Web3 has been great for Republican billionaires—and awful for almost everyone else

Episode Summary 

From a policy standpoint, probably the biggest difference between Donald Trump’s first and second administrations has been his total allegiance to the cryptocurrency industry. It was a huge shift from 2021 when he argued that Bitcoin “seems like a scam” that was “not money” and could be used for narcotics transactions.

All of that is out the window now. In addition to pardoning drug kingpins like Juan Orlando Hernández, Trump, his wife, and his sons have been rolling out numerous cryptocurrencies of their own. And as you might expect, every single one of these virtual assets have declined massively in value since their initial hype cycle.

If you think about the history of cryptocurrency, however, the fact that Trump and his cronies have changed their views about them makes a lot of sense. Not only was Bitcoin initially marketed using anarchist libertarianism, but the industry it inspired has become completely dominated by the exact sort of plutocrats that have always bankrolled the reactionary conservatism that cemented its control of the Republican Party after the Tea Party movement of the 2010s.

Joining me today to discuss what’s happened with all this is Molly White, a bane of crypto scammers everywhere. She’s the creator of Web3 is Going Just Great, a project that tracks the crypto industry. She’s also got a separate interest in Wikipedia, which has recently come under massive attack by some of crypto’s biggest schemers like Elon Musk. These two episodes are linked in my opinion, as you’ll see in our discussion.

The video of our conversation is available, the transcript is below. Because of its length, some podcast apps and email programs may truncate it. Access the episode page to get the full text. You can subscribe to Theory of Change and other Flux podcasts on Apple Podcasts, Spotify, Amazon Podcasts, YouTube, Patreon, Substack, and elsewhere.

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Audio Chapters

00:00 — Introduction

03:10 — A brief history of cryptocurrencies

08:46 — How Wikipedia’s volunteer system works

11:37 — Why Elon Musk and far-right Republicans hate Wikipedia

15:47 — The emotional worldview of crypto advocates

18:22 — White’s backstory

22:45 — Bizarre crypto stories and celebrity rug pulls

25:43 — The two-class structure of crypto: sellers and victims

34:11 — Why crypto whales hate Wikipedia’s more realized decentralization

38:17 — Talking with crypto advocates

45:52 — Analyzing Trump’s about-face on crypto

51:50 — Does crypto have a legitimate purpose?

54:54 — Network states and the billionaire escape fantasy

Audio Transcript

The following is a machine-generated transcript of the audio that has not been proofed. It is provided for convenience purposes only.

MATTHEW SHEFFIELD: And joining me now is Molly White. Hey, Molly, welcome to the show.

MOLLY WHITE: Thanks for having me.

SHEFFIELD: Yeah, so we got two big topics on deck here for today. And in a lot of ways the culture of Wikipedia and the particulars of crypto, I think it’s safe to say that most people are not particularly enmeshed in these things.

Why don’t we just start with, if you could give us an overview of the history of cryptocurrency, where it came from and why are there always so many proliferating cryptocurrencies since Bitcoin, the supposedly master currency?

WHITE: Yeah. So I mean, cryptocurrency really came about in 2008 to 2009 with the advent of Bitcoin which was the first cryptocurrency and remains one of the most dominant cryptocurrencies. And it was created with the idea of changing how people transact digitally financially. The idea was that, unlike a cash transaction where you can hand someone $20 and there’s no record of that ever happening and it’s completely private, there’s not really a great way to do that digitally.

And [00:04:00] so the idea was that Bitcoin would be this peer-to-peer cash system. And, there was sort of this ideological belief behind it that it would help to eliminate the government’s role in surveilling financial transactions or even interfering with financial transactions. This all came about sort of in the wake of the great financial crisis where there was a lot of distrust in the government and anger at how that whole situation had happened.

And so, it sort of emerged as this sort of “cipher punk” way of transacting money using the internet. But over the years it has really evolved into something quite a bit different, I would say, where there’s now this entire realm of cryptocurrencies, thousands upon thousands of them.

Many of them are based on Bitcoin, but many of them are based on different systems. And, pretty much anyone can create a cryptocurrency and therefore people have in great numbers. And they have really transformed, or I’m not sure if they ever were really the, digital cash that Satoshi Nakamoto, the creator of Bitcoin had written about. They’ve sort of never really, especially Bitcoin has never really functioned in that way.

But now, the primary use case I would say for cryptocurrency is speculation. Where people are speculating that the price of this token will go up or down, and making trades based on that.

SHEFFIELD: Yeah. Well, and the idea of these assets going up or down, like they’re not tied to anything [the creators actually control] in particular. So it is entirely speculation. I mean, like that’s, that is a fundamental difference between current, actual currencies issued by nation states. That they’re at least based on some approximation to reality, whether, depending on how, even the most inflationary currencies are still at least [00:06:00] issued by something that is accountable in some way, shape, or form.

Whereas, like the inherent idea of buying a cryptocurrency as an investment vehicle, it, makes no sense at all. Except if you can get suckers, that’s what it seems like.

WHITE: Well, I mean, yeah, if, if you believe that you can buy an asset and then later sell it for more than you’ve purchased it for, I think a lot of people are willing to make trades based on that, regardless of whether there are sort of fundamentals that cause a currency or an asset to, to go up or down in price.

People are willing to speculate on just about anything I would say. And Bitcoin and other cryptocurrencies have certainly enjoyed quite a lot of popularity in that sense, even though they’re not issued by a government or a company or any sort of centralized entity.

SHEFFIELD: Yeah. Well, the currencies themselves are centrally issued.

WHITE: Yeah.

SHEFFIELD: But at the same time, that is, I think also why hype is so endemic to these ecosystems, because that is literally all they have to determine evaluation. It isn’t that some new mineral was discovered in the country, or that they developed some new manufacturing plan or something like that. The worth of a cryptocurrency is entirely dependent on the feelings of the people that buy it. Am I just making that up?

