If you want a sense of what separates much of the leadership of the Democratic Party from many of its supporters — of what illustrates their profound disconnect from younger cohorts of liberal and progressive voters — you could do much worse than to read this recent statement from Senator Dianne Feinstein of California.
“Some things take longer than others, and you can only do what you can do at a given time,” she said in an interview with Rebecca Traister of New York magazine. “That does not mean you can’t do it at another time,” she continued, “and so one of the things you develop is a certain kind of memory for progress: when you can do something in terms of legislation and have a chance of getting it through, and when the odds are against it, meaning the votes and that kind of thing.”
“So,” Feinstein concluded, “I’m very optimistic about the future of our country.”
This entire comment was, in Traister’s analysis, a damning example of the sanguine complacency that seems to mark much of the gerontocratic leadership of the Democratic Party.
I agree.
What’s missing from party leaders, an absence that is endlessly frustrating to younger liberals, is any sense of urgency and crisis — any sense that our system is on the brink. Despite mounting threats to the right to vote, the right to an abortion and the ability of the federal government to act proactively in the public interest, senior Democrats continue to act as if American politics is back to business as usual.
Earlier this year at the National Prayer Breakfast, to give another example, President Biden praised Senator Mitch McConnell, the minority leader, as a “man of your word” and a “man of honor.”
“Thank you for being my friend,” Biden said to a man who is almost singularly responsible for the destruction of the Senate as a functional lawmaking body and whose chief accomplishment in public life is the creation of a far-right Supreme Court majority that is now poised to roll American jurisprudence back to the 19th century.
House Speaker Nancy Pelosi is similarly enamored of this rhetoric of bipartisan comity in the face of a Republican Party whose members are caught in the grip of a cult of personality marked by conspiratorial thinking and an open contempt for electoral democracy.
“It might come as a surprise to some of you that the president I quote most often is President Reagan,” Pelosi said at the ribbon-cutting for the Washington branch of the Ronald Reagan Presidential Foundation and Institute. “The good humor of our president was really a tonic for the nation, the gentleman that he was.”
And last month, she told an audience in Miami that she wants a “strong Republican Party” that can return to where it was when it “cared about a woman’s right to choose” and “cared about the environment.” Of course, the ideologically moderate Republican Party that Pelosi seems to want resurrected was largely dead by the time she entered national politics in the late 1970s, bludgeoned into submission with the notable help of Ronald Reagan, among other figures.
As I reflect on this attitude among Democratic leaders, I’m reminded of the historian Jefferson Cowie’s argument about the New Deal’s relationship to the American political order. In “The Great Exception: The New Deal and the Limits of American Politics,” Cowie argues for an interpretation of the United States in the 20th century that treats the New Deal era, from the administration of Franklin Roosevelt to the 1970s, as a “sustained deviation from some of the main contours of American political practice, economic structure, and cultural outlook.”
The Great Depression and World War II may have “forced clear realignments of American politics and class relations,” Cowie writes, “but those changes were less the linear triumph of the welfare state than the product of very specific, and short-lived, historical circumstances.”
If this is true — if the New Deal was the product of highly contingent circumstances unlikely to be repeated either now or in the future — then the challenge for those committed to the notion of a government that protects and expands the collective economic rights of the American people is to forge a new vision for what that might be. “The path forward is not clear,” Cowie writes, “but whatever successful incarnation of a liberal ‘social imaginary’ might follow will not look like the New Deal, and it might be best to free ourselves from the notion that it will.”
I think you can apply a similar “great exception” analysis to the decades of institutional stability and orderly partisan competition that shaped the current generation of Democratic leaders, including the president and many of his closest allies.
They came into national politics in an age of bipartisan consensus and centrist policymaking, at a time when the parties and their coalitions were less ideological and more geographically varied. But this, too, was a historical aberration, the result of political and social dynamics — such as the broad prosperity of the industrial economic order at home — that were already well in decline by the time that Biden, Pelosi, Feinstein and others first took office.
American politics since then has reverted to an earlier state of heightened division, partisanship and fierce electoral competition. Even the authoritarianism on display in the Republican Party has antecedents in the behavior of Southern political elites at the end of the 19th century and the beginning of the 20th.
Millions of Democratic voters can see and feel that American politics has changed in profound ways since at least the 1990s, and they want their leaders to act, and react, accordingly.
Standing in the way of this demand, unfortunately, is the stubborn — and ultimately ruinous — optimism of some of the most powerful people in the Democratic Party.
The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: [email protected].
Over the course of his life, Alejo Lopez de Armentia has played video games for a variety of reasons. There was the thrill of competition, the desire for companionship, and, at base, the need to pass the time. In his 20s, feeling isolated while working for a solar panel company in Florida, he spent his evenings using video games as a way to socialize with his friends back in Argentina, where he grew up.
But 10 months ago, Armentia, who’s 39, discovered a new game, and with it a new reason to play: to earn a living. Compared with the massively multiplayer games that he usually played, Axie Infinity was remarkably simple. Players control three-member teams of digital creatures that fight one another. The characters are cartoonish blobs distinguished by their unique mixture of interchangeable body parts, not unlike a Mr. Potato Head. During “combat” they cheerily bob in place, waiting to take turns casting spells against their opponents. When a character is defeated, it becomes a ghost; when all three squad members are gone, the team loses. A match takes less than five minutes.
Armentia at home in Florida.
Photographer: Josh Aronson for Bloomberg Businessweek
Even many Axie regulars say it’s not much fun, but that hasn’t stopped people from dedicating hours to researching strategies, haunting Axie-themed Discord channels and Reddit forums, and paying for specialized software that helps them build stronger teams. Armentia, who’s poured about $40,000 into his habit since last August, professes to like the game, but he also makes it clear that recreation was never his goal. “I was actually hoping that it could become my full-time job,” he says.
