, one could make people believe the most fantastic statements one day, and trust that if the next day they were given irrefutable proof of their falsehood, they would take refuge in cynicism; instead of deserting the leaders who had lied to them, they would protest that they had known all along that the statement was a lie and would admire the leaders for their superior tactical cleverness."
Ten thumbs up for the Arendt reference. Plus two.
If you want to see another example of this watch the documentary BS High School on Max about a guy who started a high school football team with mostly 20 year olds and no actual school and got his team on the schedule of the top ranked high school team in the nation - broadcast on ESPN. We are going to be dealing with what Trump taught the nation for many years to come. Just Bullshit.
What else can we expect from a nation where ",reality" shows are anything but, & the worst kind of businessman - one who inherited a nice amount, harmed a lot of people, somehow managed to both bankrupt a couple of casinos while convincing some gullible people that he was a successful billionaire?
But I'm still puzzled that what Bankman-Fried said so openly wasn't repeated until no one was ignorant to brag about getting in on the bitcoin craze.
Mark Twain nailed this American (?) susceptibility to bullshit in Huckleberry Finn (1884). His Duke and King preyed on river-town dwellers in exactly this way.
I wonder if kids reading this book in school make the connection? (Or maybe they can't anymore because it uses the n-word)
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