WHITE: No, I mean, I think that’s absolutely true. I mean, obviously, especially now that there are so many cryptocurrencies, there are different versions that you could say, oh, well this one’s tied to this company that’s trying to do this thing, or, a stable coin that’s tied to, it’s pegged to some other asset.

But I think you’re right, especially when you’re talking about, Bitcoin, Ethereum, Solana, some of the major cryptocurrencies that are really not tied to anything in particular. It is based on hype, and [00:08:00] certainly that’s the case with meme coins and other sorts of tokens which are basically intended to be completely dependent on hype, and therefore subject to these massive swings in price as people either pay attention to them or forget about them, usually forget about them.

But, that is really the goal is to attract as much attention and as much interest as possible so that people, early buyers can profit from those who learn about the token somewhat later.

SHEFFIELD: Yeah. Well, and it’s, that’s probably why a lot of people hate you, Molly, I would guess! That you are a hype deflator. And that’s the only thing that they really have.

And we’ll circle back to that.

How Wikipedia’s volunteer community works

But okay, so then the other thing though, the other main research interest that you have is in the culture of Wikipedia.

So, obviously everybody knows what Wikipedia is, but maybe just give us a little brief overview of the site and how it works and just how few people actually are editing it.

WHITE: Yeah, so Wikipedia is an online encyclopedia. It is maintained by a community of volunteers who edit the articles they write them, but also just sort of improve them gradually over time. And it’s a very collaborative project, it’s that the tagline is the encyclopedia that anyone can edit.

And the idea is that anyone, you or me or anyone, can begin contributing to the project as this free and open source of knowledge that is ideally covering, any topic that people might be interested about that, fits the notability criteria and, is suitable for an encyclopedia.

SHEFFIELD: Mm-hmm. Yeah. And but, and not very many people actually do it though, which is the interesting thing about Wikipedia is that every, everyone uses it. But no, almost no one edits it.

WHITE: Yeah, the number of readers is, far, larger than the number of editors, [00:10:00] especially if you look at, active long-term editors versus, people who come by and fix a typo and then never edit again. It is a relatively small community of editors that, that maintain the site.

SHEFFIELD: Yeah. And what’s interesting, I think also about that community is that I mean, Elon Musk, I think has crystallized, I think that a lot of people on the political right strongly hate Wikipedia. Actually and that’s something that right wingers have, been kind of concerned about for, I mean, since the origin of this site, when it first launched in, what was it, 2005, I think or maybe a little earlier, but whenever it was.

WHITE: I think 2001.

SHEFFIELD: Okay. Well, whenever it was like the, I remember, and I wrote what I wrote about it when I was a columnist at the conservative Washington Times that there was a “Conservapedia” that was started. And it still exists now to this day because they argued that Wikipedia has a liberal bias. And that’s something that Elon Musk has been really hammering quite a bit recently. And in fact, he launched his own Republican flavored sort of, I guess that’s what he kind of is. Well, he’s claiming that it’s neutral.

WHITE: Right.

SHEFFIELD: And of course it is! But when you look at it the Grokipedia as he calls it, which God, that sounds like something that you would vomit up after a hangover or something. But it’s largely, basically is flattering to his personal obsessions—and otherwise it’s just kind of a regurgitation of Wikipedia.

WHITE: Right.

Why Elon Musk and far-right Republicans hate Wikipedia

SHEFFIELD: But it’s interesting though that-- and I think it’s probably fair to say, and, you can correct me if I kind of wrong, but you know, I think that it is fair to say that because Wikipedia is often, has lots of articles about science and about history and things like that, that the people who are contributing to it tend to be people that are more, let’s say, [00:12:00] extrinsically oriented that actually have to be concerned about facts and coherency and structure and be able to write well in, an understandable way.

And, that might if Stephen Colbert was right, that probably is going to make some people who are religious fundamentalists or market fundamentalists feel excluded. I think that might be fair to say. What do you think?

WHITE: Yeah, perhaps. I mean the, sort of the fundamental principle of Wikipedia is that editors who are contributing to articles are not writing their own knowledge or their own research or their own beliefs. They are collating reliable sources. And what those sources have to say on a topic. And those sources don’t necessarily all have to agree.

there can be multiple viewpoints on any given topic that are all represented, in due weight to, the prominence of those viewpoints. Which I think theoretically should allow people of very different perspectives and backgrounds and viewpoints, and ideologies to collaborate on the encyclopedia in a fairly productive way.

And I would say generally it, it does, I’ve spent a lot of time editing Wikipedia, and I’ve worked pretty regularly with people who have stated that, their viewpoints are very different from mine or they come from a very different background. But because we all agree on the way that articles should be written and the process by which disputes should be resolved, it actually works fairly well.

I think the problem is that there are people, Elon Musk included, who really disagree with that approach to writing an encyclopedia. The idea of neutrality as Wikipedia treats it, that basically, treating all reliable sources in, in, in, [00:14:00] weighted as, due to their prominence of those viewpoints really does not seem to jbe well with, Elon Musk and others who essentially have redefined the idea of reliability for a source or who have decided that various sources should be considered reliable if Wikipedia does not consider them to be, they have very strong opinions on bias in sources that they think should preclude a source from being used or, change how it’s treated.

And so, rather than come in and join Wikipedia as editors or contribute to this editorial process, they’ve decided essentially that Wikipedia is a lost cause. We can’t. Save it or we don’t want to. So we’re going to create this replacement of it that has, no real clear editorial structure.

for example, Wikipedia does not have the very transparent policies and guidelines that Wikipedia has. But that can be shaped to reflect viewpoints that they prefer, whether it’s about topics that relate to them personally. I know Elon Musk has had sort of longstanding issues with how the article on him on Wikipedia has been written.