The reason this is possible—or at least it seemed possible for a few weird months last year—is that Axie is tied to crypto markets. Players get a few Smooth Love Potion (SLP) tokens for each game they win and can earn another cryptocurrency, Axie Infinity Shards (AXS), in larger tournaments. The characters, themselves known as Axies, are nonfungible tokens, or NFTs, whose ownership is tracked on a blockchain, allowing them to be traded like a cryptocurrency as well.
There are various ways to make money from Axie. Armentia saw his main business as breeding, which doesn’t entail playing the game so much as preparing to play it in the future. Players who own Axies can create others by choosing two they already own to act as parents and paying a cost in SLP and AXS. Once they do this and wait through an obligatory gestation period, a new character appears with some combination of its parents’ traits.
Every new Axie player needs Axies to play, pushing up their price. Armentia started breeding last August, at a time when normal economics seemed not to apply. “You would be making 300%, 400% on your money in five days, guaranteed,” he says. “It was stupid.”
Axie’s creator, a startup called Sky Mavis Inc., heralded all this as a new kind of economic phenomenon: the “play-to-earn” video game. “We believe in a world future where work and play become one,” it said in a mission statement on its website. “We believe in empowering our players and giving them economic opportunities. Welcome to our revolution.” By last October the company, founded in Ho Chi Minh City, Vietnam, four years ago by a group of Asian, European, and American entrepreneurs, had raised more than $160 million from investors including the venture capital firm Andreessen Horowitz and the crypto-focused firm Paradigm, at a peak valuation of about $3 billion. That same month, Axie Infinity crossed 2 million daily users, according to Sky Mavis.
If you think the entire internet should be rebuilt around the blockchain—the vision now referred to as web3—Axie provided a useful example of what this looked like in practice. Alexis Ohanian, co-founder of Reddit and an Axie investor, predicted that 90% of the gaming market would be play-to-earn within five years. Gabby Dizon, head of crypto gaming startup Yield Guild Games, describes Axie as a way to create an “investor mindset” among new populations, who would go on to participate in the crypto economy in other ways. In a livestreamed discussion about play-to-earn gaming and crypto on March 2, former Democratic presidential contender Andrew Yang called web3 “an extraordinary opportunity to improve the human condition” and “the biggest weapon against poverty that we have.”
By the time Yang made his proclamations the Axie economy was deep in crisis. It had lost about 40% of its daily users, and SLP, which had traded as high as 40¢, was at 1.8¢, while AXS, which had once been worth $165, was at $56. To make matters worse, on March 23 hackers robbed Sky Mavis of what at the time was roughly $620 million in cryptocurrencies. Then in May the bottom fell out of the entire crypto market. AXS dropped below $20, and SLP settled in at just over half a penny. Instead of illustrating web3’s utopian potential, Axie looked like validation for crypto skeptics who believe web3 is a vision that investors and early adopters sell people to get them to pour money into sketchy financial instruments while hackers prey on everyone involved.
Axie’s Fall
Sources: Coinbase, Sky Mavis
As Sky Mavis’s revolutionary rhetoric began to look increasingly hollow, the company shifted its story. In December it quietly altered its mission statement, deleting the phrase “play-to-earn” and replacing it with the mushier “play-and-earn.” Days after the hack it launched Axie: Origin, a long-awaited new version with upgraded graphics and tweaks to the gameplay. Crucially, this iteration doesn’t involve cryptocurrencies at all, because Sky Mavis has acknowledged that many players are willing to engage with a new game only if the complications of crypto are removed. The plan is for Origin to supplant the original game, with the noncrypto version attracting a broad base of players. Of course, Sky Mavis would still also offer a full version with the original crypto economy.
Company executives are trying to give the impression that nothing is wrong, but a clear sense of tension has edged in since Axie token values began to plummet late last year. When I first spoke to Sky Mavis co-founder Jeffrey Zirlin in late January, he told me he was living somewhere in the US but paused when I asked where in the country he was. “I could live anywhere, I don’t usually leave my room,” he said. He did finally give me a more specific location, but asked me not to make it public, noting that his team has gotten death threats. “We have to be careful revealing our location, just like the president doesn’t always have to reveal his location,” he said. “We’re kind of like heads of state.”
Zirlin said he empathized with people who’d lost money—life-changing sums, in some instances. But he added that a crash that got rid of Axie profiteers could have its upside, too. “Sometimes having to flush out the people who are just in it for the money,” he said, “that’s just the system self-correcting.”
The history of video games has seen plenty of in-game economies with real-life stakes for its players. Axie’s entry to the marketplace can be traced most directly to a fad known as Cryptokitties. These tradable, breedable digital pets, which surfaced in the fall of 2017, during the first crypto boom, were a proof-of-concept for NFTs. As with many things in crypto, the simple fact that they could be bought and sold was enough to spark speculative fervor. Within a few months, Cryptokitties peaked, some selling for six-figure sums.
The Sky Mavis co-founders originally met in forums for Cryptokitties, according to Zirlin. He’d fallen hard for the digital collectibles while living on New York’s Lower East Side and working in finance. In 2018 he moved to Ho Chi Minh City, where another Sky Mavis co-founder, Trung Nguyen, had already begun working on a game that would place Cryptokitty-like characters at the center of a bigger gaming universe. Nguyen had previously founded a social network for food bloggers, then spent three years working for a financial software company co-founded by American venture capitalist Joe Lonsdale. Another co-founder, Chief Operating Officer Aleksander Leonard Larsen, worked as a community manager for a Norwegian gaming studio. Creating Axie Infinity started in earnest just as the 2017 crypto boom was giving way to the first crypto winter.
