Here’s a new book for Bitcoin Skeptics

I was expecting a rather lazy and hysterical tale of crypto’s many ills when I started reading Pops the crypto bubble. The ambitious cryptoskeptic book was co-authored earlier this year by financial fraud writer Darren Tseng, fintech consultant Jan Akalin and software engineer Stephen Diehl – ​​notably the organizers of September’s historic “no-coiner” conference.

Diehl is the most notorious of this trio. He regales his 58,000-strong Twitter audience with a daily deluge of epigrammatic, viciously cynical talking points that are a crypto-skeptic version of the empty catchphrase of Bitcoin-booster bros like Anthony Pompliano.

Diehl ad nauseum blasts crypto as a “grift”, a massive “ponzi”, etc etc, and it’s all gotten a bit tiresome. What might once have read as fair criticism has since solidified into another boring dogma to be digested by the terminal online.

Still, Diehl et al the book, which promises to “uncover the truth about the technology behind cryptocurrency, its political ideas and the narratives driving the biggest economic bubble in human history,” was better than I expected. Although let down by a somewhat fatal tendency towards confirmation bias – I’ll get to this – it presented a sober articulation of crypto-skeptics’ fears about the potential harms of crypto, and the cries of “bubble” and “Ponzi”. ” were more nuanced than their regular Twitter equivalent — only slightly.

The book’s treatment of crypto as a “bubble” was interesting and well researched. The authors describe the current crypto “whirlpool” not as a single, Tulip-like craze, but a machine capable of producing new crazes (ICOs, Defi, NFTs). , etc.) infinite. (Sounds impressive!)

Issuance of private currencies, speculation around unproductive business, accounting fraud, cash wrapped in the language of liberation, “financial nihilism”, it’s all in the history books if you look for them. Crypto’s most important innovation, the authors argue, is that it dissolves these disparate streams into a mega-scam that is sold to gullible investors as a solution to the corruption of the very capitalism that has fueled its own insane growth.

The book is at its best when it discusses what the authors see as the pure scum of the crypto industry. Even its most ardent followers cannot deny that large electricity costs (which Bitcoin defenders say is a feature, not a bug; and yes, yes, The Merge fixed this for Ethereumetc.) and the enormous amount of capital that ends up either being speculated into oblivion or poured into unproductive activities.

They use a new term, “Blockchainism”, to describe the endless failed “pivots” to blockchain by flailing legacy companies. Due to the tendency for millions of dollars to end up in failed projects, in the hands of fraudsters or in dead wallets, the authors argue that investing in crypto is often a negative sum game – a situation where more value ends up being destroyed than created. . Investing in, say, Apple shares will ideally increase the wealth of all investors if the company itself is growing; with many crypto schemes, there can be virtually zero underlying growth, and gains are just the division of a dwindling pool of capital among a few lucky early investors.

The problem with the book is that the authors extend this credible challenge to the carnival-barking, speculative side of the industry into a general case against crypto producers. anything of value, ignoring any argument that damages their previous screed.

The authors are unwilling to dwell even for a moment on the possibilities of, say, new models of ownership or organization that technology offers. They reductively divide crypto “culture” into three camps (Austrian economists, techno-libertarians, and cypherpunks) while ignoring the more modest aspirations of, for example, leftist DAO founders who want to entrench the collaborative model (DAOs are simply dismissed as a “form of regulatory avoidance” in two measly paragraphs), or web developers interested in micropayments.

Similarly, the authors aim to accuse Ethereum with the pedantic argument that “smart contracts are not really smart contracts” – something any Ethereum developer will happily tell you. Apparently based on his own experience as a coder, Diehl further claims that Ethereum’s coding language, Solidity, is highly error-prone and nearly impossible to test in a chaotic market environment.

Most new programming languages ​​are unstable at first. Ethereum coding has actually come on leaps and bounds since the network’s inception in 2015, now involving endless rigorous testing and “search term” which helps prevent programming accidents. Hence the success of the Ethereum merger — a technical feat that Diehl and co., as it happens, predicted would never happen due to technical limitations. (The book went to press before the merger was implemented on September 15. Oops!)

Perhaps the tome’s greatest shortcoming is the authors’ confusion about their own moral stance on things like drugs, law enforcement, sanctions, technology, and Wall Street. They rage against the corrupt financial system that inspired crypto, while often reflecting on the opinions of the system’s main exponents, among them people like Warren Buffett who have called for the destruction of crypto. They write approvingly of illegal torrent networks such as BitTorrent, while rejecting crypto’s use in any form of illegality in principle.

The ideological root continues. As recent founders of an anti-crypto think tank called the “Center for Emerging Tech,” the authors call for more regulation and prosecution of crypto companies, issuing at one point, Economist-style, a numbered list of strict dictates to the US government. And yet, at the same time, they seem mostly fine with the same venture capital model that led to some of the most disastrous frauds of the last few decades (ahem: Theranos). Despite protesting capitalism, they end the book by declaring, “capitalism isn’t going anywhere anytime soon,” suggesting that getting rid of the crypto world to preserve the status quo is noble enough.

Perhaps all this is inevitable for a movement that has drawn its broad-based coalition of haters from so many different sources: the “legacy” world of finance, politics, online activism, gamers, leftists and a host of others unite in their crypto. hate.

Ultimately, Pops the crypto bubble provided a deeper analytical substance to the highest skeptics endlessly retweeting on no-coiner Twitter. I came away with the feeling that the writers only succeeded in knocking down a straw man: a version of the crypto industry there everyone is either a delusional libertarian fantasist or a vaporware-hawking tech bro.

These guys are just, like, 99% of the industry. And the remaining 1% can make the difference.