And sort of the, he seems to have decided that Wikipedia will be the solution to that and he’ll just make it say what he wants it to say. Or whether it’s, political beliefs that they have that they think Wikipedia is not reflecting honestly. The solution has really been to just replace Wikipedia with a version of it.

And, it is really a version of Wikipedia. Wikipedia has sourced many of its articles directly from Wikipedia and reused them and then sort of shaped them in the way that they wish Wikipedia would.

The emotional worldview of crypto advocates

SHEFFIELD: Yeah. Yeah, that’s right. And it is interesting to me because I, think that there is a, common epistemic orientation between that motivation of Musk and people like him and [00:16:00] why they also like cryptocurrency. These are people that, I mean, there, there is this tremendous irony I think, in that their worldview is extremely emotional. And, it is entirely intuition driven almost. And that they, proceed from their beliefs first and then go to, well, what facts should be discussed, should be allowed to be discussed, rather than saying, well, let’s figure out what facts are and then shape our worldview.

And so that, I think is, why they hate Wikipedia so much. And also why they love crypto so much. I mean, what do you think?

WHITE: Yeah, I mean, I do think that, crypto is very attractive to people who have very strong ideological beliefs, whether it’s about currency and how currency should operate or governments, and the degree to which governments should be involved in day-to-day financial transactions. But crypto really enjoys this almost religious community of advocates and enthusiasts who really love their currencies of choice and, could be all cryptocurrencies or sort of a subset of them with this almost religious fervor that is not particularly susceptible to reason I’ve found. And a lot of times when people do discuss cryptocurrencies from either an economic perspective, a technological perspective, a sort of, fact-based perspective, they’re met with an incredibly hostile response as though you’ve attacked their, friend or something like that.

There’s this very strong attachment to it that is very emotional, as you say, rather than, the types of emotions you tend to expect from financial instruments. most people, I would say are not incredibly emotionally attached to treasury bills or, any, I would say [00:18:00] stocks, but I, now that we’re in the sort of meme coin or meme stock era, there is actually sort of a very emotional attachment to some stocks as well.

But you know, most people are not emotionally attached to SPY or, just sort of like basic financial instruments like that, in the way that you see people very attached to cryptocurrencies.

White’s backstory

SHEFFIELD: They are. Yeah. And, we’ll circle back to that in a bit, but I did wanna, before we get into that, I did want to talk about your own personal interest in both of these topics. So like, how is it that you got into them? Because I think that they’re related. But I’m interested to hear your backstory on that.

WHITE: Yeah, well, I got involved with Wikipedia when I was very young. I was, I think 12 or 13 years old, and I discovered that the encyclopedia that anyone can edit included 12 year olds. and so I began editing when I was pretty young and then developed a real love for it a little bit later in my life.

And, have been a very active editor for probably 15 years now. it’s, something that really spoke to me as an opportunity to contribute to an open and free, resource that would be available to people who maybe don’t have access to a college education or a well stocked library or, any sort of many of these resources that are difficult to access. And so, that was sort of how I got into Wikipedia.

I got into cryptocurrency and, researching cryptocurrency quite a bit later. It was, I think, 2021 or so. At that time I was working as a software engineer. I had. Spent a lot of my time working on web software and people had really started to talk up this idea of Web3, in 2021 or so which was the idea that cryptocurrency was gonna solve everything that’s wrong with the web.

the idea of the web really centralizing around a small number of companies these sort of walled garden [00:20:00] social networks. The inequality of how people are able to in interact on the web and the, power dynamics that exist there. And I was originally like kind of interested because I do think there are a lot of issues with the web.

I’ve been a lifelong lover of the web and also a critic of the way the web has sort of evolved. And so I was interested in learning more, but as I learned more, I learned more about cryptocurrency, more about the hype that was happening, which was extreme in the sort of 2020 to 2021 era where, there were Super Bowl ads and all kinds of marketing, trying to encourage retail, everyday people to get involved in purchasing cryptocurrencies.

and people were simultaneously getting completely wiped out on a day-to-day basis with hacks, or they were getting scammed or, something would go wrong and they would lose their entire investment. And it felt to me as I learned more about it, that there wasn’t much coverage of that angle.

At, at the time it felt like the media profiles of, crypto companies or people, or just the technology in general were very fawning. There were a lot of pieces about is this the, future of currencies? That’s the future of the web. Look at this person who became a millionaire overnight.

There was not much discussion of people getting totally ripped off or companies operating in really shady ways. And so my instinct was actually first to write a Wikipedia article about it, because that’s sort of how I grew up. That was just what I did. If there was something that I was interested in or even if it was something I wanted to learn more about.

And I actually did, I wrote the, Wikipedia article about Web3. Way back then. But as I was continuing to read about it and see all of these incidents, I knew that Wikipedia really wasn’t the right place for that because, a company that pops up and then scams everybody and then disappears into the ether is really not a good, topic for a Wikipedia article.

[00:22:00] There’s a million of those and they just don’t meet the notability requirements. And plus I, at this point had begun to have a pretty strong viewpoint on cryptocurrency and didn’t really feel like I should be editing Wikipedia articles about it that much, just because my perspective on it was so strong.

And so it was at that point that I started Web3 is going just great, which is my website that just chronicles all of these incidents where things are not going according to plan and people are getting really hurt by crypto or crypto companies. And that ended up taking off a little bit more than I expected.

And I continued to become very interested in it and researching it. And eventually I sort of became a crypto researcher and writer.

Bizarre crypto stories and celebrity rug pulls

SHEFFIELD: Yeah. Well, and what are some of the more bizarre stories that you’ve chronicled along the way as far as crypto? because there are so many but let’s give us a couple of highlights if you would.