The resulting game was hardly a revelation; Sky Mavis’s initial success owed more to a clever innovation in its technical architecture. At that point, anyone building NFT games was relying on the Ethereum blockchain to handle transactions, leaving character trading and other in-game actions subject to its inconsistent speed and notoriously high transaction fees. Sky Mavis built its own blockchain, Ronin, which lowered costs and improved speed by centralizing the key function of verifying transactions. Purists might have taken issue with the decision to abandon the core blockchain precept of decentralization, but on the other hand, the game actually worked.
The other key to Axie’s popularity was an economy based on a form of paid labor that has long existed in gaming: the for-profit player. People who owned Axies could rent them out to players, usually in lower-wage regions in Southeast Asia or Latin America, who treated the game as if it were a job. Players who don’t own their Axies are akin to digital sharecroppers, but they’re widely referred to as “scholars,” because they’re supposedly using their rental Axies to learn about the broader potential of investing in crypto. In Axie’s biggest market, the Philippines, the average daily earnings from May to October 2021 for all but the lowest-ranked players were above minimum wage, according to the gaming research and consulting firm Naavik. Of course, actually converting this income into usable form meant cashing out their cryptocurrencies, at a time when many people involved in Axie were saying cryptocurrencies were only going to get more valuable.
The rise of the scholar class made Axie look like a hit. Player-speculators wanting to get in early flooded the game, sending the prices of its digital assets skyrocketing. Many were open about their mercenary intentions. “I started playing because earning money playing video games seemed pretty unbelievable and amazing,” says Filip, a Slovakian in his 30s who asked to be identified only by his first name. While he doesn’t mind playing Axie, exactly, he acknowledges he’s in it 100% for the money and 0% for recreation. “When I want to play games for fun, I play real games,” he says.
That Axie was widely viewed primarily as a way to make money has proven a major problem for its virtual economy. The game is designed to offer ways to both earn and spend SLP within the game. Any tokens spent within the game just disappear. But play-to-earners instead cash out all SLP by selling them on crypto markets, meaning the total number of tokens increases over time. The additional supply depresses prices, in a crypto version of hyperinflation. Players are constantly hounding Sky Mavis to tweak how the game works in ways that would reduce the amount of SLP in circulation.
SLP prices peaked last July, but as they dropped, players began hoarding tokens in hopes of a market recovery. This strategy is self-defeating, according to Lars Doucet, co-author of a detailed—and overwhelmingly negative—analysis of Axie’s economy published by Naavik in November. Doucet says Axie is stuck with the “sleeping dragon” problem: Every time SLP value begins to rise, the dragons—the people who have been waiting to cash in their SLP—wake up and liquidate their stashes, pushing the price back down.
Even before the broader collapse of crypto, Sky Mavis struggled to address the issues with Axie’s internal economy. A financial system consisting of people all hoping to put in $1 and take out $2 can last only as long as someone else shows up believing others will come in after them with more fistfuls of cash. Once Axie began looking less profitable, its ability to draw new players decreased, making it even less profitable and setting off a vicious cycle. “Axie has just been this fascinating tale of people learning hard lessons of economics and monetary policy in microcosm,” says Doucet.
A couple in suburban Manila on the Axie Infinity site.
Photographer: Jam Sta Rosa/Getty Images
Armentia first heard of Axie last summer from a childhood friend living in Argentina, where many people had started playing the game for money. He and his mother had emigrated to Florida during Argentina’s 2001 financial crisis, when he was a teenager. After the solar panel company he worked for in his 20s went out of business, he started buying luxury goods in bulk, then retailing them at marked-up prices, mostly on cruise ships. That business crashed when the pandemic hit, leaving him in need of a new venture.
Sitting at home with little to do but putter around the internet and take care of his young daughter, Armentia was well aware that people were making money in weird new investments while his savings sat in a bank account. He dabbled in meme stocks and began looking at crypto. By late last summer, he put his first $3,000 into Axie and was soon spending most of his time on the game.
In February he agreed to have me over to show me his typical workday. Axie was foundering, but he was pouring money into what he saw as a temporary market swoon. In the week before I showed up he’d bought more than $5,000 worth of SLP at less than 2¢, figuring the price was bottoming out.
When I arrived in Miami, Armentia told me that his wife, who was skeptical at best about his video game business, had forbidden him from letting some guy he’d met on Reddit into their house. So we met in the middle of the afternoon at a Starbucks in a strip mall. Armentia showed up wearing a baseball hat and a T-shirt with a palm tree on it. He has the stubble and tired eyes of a guy who’d spent the past two years working from a home that contains a toddler. We ordered coffee, found seats near an electrical outlet, and huddled around his laptop.
First we played a few quick games, netting about 25¢ worth of SLP. He then checked in on the dashboard he uses to track his 20 Argentine scholars, whom he pays his childhood friend to manage, before turning to breeding. Armentia started browsing a market on Sky Mavis’s website, scanning Axies that other people had put up for sale. When he found one he liked, he entered its traits into a software program that ran inside Discord, along with the traits of whatever Axie he planned on pairing it with. The program predicted what characteristics the offspring would have, allowing Armentia to assess its market potential. He clicked among many browser tabs at breakneck speed. Video games may now be a spectator sport, but character breeding definitely isn’t—I felt like I was watching someone do his taxes. There was work to do, though, and Armentia kept at it until it got dark outside.
When I asked if this was a strange way to make a living, he told me it wasn’t any less meaningful than his previous lines of work. “What’s the purpose of that bracelet?” he asked of the jewelry he’d been selling to cruise ship passengers. “It’s that someone can wear it and feel pretty, or whatever. Let’s say I create an Axie, and it costs me $30, and I sell it for $60 because I created something that someone else wants. That’s going to provide that same feeling as the people who buy those bracelets.”