WHITE: Yeah, there are a lot. I mean, some of the highlights I think are, I’ve always loved the story of the people who decided that they were going to create a dao, which is a decentralized organization, essentially, and raised money to buy something called the Dune Bible, which is this storyboard book essentially by the creators of the Dune films, I believe.

They raised millions of dollars to purchase the book and then realized after the fact that just owning a copy of the book does not give you the IP rights to actually do things with the book. And so their plans of creating, sort of spinoffs and all these different things were suddenly very much dampened and the whole thing ended up sort of.

Just exploding in this weird meltdown. There have been quite a few crypto rug poles by celebrities, which have always been very interesting to me because watching a celebrity get caught [00:24:00] up in crypto hype

SHEFFIELD: Can you explain uh, what a rug pole is for people?

WHITE: Yeah. Yeah. So if someone launches a crypto project and promises you, they’re gonna do X, Y, and z.

There’s this, there was this trend in 2021 and 2022, where like basketball player, like NBA basketball players would launch NFT projects that were all themed around them. And there would be all these perks, like if held enough of these NFTs, you might get a courtside seat at a basketball game.

Or, these sort of like perks that came along with it. And a rug pull is really when the project fails to follow through with their promises. And usually just, the, NBA player loses interest and the token plummets in value and you never get to go see the basketball game. Those were always very interesting to me.

Or just watching like everyday celebrities suddenly become Web3 promoters was a very surreal experience like Paris Hilton on Jimmy Fallon holding up her bored APE token was just one of those moments of like, where did this all go wrong?

SHEFFIELD: Yeah. Well, and yeah, and then there are so many hacks as well, like of people’s wallets getting stolen or emptied out or things like that. And, then even just like the exchanges themselves, I think

WHITE: Right.

SHEFFIELD: has been a huge thing. Not just Sam Maman freed either.

There’s so many other ones that have had issues.

WHITE: Yeah. I mean, crypto exchanges get hacked or, otherwise, lose customer assets on practically a weekly basis, I would say. I mean, Upbit in South Korea was just hacked, like a week or two ago. It’s, a very constant drumbeat of these exchanges getting compromised and people losing funds.

The two-class structure of crypto: sellers and victims

SHEFFIELD: Yeah. Well, so going back to the idea though of like people having this kind of religious devotion to it. So I’m obviously you have had a lot of interactions with advocates of crypto. I’m sure like, and [00:26:00] it’s, and I, would say that there’s, there really is kind of a two class structure, if you will, that, the people who are just the, the ones running the schemes versus the victims.

That’s essentially how I see it. And they do have different mentalities it seems like to me. What do you.

WHITE: I think that’s true. But I also think there’s this constant belief that, the, everyday people who are buying into whatever crypto scheme is being presented to them might eventually become part of the other group, the, wealthy, successful people who are creating cryptocurrencies and making money off of them.

I think most people who are involved in crypto who have not made money off of it, believe that it’s just a matter of time or they’ve had bad luck or eventually something will change and they will become one of those glorified few who have made a lot of money off of it. And so. But I think that’s true that that there is the, crypto industry, the crypto executives, the crypto project founders in one bucket, and then there’s the customers in the other bucket where, they’re the marks, essentially the people who are being sold these crypto tokens with big promises of becoming wealthy.

But oftentimes it is the people in the first bucket who are making money and not the people in the second bucket.

SHEFFIELD: Yeah. because I mean, it, it seems like, of any currency that ever appreciates in value, it’s, the pattern is almost always the same with these new ones. It’s, there is a huge hype cycle and it goes up for a bit and then it goes down never to overturn. That seems to be pretty much every single cryptocurrency that is launched for the past several years.

is that an exaggeration or not?

WHITE: No, I mean the vast, if you’re looking at, [00:28:00] especially if you’re looking at the, cryptocurrencies just by raw numbers, the vast majority of them I mean some of them really never achieve value at all. But those that do often lose it very quickly and never recover any of the value. And the only people who make money are the people who created the token, or in some cases who are very, early to purchasing the token in some cases earlier than would even be possible for any random person to buy the token.

There are token pre-sales or there are allocations to select groups where you really have no opportunity to be a part of that early group. And so the only people who, join in after the fact pretty much lose money. There are certainly tokens that have had. Somewhat more sustained success, but that is, I would say, the exception rather than the norm.

SHEFFIELD: Yeah. Well, and I, you are, you’re, writing and research on all this. I mean, it is obvious to me as altruistically motivated. You’re trying to help people, not get scammed. Have you ever had interactions with people that you know really hated you at first, or were angry at you and then later came to realize, oh, she was actually trying to help me by writing about this. Have people said that to you?

WHITE: Yeah, that happens a lot actually, where I get really angry, like very, angry messages from people. And then I’ll just talk to them a little bit and try to understand what it is that they’re saying. Or often it’s really a question of understanding what it is that they think I believe, because there’s often a very strong discrepancy between their perception of me and my opinions and my actual opinions.

And oftentimes, assuming they’re willing to continue the conversation, by the end of the conversation, they’ll say things like, oh, we actually have a lot more in common than I thought. Or, our ideas are really not that [00:30:00] different. Because I think people get this sort of caricature opinion of me based on, I don’t know how crypto advocates describe me or something, I’m not sure. But that somehow is like, oh, she doesn’t want any of us to make money. She wants crypto to go to zero. She wants to solve bands, or, something like that.

And once they actually understand my opinions, I think they understand that I actually have a lot in common with a lot of crypto advocates around, especially when it comes to the sort of ideological ones when it comes to topics like privacy or, the ability to make transactions that are private and, not exposed to, I mean, the internet in general, which I guess sort of, is a difference for crypto advocates because of the public ledgers.

But also just, to, to governments or law enforcements. I, think I share a lot of opinions with those people. The same thing is true when it comes to Web3 advocates and those who want to see blockchains used as a way of improving the web. I think we often have some of the same complaints about the web and some of the same goals for the web.

And really the only disagreement is about how to get there and whether or not blockchains are a feasible way of doing it.

SHEFFIELD: Yeah. Well, and, the reality is that none of these technologies are actually private. Like if pe, if governments want to find out what you did with your money, they can find out what you did with your money. But that is just such a fundamental thing that, that all of the customers seem to believe that is very hard to disuse them of.

But the other thing that is, I think, notable is that in this bifurcation between the token sellers and the buyers is that when you look at-- like there’s just, there is there token sellers are not consistent at all in advocating privacy or wanting free speech or, wanting any of these things that their customers are being sold on. Like when you look at Peter Thiel, when you [00:32:00] look at Mark Andreesen, just any of these, he or even the Trump family, which has gotten into crypto bigly as we may say that, like they’re authoritarian in everything. And, and they’re spending big in surveillance and big in mil militarization.

So like all the things that their customers seem to genuinely oppose the cryptocurrency vendors love them.

WHITE: Right. I mean, I do think that there is this very strong difference between the ideological crypto true believers, who hope for freedom of speech, freedom to transact, lack of censorship, lack of surveillance, and many of the crypto industry people who will often speak about those things and use them for marketing purposes essentially, but have absolutely no.

Ties to them, they’re willing to abandon those principles pretty much immediately. Whether it’s for money or political power, or the power that one earns from surveilling their customers. The goals, those early ideological goals of crypto advocates and cipher punks have largely fallen by the wayside, especially as crypto has become so speculative, and it has sort of entered the mainstream in a more significant way.

And a lot of these companies have realized that, you can either make a ton of money or you can stick to your beliefs around financial privacy, but you can’t really have both. And if you want to be allied with the US government for example, they’re not going to accept that your financial transactions are private or uncensorable because that frankly does not comply with US law.

And a lot of these companies would rather essentially become [00:34:00] shadow versions of the banks and financial institutions that crypto is intended to do away with, rather than stick to those ideological goals.

Why crypto whales hate Wikipedia’s more realized decentralization

SHEFFIELD: Yeah. I agree. And I think that this is maybe also why you’ve become so interested in it, is that in a sense, the ethos, the goals of Wikipedia are also the goals of cryptocurrency in the broadest possible sense of decentralization, of, equality of access.

They’re the same thing. It’s just that only one of those projects has actually had an achievable move in that direction. And that’s Wikipedia, whereas, cryptocurrency as practiced and sold and is remarkably unequal. It is, the, it is about, it is far more centralized.

And even Bitcoin, is dominated entirely. The price of Bitcoin is dominated entirely by the holder, by its biggest holders. And that’s indisputable, like, so all the promises of decentralization, freedom, privacy of crypto haven’t happened, but they have happened on Wikipedia. And I think that also might be why the biggest crypto whales like Elon Musk, Peter Thiel, and Andreessen, why they hate Wikipedia so much because it is decentralized and they can’t control it.

WHITE: I think that, yeah, I think you’ve, touched on it there, which is that if a project is truly decentralized and, I would say Wikipedia is in some ways and not in others, it was never a goal for Wikipedia to be truly, decentralized in the way that, Bitcoin advocates wish that Bitcoin was.

But you know, if you have a project that’s decentralized like Wikipedia, then Elon Musk can’t just swoop in and take it over. he can’t buy Wikipedia, which he’s talked about doing multiple [00:36:00] times. He can’t unilaterally control it. He has, we’ve seen governments try to influence Wikipedia whether it’s the US government or often other country governments trying to change what is written on Wikipedia, which has been largely challenging for them to do.

And so, it, it does make Wikipedia more resilient because it is more decentralized than, many web projects are. And I think that is very frustrating to Elon Musk and to others who see Wikipedia as. this threat because it is not reflecting what they wish was true or what they wish everyone believed.

It, it, relies on a very broad range of sources, not just the ones that they approve of.

SHEFFIELD: Yeah. Well, and it’s interesting also that Jimmy Wales, the founder of Wikipedia is, well, I don’t know how he is now, but at least in his early days when I interacted with him he was very big libertarian anarchist, which is literally the, that’s the people who, you know, created and started cryptocurrency is also the same libertarian anarchist ethos.

But because Wikipedia has to be actually anchored in facts, your articles have to cite credible sources, not, and, that have real scientific backgrounds or, actual fact, reliable sourcing of, historical depiction. This is why, this more intuitive epistemic orientation, that’s why they’re so angry about it now. It isn’t just the central, the decentralization of it. It’s also that they don’t think in terms of facts. They think, in terms of feelings, I think.

WHITE: Yeah. Or they sort of select facts that align with their predisposition. Yeah, right, exactly.[00:38:00]

SHEFFIELD: which is, and, there is a sociological irony also in that. I mean, when you look at these fields, they’re overwhelmingly dominated by men who insist that they are ultra hyper rationalists.

WHITE: Rational. Yeah.

Talking with crypto advocates

SHEFFIELD: and yet, cryptocurrency is, entirely hype. I’m sure that’s also been a little interesting for you as a woman to interact with that field because it does seem like that pretty much everybody in crypto is a man.

WHITE: There is a pretty strong male bias, I think in the demographics of crypto enthusiasts. But yeah, I mean, I think that’s really true. And a lot of people who are into crypto are very similar in that sense, in that they believe that, this is all founded in mathematics and cryptography and very, hard math or science, not sort of touchy feely types of things. But then, you see that same behavior where if they like a cryptocurrency, then if there is any fact that challenges that cryptocurrency or, introduces doubt it’s dismissed as illegitimate or inaccurate or, somewhat how unacceptable, whereas they will essentially concoct information or facts or math, that they believe will support their opinions.

You see this a lot with the sort of technical analysis types of people who, will take all these price charts of a cryptocurrency and draw these like lines on them that always promise that the price is gonna go up and it, it doesn’t really matter what actually happened historically.