Armentia didn’t try to sugarcoat his performance to date. Popping open a sprawling spreadsheet he used to track his Axie operations, he determined that he could theoretically cash out his cryptocurrencies for a $5,000 profit, without touching the 100 or so Axies he was holding. “I’ve been at it since August, so $5,000 in that many months is not something to be proud of, right?” he said. “I could’ve worked at McDonald’s and made more.” But then he gave me his projections for the crypto markets—AXS, he said, would rise to $150 by May. He changed a few cells to account for these predictions, and suddenly his venture did indeed seem more lucrative than flipping burgers.
When the end of May actually came, AXS was at about $23. Armentia estimated his Axie investment was down about $15,000 but said he didn’t know for sure because he’d stopped looking at the spreadsheet.
Philip La, head of product, and Zirlin in Vietnam.
Photographer: Maika Elan for Bloomberg Businessweek
On May 18, Zirlin and Larsen held a pep talk for the Axie community on Twitch. In the days after the March hack, the company had announced that it had raised $150 million to reimburse victims and repair its infrastructure. But nearly two months later the systems compromised during the hack still weren’t up and running, and the executives were vague about when everything would be repaired. (A company spokesperson said on June 3 that this could happen by midmonth, pending the results of an external audit.)
The co-founders spent a good deal of time on Twitch commiserating with players about the pain the crash had caused. Larsen told the 2,500-person audience that the collective trauma of losing all that money was an opportunity to forge a stronger community. “This is when you can find true friends in the space,” he said. Zirlin, who spent the entire hourlong session grimacing in a manner suggestive of indigestion, noted that gloom was contagious. “Sometimes when you put negative opinions out there on the internet, that affects other people and hurts the project,” he said.
Sky Mavis had reason to be concerned about players losing hope. By late May even top-ranked players were making the equivalent of 68¢ a day, according to Naavik—a total that doesn’t account for the cut any scholars have to give to their managers. The company and other big players in the Axie economy were working to persuade everyone to hold on. Yield Guild Games head Dizon, whose company owns more than 150,000 Axies that it rents to scholars, says games like Axie were always intended to be a steppingstone to something else. “We’ve been trying to warn people, even when prices were high, don’t expect this to be a stable source of income,” he says. Dizon’s pitch now focuses on the value of owning NFT gaming assets over time, with the potential for some supplemental money along the way. “It’s a digital version of a gig economy job,” he says.
Sky Mavis, meanwhile, now consistently downplays the financial aspects of Axie. It has brought in a new head of product, Philip La, who spent the past four years as a product manager at the company behind Pokémon Go. Before being recruited, La had written a post on his personal blog entitled “Is Axie Infinity sustainable?” He concluded that the game’s economy would ultimately fail if all its players continued to think like investors. “Axie Infinity first and foremost needs to be a game,” he told me.
So La is going back to basics, hoping to make Axie more like Pokémon Go—a place where players can spend money within the game on things like decorations for their avatars. He says it’s still important that people own their Axies, even if it’s not just about the financial upside. “With that comes the ability to sell those things if you stop playing or whatnot,” says La.
Armentia has largely stopped playing Axie, as have about three-quarters of his scholars. Many have walked away with tokens now worth almost nothing. But at least one was sufficiently seduced by Axie’s potential to take a significant loan to buy AXS tokens, which he saw as a way to hedge against inflation of the Argentine peso. The local currency has indeed lost value since he took out the loan, but not nearly as much as AXS.
For his part, Armentia says he thinks Origin is shoddily designed, and he doesn’t have high hopes that it will bring the significant new user base the game needs. One thing I learned after talking to Armentia for several months, though, was the durability of his optimism. He continues to express confidence that Axie will pay off as an investment in the long term—that crypto gaming will inevitably take over a significant portion of the gaming world, with Sky Mavis leveraging its role as the early leader to take a key spot.
But Armentia’s mind has also been elsewhere. Earlier this year, he and a friend purchased a company that rents out bouncy houses. Instead of crypto prices, he’s been spending his days worrying about what to do when a driver calls in sick, or whether to send his crews out when there’s a chance of a tropical storm.
In early May, on one of the most brutal days in the crypto markets, I texted Armentia to see how he was doing. He replied with a video of a huge inflatable slide, complete with a cannon shooting foam. He had plenty of time to wait for the crypto markets to turn, he said. Then he described his new business in much the same way Sky Mavis now describes its own: “I’m selling fun now.”
Carriers are banking on the psychological allure of marginal luxury.
Airlines have once again wrung a new social class from flying. ( Alex Cochran )
Let’s say you receive an unexpected financial windfall. What’s the first thing you’re spending money on? If it’s a lavish vacation—how are you getting there? Americans top the list of consumers who say they’re interested in private travel, so there’s a clue. Many of us would prefer to opt out of the commercial-flight experience, but the odds of hailing a private jet are lottery-long for anyone not in the 1 percent. Still, that doesn’t mean that commercial flying is devoid of its own cutthroat class system.
As with life at ground level, social mobility in the sky is secured by money and a slew of secondary considerations, like “loyalty,” that also mean money. The majority of us find ourselves on the bottom rung—the main cabin, which accounts for roughly 70 percent of the seats on a Boeing 737. And airlines don’t let us forget it. Every boarding-zone call registers our lowly station, sorting passengers with all the sensitivity of industrial farm equipment. Every full overhead bin mocks our sad aftward shuffle past first or business class. On occasion, some of us get to ride the company card to relative comfort, but when you’re flying on your own dime, you’re more than likely facing the bald reality of economy seat 28F.