They find a way to sort of, fudge the lines so that they know that the price is just about to go to the moon and it, often doesn’t play out and they never seem to be terribly thwarted by that. They just redraw the lines and, continue to predict that the price jump is right around the corner.

SHEFFIELD: Yeah, it is interesting in that regard also [00:40:00] that, so they, believe they have no accuracy obligation, but the people who criticize them have to always be accurate.

WHITE: Yes.

SHEFFIELD: you have to be a hundred percent accurate and they can be 0% accurate actually, and it doesn’t matter because, they be, they have the correct emotional starting point.

They have. The first principle, like that’s, that I think is, and that’s something that, that we’ve explored on, my podcast here for several different episodes. Like this is basically they, don’t think empirically, they think in terms of everything is from first principles that from and from my emotional state, if you will.

So if I have the right starting point, then I can be wrong about everything I say and it doesn’t matter because I’m still right. That seems to be how it kind of works. and I don’t know. I mean, like, so, so I mean over time ha have, has the crypto communities, have they kind of changed how they respond to you though, in particular?

Because like, I my suspicion is that maybe when you first got into this stuff, they were, saying, oh, how dare this girl tell me I’m dumb? But now they realize, oh shit, she actually knows what she’s talking about. I don’t know. Have they changed in their responses to you, do you think?

WHITE: Yeah, I mean there’s always been a wide variety of responses to me. I would say there, since day one and continuing through to today, there are people who have that very exact reaction, which is like, who is this dumb lady who is telling me my crypto, is, not what I think it is or that there’s problems in this industry or that, this might be a scam.

But I would say there have also always been people who are fairly receptive to what I have to say. I think that there are reasonable people in the crypto world [00:42:00] who appreciate that, there are problems there and that it is useful to have someone pointing that out. I’ve always appreciated those people who, I do think that no matter how much you love something, there should always be a willingness to take a step back from it and, evaluate it and analyze if there are issues or, things that need to be considered.

And then I would say things have changed pretty dramatically in terms of the politic politicization of it, which is that when I first started writing about crypto, it was not a Republican thing. It was not heavily tied to any particular political belief. I mean, there was certainly, the libertarian segment which has always existed, but you know, it was not something that presidents were talking about or congress people for the most part.

and that has Trump said it was a scam, actually. Oh.

Yes. Right. That has really changed. Where now in addition to people having really strong sort of crypto beliefs, they also have very strong political beliefs. And those two things are often very tied. And they often, I think. Elicit similar responses when they’re threatened, which is that, political beliefs are very emotional, very, personal.

And so any challenge to those is often met with hostility. I think the same thing is true with crypto. And now that the two have become so tightly linked and there has been so much bleed between politics and the crypto world, that is only more so. And so you get this sort of radical political segment as well, which is not something that I had engaged with or, experienced much when I first began writing about this in people, these days I think are a lot more concerned with my own political beliefs than they ever were when I started.

SHEFFIELD: Oh, that’s, that is interesting. So in other words, what they’re asking you, what do you believe about this issue or whatever is they’re challenging

WHITE: they’re very, [00:44:00] yeah, they’re very concerned with, oh, she’s a leftist, so therefore she has no, she can’t possibly be capable of speaking on this issue. Or, oh, she believes about this completely unrelated political issue. And so therefore, she has no right to be talking about crypto.

the two have become very, closely linked, or, oh, she hates crypto because she’s a leftist, or she’s a leftist because she hates crypto. The, two things they have really closely linked together.

SHEFFIELD: Yeah. Okay. I get it. Well, and there, there’s an irony in that position, which they really, and, that is a position they often, say in other areas besides crypto. But you know, like they don’t get though that the entire idea of a market is a government creation. Governments make markets, do not exist without governments.

If you didn’t have a government, basically the people who have the most guns would have everything. That would be it. There would be no market. The people who had the most power would have all the other things as well. And, it’s just that simple. And so like, so therefore, as somebody who, believes in a stronger role for government, what you were saying actually makes perfect sense for you to talk about.

Rather than, being some sort of contradiction that as somebody who, values a strong government as a, in, a protector of democratic values and civil rights, you should be talking about this if you want to.

WHITE: Right.

SHEFFIELD: and, but again, like this is, it all reflects their, sort of standpoint epistemology, that they have the right starting point, so therefore everything they say is true.

And you have the wrong starting point. So therefore nothing you say is true, even if it is,

WHITE: right.

Analyzing Trump’s about-face on crypto

SHEFFIELD: yeah. Well, okay. So, but, and you mentioned the political angle, I mean, and that is one [00:46:00] thing that has been just dramatically different for the second Trump administration compared to the first, is that the first time around he-- as, I said, he thought Bitcoin was a scam. And this time around now, he’s literally brought in David Sachs, one of the biggest cryptocurrency scammers, dare I say, into his high level administration, and and so I mean, what, do you think accounts for that difference between Trump, of the two Trump terms?

WHITE: Well, I mean, I think that, some of it is financial. I think that Trump has realized that crypto is very lucrative for him personally. And so we’ve seen him and his family members launching endless cryptocurrency projects. Which of course is Ben, those benefit from his promotion of crypto as well as his actions to, pressure regulators to back off from crypto and congress to write new laws that are in supportive of the crypto industry.

So, I think that’s a big part of it. And I think also that, there are very wealthy people in the crypto industry and, very wealthy tech. Entrepreneurs and businessmen who were, willing to, support him, who came out of the crypto industry. And so he was willing to change his stance in order to court that money and that political backing.

But I also think that, crypto has become a useful tool in terms of, his political agenda. When it comes to mass surveillance, I think crypto is actually very well suited to that. when it comes to government control over what people are doing with their money, crypto is actually very well suited to that despite its intentions.

the way it has been designed essentially allows for war warrantless surveillance of people’s transactions if, the government so chooses. And so I think that

SHEFFIELD: Yeah.

WHITE: Exactly right. And so I think that, some [00:48:00] of the adoption of crypto and the interest in crypto has been because it actually aligns fairly well with the authoritarian goals of his regime.

SHEFFIELD: Yeah, that’s a, that’s an interesting point. And I think that’s right. And so ultimately there isn’t really a contradiction between advocating for crypto and wanting that centralization of authority and power.

WHITE: And I think that, a lot of what a lot of the ideological parts of crypto were more aspirational than built in to the technology. There’s really very little that is allowing, from a design perspective that is causing Bitcoin, for example, to be privacy protecting.

There’s very little that keeps it from centralizing. And so, as we see the actual, reality of the crypto ecosystem evolving, we do see cryptocurrencies like Bitcoin, centralizing becoming less private, becoming more easily traceable, becoming more easily frozen, or controlled by centralized entities.

And so, just because people say, oh yeah, Bitcoin is private, Bitcoin is censorship resistant. I, ideally, aspirationally, yes, but in practice, maybe not so much,

SHEFFIELD: Yeah, well, not really at all, frankly. Well, so, but at the same time that Trump has, really gotten into all this stuff, we have to say that it, there are some people in the democratic side of things that are advocating and taking money from the cryptocurrency world.

And and Sam Bickman free before he was sent to prison, was, if not the biggest democratic donor, at least one of the biggest. And he hasn’t, and he would spend, he’s been kind of replaced. So like there are still are several a fair number of Democrats out there that are crypto advocates.

Like how do they even justify it with regard to progressive [00:50:00] ideology? Or do they even try.

WHITE: Yeah, I mean there isn’t a whole lot of attempt, I would say, to justify it as a progressive tool. Although you do get, a lot of lip service to things like, oh, this is gonna democratize finance. This is gonna make it more, possible for minority communities to get access to banking and all these things which generally are not supported by evidence, but, have been very popular stories.

So you do hear some of that from Democrats, but I think a lot of it just comes down to, a lot of Democrats also are acting in service of power and wealth and are willing to get on board with. What they think will be, will enable them to accumulate more of that, or that will please the wealthy and powerful people who are supporting them that will, the things that they think will guarantee reelection.

And so I think a lot of it frankly doesn’t come down to beliefs or ideology or what’s best for their constituents, but it comes down to what’s gonna fund their next campaign or what’s going to earn them brownie points in the eyes of political mega donors and fundraisers and, influential voices.

Frankly that’s not a particularly partisan question. I think a lot of politicians are just serving those interests and so it’s somewhat predictable. I think that there has been some bipartisanship on the crypto issue. But I think that when it comes to people who. Are very outspoken in favor of consumer protection and, the ability to engage in society and finance in an equitable manner.

You tend to see less support for crypto and these sort of procr legislation that has been pushed by the crypto industry.

Does crypto have a legitimate purpose?

SHEFFIELD: Yeah. Yeah, I, that’s definitely true and unfortunate. Well, so I mean, so do you think there is, I mean, a legitimate role for [00:52:00] cryptocurrency in society? Or like, what would you, in your ideal world, if you could wave a magic wand, what would you say about it?

WHITE: Yeah, I mean, I, am not someone who thinks that, crypto should be banned or Bitcoin should be banned. First of all, I don’t think it’s a very realistic thing to do, but also it’s, I don’t think that should happen. I, don’t think that gambling should be banned. I think there are a lot of.

Behaviors that people choose to engage in that assuming that they are well-informed and, operating in a fairly fair system, they should be allowed to do. The problem is that in, and most of my objections come in where people are not operating in a fair system. They are not. Making trades based on a full understanding of the facts.

Many of the, many of the times they’re being outright lied to. They are often engaging in systems where they expect the kinds of regulation that Americans have become very used to. And it, when it comes to the stock exchange or other sort of highly regulated financial systems, they expect that to be in place when they’re in working with crypto or, trading crypto, and are very surprised to find that it’s not.

And then, regulators are not involved in policing crypto markets. In fact, they’re sort of making it more possible for crypto wrongdoers to, to steal people’s money. And so you have this system where people are getting absolutely taken for a ride, which that is really what I object to. I think that if crypto is going to be a part of day-to-day society, then it needs to be very highly regulated. It needs to be something where people are given a very full understanding of the risks. that you might lose all your money. Someone might just run away with it at this point.

Or there needs to be strong enforcement so that’s not happening. But I mean. I don’t see a role for crypto in the sense [00:54:00] that, Trump sees a role for crypto. I don’t think it’s gonna replace the financial system. I think that there are absolutely issues with traditional finance that need to be resolved, and I don’t think that creating a shadow financial system with a sort of worse version of what we have in traditional finance with crypto is the way to do that.

So, I think that people should be allowed to do, broadly speaking whatever they want to do, so long as they have all the information and they’re operating in a fair environment. And likely crypto would become a fairly niche speculative investment for those who like very high risk, assets that are not particularly tethered to anything of intrinsic value.

SHEFFIELD: Yeah, I mean basically it’s as practiced, not really appreciably different from casino gambling. It, I mean,

WHITE: Except that casinos are actually pretty regulated.

Network states and the billionaire escape fantasy

SHEFFIELD: Yeah, I know. Well, except in that way, yes. No. great, point, Molly.

Okay, so let’s maybe end on the, just like, it seems like the future that the elites of crypto are trying to push toward is this concept of network states. It seems like, like that’s, that idea has infected the brain of every elite Republican, it seems like, that’s not incredibly ancient or just some pol politician ddy, but like they, they have all become obsessed with this idea. So what, is a network state? And like, why is it and what are your thoughts on it? I guess?