Or maybe, just maybe, you reach a little deeper into your pocket and cough up the bones to relocate to a slightly sexier neighborhood: premium economy. Though not as plush as a business-class berth, premium (which goes by different names depending on the airline) delivers various creature comforts—a few extra inches of legroom, or a toiletry kit with Malin+Goetz products, or a “chef-inspired” meal with craft beer, to name a few perks across carriers. In recent years, an emerging subset of fliers has signaled enthusiasm for premium economy’s marginally more refined service. “One of the trends that everyone in the airline industry is talking about nowadays, especially coming out of the pandemic, is a greater willingness on the part of leisure travelers to buy a premium economy seat,” Rob Britton, an adjunct professor at Georgetown University and a former managing director of American Airlines, told me. Business travel, airlines’ usual bread and butter, fell off a cliff in 2020, and these companies now see a lifeline in Millennial yuppies. “The 35-year-old couples going to Paris are filling the gap.”
In the mid-aughts, when a major aircraft manufacturer was designing a new model, it studied the cost per square-inch of real estate in the most expensive markets: New York, Paris, London. Then it looked at the cost per square-inch on airplanes. There was no comparison, Uzma Khan, a marketing professor at the University of Miami, told me. “From an airline’s perspective, what is the most expensive thing for them to give you? Real estate in the air.” In that regard, airlines operate as a kind of landlord, calculating the expense of hurtling a single passenger from one place to another and adding a healthy upcharge on top.
Historically the seats in the front of the plane subsidized operations, as besuited flyers from the likes of Bain and Deloitte and Baker McKenzie reliably bought more expensive business-class tickets. Still, carriers clung to thin margins. And in 2008, rising fuel costs and sagging demand prompted airlines to decouple standard amenities from economy tickets in order to keep their prices competitive. Over time, they made it up not just by selling credit-card miles, corporate contracts, and cargo, but also by using premium economy to sell the faint whiff of pampering to vacationers like Kelsey Masters, a project manager who lives in New York.
By her own admission, Masters is terrified of flying, but she makes frequent cross-country trips to see friends and family. She described her purchase habits to me with a weary acceptance that characterizes her overall feelings on pandemic air travel: “Screw it. Sixty bucks to upgrade? I get a little more legroom and a free drink, and I can just be a little more calm? That sounds like a really good thing right now.” Rather than splurge in the planning stage, she tries to buy the cheapest fare ahead of time and let the circumstances of the travel day guide her upgrade decisions. Compounding stressors from the airport, the trip itself, or even a few nights of fitful sleep on a friend’s living-room pullout “will make me start to reevaluate the opportunity cost of the dollar,” she said.
Premium economy has become a major revenue driver for the airlines, which, according to Counterpoint Market Intelligence, an aerospace market research company, are projected to triple their inventory of premium seats by 2025. But travelers like Masters weren’t the original target. Britton explained that premium economy wasn’t built to entice strivers across flight-class lines; carriers originally designed it to catch the bruised egos of former business-class members when the corporate world began to earnestly self-audit and downgrade employee travel budgets. A recent report by Jay Sorensen, an industry consultant, noted that “the apparent discovery of a new type of upscale leisure traveler” is a welcome surprise for these airlines. It connoted a small miracle: Airlines had once again wrung a new social class from flying, as they had done with first and business class. And they were able to do it, in part, because of a phenomenon called “pain of payment.”
According to Khan, people often experience “actual, physical pain” upon paying for something. But humans can have short memories. If airlines create enough distance between the initial ticket purchase and the option to upgrade, passengers are more likely to think of the latter as a standalone cost. “A lot of upgrades happen because now you’re either at the airport, or you’re checking in, and they give you an option. You don’t even remember exactly how much you paid for your flight when you were booking it, so that pain is gone,” Khan said. Basically, you don’t consider the total amount because you’ve already internalized the initial amount.
At the point of travel, an extra $45 or so to improve a short-haul flight—however modestly—doesn’t seem so decadent, especially when the threat of suffering through basic economy looms. Back in 2014, the antitrust scholar Tim Wu coined the phrase calculated misery to describe the conditions of basic economy, positing that airlines deliberately provide substandard service to coerce customers into paying for amenities that previously were free—seat selection, checked baggage, and itinerary changes, for instance. “It’s just a matter of physical discomfort translating into an emotional debt,” says Wesley Kang, a co-founder of Nimble Made, an e-commerce clothing brand, who flies frequently for leisure and family visits. “The less you move around, the less you have to adjust, the less inconsiderate you’re being to the person next to you.”
There is, of course, another prevailing opinion about premium economy, which is that it’s simply a ham-fisted attempt to get passengers to pay more for a negligibly better experience. This attitude puts the pomp and puffery of premium economy into sharp relief. A seat upgrade, after all, does not get you to your destination any more quickly or safely. Research bears that line of thinking out to an extent. Khan mentioned several studies that were conducted to determine the extent to which space colored the overall experience for passengers. An aircraft manufacturer brought in focus groups to try different seat configurations on its prototype, sometimes offering more legroom, sometimes more elbow room. “It had zero impact on customer satisfaction,” Khan said. “Where people do feel the difference is if you give them four more inches at the eye level. Because the perception of space is what matters.”
One could posit that the rise of premium economy was culturally foretold. The coveted Millennial-yuppie flier laying their claim to “nicer” seats falls in line with the idea that they’re bold go-getters who seek experiences over things. Plus, the confluence of pandemic exhaustion, discretionary income, and the aforementioned “screw it” attitude toward purchasing small luxuries creates the perfect environment for low-stakes indulgence. Despite what travelers may know about seat-upgrade marketing tactics, many still think the extra spend is worth it. And perception is reality. Airlines, it turns out, have figured out how to bank on that fact.
Annotations by Molly White, Matt Binder, Grady Booch, Amy Castor, Stephen Diehl, Dirty Bubble Media, Dr. Catherine Flick, David Gerard, Geoffrey Huntley, Bennett Tomlin, Neil Turkewitz, Ed Zitron, and some anonymous contributors. Published March 25, 2022.
On March 20, 2022, the New York Times published a 14,000-word puff piece on cryptocurrencies, both
online and as an entire section of the Sunday print edition. Though
its author, Kevin Roose, wrote that it aimed to be a “sober, dispassionate explanation of what crypto actually is“, it was a thinly-veiled advertisement for cryptocurrency that appeared to have received little
in the way of fact-checking or critical editorial scrutiny. It uncritically repeated many questionable or
entirely fallacious arguments from cryptocurrency advocates, and it appears that no experts on the topic
were consulted, or even anyone with a less-than-rosy view on crypto. This is grossly irresponsible.
Note: Annotations that are quoted directly are explicitly credited to their authors inline. Annotations without inline attribution are a summary of multiple comments.
Crypto is a lot of things – including terribly explained. We’re here to clear things up.
Until fairly recently, if you lived anywhere other than San Francisco, it was possible to go days or even weeks without hearing about cryptocurrency.
Now, suddenly, it’s inescapable. Look one way, and there are Matt Damon and Larry David doing ads for crypto start-ups. Swivel your head — oh, hey, it’s the mayors of Miami and New York City, arguing over who loves Bitcoin more. Two N.B.A. arenas are now named after crypto companies, and it seems as if every corporate marketing team in America has jumped on the NFT — or nonfungible token — bandwagon. (Can I interest you in one of Pepsi’s new “Mic Drop” genesis NFTs? Or maybe something from Applebee’s “Metaverse Meals” NFT collection, inspired by the restaurant chain’s “iconic” menu items?)
Crypto! For years, it seemed like the kind of fleeting tech trend most people could safely ignore, like hoverboards or Google Glass. But its power, both economic and cultural, has become too big to overlook. Twenty percent of American adults, and 36 percent of millennials, own cryptocurrency, according to a recent Morning Consult survey. Coinbase, the crypto trading app, has landed on top of the App Store’s top charts at least twice in the past year. Today, the crypto market is valued at around $1.75 trillion — roughly the size of Google. And in Silicon Valley, engineers and executives are bolting from cushy jobs in droves to join the crypto gold rush.
As it’s gone mainstream, crypto has inspired an unusually polarized discourse. Its biggest fans think it’s saving the world, while its biggest skeptics are convinced it’s all a scam — an environment-killing speculative bubble orchestrated by grifters and sold to greedy dupes, which will probably crash the economy when it bursts.
I’ve been writing about crypto for nearly a decade, a period in which my own views have whipsawed between extreme skepticism and cautious optimism. These days, I usually describe myself as a crypto moderate, although I admit that may be a cop-out.
I agree with the skeptics that much of the crypto market consists of overvalued, overhyped and possibly fraudulent assets, and I am unmoved by the most utopian sentiments shared by pro-crypto zealots (such as the claim by Jack Dorsey, the former Twitter chief, that Bitcoin will usher in world peace).
But as I’ve experimented more with crypto — including accidentally selling an NFT for more than $500,000 in a charity auction last year — I’ve come to accept that it isn’t all a cynical money-grab, and that there are things of actual substance being built. I’ve also learned, in my career as a tech journalist, that when so much money, energy and talent flows toward a new thing, it’s generally a good idea to pay attention, regardless of your views on the thing itself.
My strongest-held belief about crypto, though, is that it is terribly explained.
Recently, I spent several months reading everything I could about crypto. But I found that most beginner’s guides took the form of boring podcasts, thinly researched YouTube videos and blog posts written by hopelessly biased investors. Many anti-crypto takes, on the other hand, were undercut by inaccuracies and outdated arguments, such as the assertion that crypto is good for criminals, notwithstanding the growingevidence that crypto’s traceable ledgers make it a poor fit for illicit activity.
What I couldn’t find was a sober, dispassionate explanation of what crypto actually is — how it works, who it’s for, what’s at stake, where the battle lines are drawn — along with answers to some of the most common questions it raises.
This guide — a mega-F.A.Q., really — is an attempt to fix that. In it, I’ll explain the basic concepts as clearly as I can, doing my best to answer the questions a curious but open-minded skeptic might pose.
Crypto boosters will likely quibble with my explanations, while dug-in opponents may find them too generous. That’s OK. My goal is not to convince you that crypto is good or bad, that it should be outlawed or celebrated, or that investing in it will make you rich or bankrupt you. It is simply to demystify things a bit. And if you want to go deeper, each section has a list of reading suggestions at the end.
Crypto will be transformative
Understanding crypto now — especially if you’re naturally skeptical — is important for a few reasons.
The first is that crypto wealth and ideology is going to be a transformative force in our society in the coming years.
You’ve heard about the overnight Dogecoin millionaires and Lamborghini-driving Bitcoin bros. But that’s not the half of it. The crypto boom has generated vast new fortunes at a clip we’ve never seen before — the closest comparison is probably the discovery of oil in the Middle East — and has turned its biggest winners into some of the richest people in the world, essentially overnight. Some riches could vanish if the market crashes, but enough has already been cashed out to ensure that crypto’s influence will linger for decades.
Crypto’s madcap, meme-crazed online culture can make it seem frivolous and shallow. It’s not. Cryptocurrencies, even the jokey ones, are part of a robust, well-fundedideological movement that has serious implications for our political and economic future. Bitcoin, which emerged out of the ashes of the 2008 financial crisis, first caught on among libertarians and anti-establishment activists who saw it as the cornerstone of a new, incorruptible monetary system. Since then, other crypto realms have fashioned similarly lofty goals, like building a decentralized, largely unregulated version of Wall Street on the blockchain.