WHITE: Yeah, so I mean, network states are basically this idea that rather than having geographical states. You would have states that were formed based on shared ideology, shared interests, sort of if you really care about organic gardening, then you would go and join the Organic Gardening Network state [00:56:00] and you would be with all these people and you’d be governed accordingly with people who share that interest.

and there would be any number of these states that would sort of replace the traditional, statehood that we are, used to. And a lot of it, is very crypto related, where these would all be on the blockchain and, all these transactions would be happening using cryptocurrencies.

And if you disagreed with how your state was being governed, then you would just switch to another state and, find one that matched your beliefs more closely. It’s a very sort of weird fringe, I would say ideology. And one that I don’t think is particularly practical, but it’s something that has been very appealing to a lot of sort of hard right tech visionaries.

I don’t know, whatever you would call it, but,

SHEFFIELD: people who don’t want to pay taxes is what I would

say.

WHITE: yes, and I think, I mean, I think a lot of it comes down to, they don’t agree with everything that, whatever government is doing. And so they want to, Elon Musk with Wikipedia. They don’t like how it’s run and so they wanna create their own version with their own rules, which they essentially control as they see fit.

And I think it is part of this very sort of escapist ideology from a lot of very wealthy tech, folks, which is that, things have become fairly dire. the, inequality in the world has become very severe. They are becoming more and more held to account for it. I think everyday people are becoming more willing to accept that.

Maybe billionaires don’t have their best interests in mind. Maybe that there is, there is some culpability among tech giants or incredibly wealthy people, or, oftentimes the intersection of the two for the way that the world has become. And a lot of these people, those very same wealthy tech people have decided that, [00:58:00] the best solution is to essentially run away from it.

I mean, it’s, sort of, the Douglas Rushkoff, survival of the richest, escape fantasy, which is that, they’ve made the world appreciably worse. People are beginning to recognize that. And now the idea is like, let’s all run to our bunkers where the people who have been victimized by this can’t hold us to account for it.

SHEFFIELD: Yeah. Well, in, in, in a lot of ways it, I just see this as a 21st century version of Vine Rand. I mean, that’s really what it is that people, who exploited their customer and exploited their employees. Yeah. That they are now trying to sell the fantasy of ’me evading accountability and taxation it’s actually good for you’ that is fundamentally what the network state sales pitch is. And it’s like neo feudalism with the fake promise that you’ll be able to, exit. Because like the reality is if you live in a nation or you know some place you have and you have your stuff there, and you have a job there and you have people there, you can’t just fucking leave whenever you want.

Like I see that, that same, people sometimes will say about, like, with regard to abortion restrictions, like they’ll say, well, why are women living in a state where abortion is illegal? And it’s like, gosh. Do you think that they want to do that? Huh? Maybe, maybe they don’t have a choice where they live.

WHITE: Yeah, I mean, I do think that frankly a lot of the people who most believe in this network state idea are very isolated. They don’t have strong connections to other people or to any particular location. And so I don’t, I mean, I think to them it doesn’t cross their mind that they wouldn’t just up and leave.

And certainly they have the resources to do so, and it doesn’t cross their mind that other people might not, or they don’t care, frankly.[01:00:00]

SHEFFIELD: Yeah, that’s a good point. and it does loop back to the, sociological trend that we were talking about earlier, that with so many of these detached men, basically that’s who the crypto purchasers are

WHITE: yeah. I mean, I think that’s why people in the crypto world are, so, you constantly hear people talking about community. This is a crypto community. It’s like, no, you, just all hold the same token. You know? It’s like I’m not in a community of people who holds, some ETF, right? Like, I’m not, that’s not a normal thing.

But in crypto with that strong, personal attachment, people have really used community as a way to draw people in. And to make it challenging for them to leave. It’s something I wrote about a long time ago, but if you basically convince people that, if you buy my NFT, you’re gonna be a part of this tight-knit community, then people don’t wanna sell it because then they have to leave the community.

And I think there’s been this sort of weaponization of community which has been very alluring to people who don’t have much community in their real lives.

SHEFFIELD: Yeah. And it’s had tragic consequences for so many people. And nobody deserves that, whatever their beliefs are. So, I mean, so do you have any thoughts though on, in terms of where anything might be headed in this regard, or what do you think as we wrap up here?

WHITE: Yeah, I mean, I think we’re in a weird situation right now where crypto has become, it’s come a long way from its early ideological origins to become essentially unrecognizable. Meanwhile, crypto tends to follow these incredibly extreme boom and bust cycles, which can be incredibly devastating.

and I think frankly, it’s just a matter of time before we see another one of those things happen with potentially very, traumatic con consequences for people who. Like we saw last time [01:02:00] around in 2022, a lot of people lost everything. And now we’re looking at people who have been encouraged to buy crypto by their governments, by very influential people and who have sunk quite a lot of money into it.

And it’s been incredibly closely tied to now the entire US government. I think it’s gonna be a very interesting road as things evolve. Especially when you add in the factor that, with regulators stepping away, there’s been more opportunity for malfeasance, those types of the sort of shady business that tends to go on behind the scenes even when regulators are ostensibly paying attention tends to be what can cause incredibly dramatic downturns in crypto.

I mean, FTX, for example, the collapse of FTX was a major component of the crash in 2022. And so, I think we’re potentially in a very dire situation when it comes to crypto. And what comes of that I think is, sort of anyone’s guess.

SHEFFIELD: Well, I guess we’ll see then. So, you wanna give out any websites for people to keep up with you in the

WHITE: Sure. Yeah. So I write the newsletter citation needed, which is at citationneeded.news. I also run Web3isgoinggreat.com, which is the sort of timeline of crypto disasters. Um, And then you can find anything else about me at mollywhite.net

SHEFFIELD: All right, sounds good. Thanks for being here.

WHITE: Thanks for having me.

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