We are already starting to see a swell of crypto money headed toward the U.S. political system. Crypto entrepreneurs are donating millions of dollars to candidates and causes, and lobbying firms have fanned out across the country to win support for pro-crypto legislation. In the coming years, crypto moguls will bankroll the campaigns of crypto-friendly candidates, or run for office themselves. Some will peddle influence in the familiar ways — forming super PACs, funding think tanks, etc. — while others will try to escape partisan gridlock altogether. (Crypto millionaires are already buying up land in the South Pacific to build their own blockchain utopias.)
Crypto is poised to soon become one of a handful of true wedge issues, with politicians all over the world forced to pick a side. Some countries, like El Salvador — whose crypto-loving president, Nayib Bukele, recently announced the development of a “Bitcoin City” at the base of a volcano — will go full crypto. Other governments may decide that crypto is a threat to their sovereignty and crack down, as China did when it outlawed cryptocurrency trading last year. The divide between the world’s pro-crypto and no-crypto zones could end up being at least as big as the divide between the Chinese internet and the American one, and maybe even more consequential.
There’s a lot of army helicopter tours for his wealthy European and American friends, not a lot of road building or pipe-laying.
In America, we have already seen how crypto can scramble the usual partisan allegiances. Former President Donald J. Trump and Senator Elizabeth Warren, the Democrat from Massachusetts, are united in crypto skepticism, for example, while Senator Ted Cruz, Republican from Texas, is in the same bullish camp as Senator Ron Wyden, the Democrat from Oregon. We have also seen what can happen when the crypto community feels politically threatened, as happened last summer, when crypto groups rallied to oppose a crypto-related provision in President Biden’s infrastructure bill.
What I’m saying, I guess, is that despite the goofy veneer, crypto is not just another weird internet phenomenon. It’s an organized technological movement, armed with powerful tools and hordes of wealthy true believers, whose goal is nothing less than a total economic and political revolution.
Absolutely baffling that an editor let him get away with such a handwavy statement about unspecified tools.
Crypto could be destructive
The second reason to pay attention to crypto is that understanding it now is the best way to ensure it doesn’t become a destructive force later.
In the early 2010s, the most common knock on social media apps like Facebook and Twitter was that they just wouldn’t work as businesses. Pundits predicted that users would eventually tire of their friends’ vacation photos, that advertisers would flee and that the whole social media industry would collapse. The theory wasn’t so much that social media was dangerous or bad; just that it was boring and corny, a hype-driven fad that would disappear as quickly as it had arrived.
What nobody was asking back then — at least not loudly — were questions like: What if social media is actually insanely successful? What kind of regulations would need to exist in a world where Facebook and Twitter were the dominant communication platforms? How should tech companies with billions of users weigh the trade-offs between free speech and safety? What product features could prevent online hate and misinformation from cascading into offline violence?
People absolutely were asking these questions (see Matt Binder’s comment above), though Roose seems to have set himself up for the defense of “well sure, but they weren’t being loud enough”. What does “loud enough” look like? Are the people asking these questions of crypto being loud enough?
Quite a few ethicists were talking about this, but we were mostly in academia so I guess that’s not loud enough for him. Here’s the entire list of abstracts from ETHICOMP 2011, for example, with plenty of ethical analyses of social media that assumed it would be successful.
By the middle of the decade, when it was clear that these were urgent questions, it was too late. The platform mechanics and ad-based business models were already baked in, and skeptics — who might have steered these apps in a better direction, if they’d taken them more seriously from the start — were stuck trying to contain the damage.
Are we making the same mistake with crypto today? It’s possible. No one knows yet whether crypto will or won’t “work,” in the grandest sense.(Anyone who claims they do is selling something.) But there is real money and energy in it, and many tech veterans I’ve spoken to tell me that today’s crypto scene feels, to them, like 2010 all over again — with tech disrupting money this time, instead of media.
If they’re wrong, they’re wrong. But if they’re right — even partly — the best time to start paying attention is now, before the paths are set and the problems are intractable.
The third reason to study up on crypto is that it can be genuinely fun to learn about.
Sure, a lot of it is dumb, shady or self-refuting. But if you can look past the carnival barkers and parse the convoluted jargon, you’ll find a bottomless well of weird, interesting and thought-provoking projects. The crypto agenda is so huge and multidisciplinary — drawing together elements of economics, engineering, philosophy, law, art, energy policy and more — that it offers lots of footholds for beginners. Want to discuss the influence of Austrian economics in Bitcoin development? There’s probably a Discord server for that. Want to join a DAO that invests in NFTs, or play a video game that pays you in crypto tokens for winning? Dive right in.
Crypto is a generational skeleton key
Mind you, I am not suggesting that the crypto world is diverse, in the demographic sense. Surveys have suggested that high-earning white men make up a large share of crypto owners, and libertarians with dog-eared copies of “Atlas Shrugged” are likely overrepresented among crypto millionaires. But it’s not an intellectual monolith. There are right-wing Bitcoin maximalists who believe that crypto will liberate them from government tyranny; left-wing Ethereum fans who want to overthrow the big banks; and speculators with no ideological attachments who just want to turn a profit and get out. These communities fight with one another constantly, and many have wildly different ideas about what crypto should be. It makes for fascinating study, especially with a bit of emotional distance.
He probably means like the hedge fund guys who will trade literally anything and ignore the externalities. He probably shouldn’t use the phrase “no ideological” to describe that worldview though.
And if you do learn some crypto basics, you might find that a whole world opens up to you. You’ll understand why Jimmy Fallon and Steph Curry are changing their Twitter avatars to cartoon apes, and why Elon Musk, the richest man in the world, spent a decent chunk of last year tweeting about a digital currency named after a dog. Strange words and phrases you encounter on the internet — rug pulls, flippenings, “gm” — will become familiar, and eventually, headlines like “NFT Collector Sells People’s Fursonas for $100K In Right-Click Mindset War” won’t make you wonder if you’re losing your grip on reality.
Crypto can also be a kind of generational skeleton key — maybe the single fastest way to freshen your cultural awareness and decipher the beliefs and actions of today’s young people. And just as knowing a little about New Age mysticism and psychedelics would help someone trying to make sense of youth culture in the 1960s, knowing some crypto basics can help someone perplexed by emerging attitudes about money and power feel more grounded.
Again, I don’t really care whether you emerge from these explainers as a true believer, a devoted skeptic or something in between. Participate or abstain as you wish!All I’m after is understanding — and possibly, a little relief from the question that has consumed my social and professional life for the past several years:
“So … can I ask you a question about crypto?”
Let’s start from the beginning: What is crypto?
A decade or two ago, the word was generally used as shorthand for cryptography. But in recent years, it’s been more closely associated with cryptocurrencies. These days, “crypto” usually refers to the entire universe of technologies that involve blockchains — the distributed ledger systems that power digital currencies like Bitcoin, but also serve as the base layer of technology for things like NFTs, web3 applications and DeFi trading protocols.
Ah yes, blockchains. Can you remind me, without going into too much technical detail, what they are?
At a very basic level, blockchains are shared databases that store and verify information in a cryptographically secure way.
“Validation/verification” has a specific computer science meaning and like many of these things they don’t tend to translate well into everyday jargon. Using this term in this way is likely to mislead the average reader, who would likely interpret this to mean that there is some verification of the accuracy of any information that is added to a blockchain. The verification that I believe he is intending to describe is other nodes verifying that some data exists on the chain, not verifying that the data is any good, and he should be much more explicit about that.
You can think of a blockchain like a Google spreadsheet, except that instead of being hosted on Google’s servers, blockchains are maintained by a network of computers all over the world. These computers (sometimes called miners or validators) are responsible for storing their own copies of the database, adding and verifying new entries, and securing the database against hackers.
This is a clunky explanation that starts with the worst comparison.
So blockchains are … fancy Google spreadsheets?
Sort of! But there are at least three important conceptual differences.
First, a blockchain is decentralized. It doesn’t need a company like Google overseeing it. All of that work is done by the computers on the network, using what’s called a consensus mechanism — basically, a complicated algorithm that allows them to agree on what’s in a database without the need for a neutral referee. This makes blockchains more secure than traditional record-keeping systems, proponents believe, since no single person or company can take down the blockchain or alter its contents, and anyone trying to hack or change the records in the ledger would need to break into many computers simultaneously.
The second major feature of blockchains is that they’re typically public and open source, meaning that unlike a Google spreadsheet, anyone can inspect a public blockchain’s code or see a record of any transaction. (There are private blockchains, but they’re less important than the public ones.)
This analogy is really falling apart… you could publish a Google spreadsheet to make it publicly visible too, and whether the blockchain itself is open-source or not is a separate topic to whether it’s a public or private blockchain (there are open-source private blockchains). We also seem to be working up to the suggestion that blockchains are the only reasonable way to verify that data hasn’t changed, which is far from accurate.
Third, blockchains are typically append-only and permanent, meaning that unlike with a Google spreadsheet, data that’s added to a blockchain typically can’t be deleted or changed after the fact.
Got it. So blockchains are public, permanent databases that nobody owns?
You’re getting it!
One could just as easily argue that everyone owns it—everyone has access to your data, including those same tech giants that blockchain proponents usually oppose doing data collection.
Roose has inadvertently refuted a point that a lot of blockchain proponents fall back on. “In web3 you will own your own data!” No, no one will own it once you put it out there, including you, because you won’t be able to change or delete it.
Molly made the point I was going to make. “You can sell your data if you want!”
Well, no, because one it’s not worth anything if it’s not bundled with a million other data points and two, you’re already giving it away for free because anyone can download the chain and run their own chain analysis tools to scrape out whatever they want.
Now remind me: How are blockchains related to cryptocurrencies?
Blockchains didn’t really exist until 2009, when a pseudonymous programmer named Satoshi Nakamoto released the technical documentation for Bitcoin, the first-ever cryptocurrency.
Demonstrably false. Blockchains started in 1991 with Stornetta and Haber. Everything that is now called “blockchain technology”—shared Merkle tree ledgers—has existed and been used since the 1990s. The new thing is “blockchain” the marketing term.
Bitcoin used a blockchain to keep track of transactions. That was notable because, for the first time, it allowed people to send and receive money over the internet without needing to involve a central authority, such as a bank or an app like PayPal or Venmo.
Many blockchains still perform cryptocurrency transactions, and there are now roughly 10,000 different cryptocurrencies in existence, according to CoinMarketCap. But many blockchains can be used to store other kinds of information, too — including NFTs, bits of self-executing code known as smart contracts and full-fledged apps — without the need for a central authority.
“many”? There are no cryptocurrency-free blockchains, at least not public ones, which is what Roose just established we’re talking about here.
He’s a bit muddled here, treating these as distinct concepts.
OK, but can we back up a second? Weren’t tech people telling us, years ago, that crypto was a new and exciting form of money? And yet, nobody I know pays their rent or buys groceries in Bitcoin. So were those people just … wrong?
Good question. It’s true that today, hardly anyone pays for things in cryptocurrency. In part, that’s because most merchants still don’t accept crypto payments, and hefty transaction fees can make it impractical to spend small amounts of cryptocurrency on daily living expenses. It’s also because the value of popular cryptocurrencies like Bitcoin and Ether has historically gone up, making it somewhat risky to use them for offline purchases. (The counterexamples are usually cited with pity, like the guy who, in 2010, bought two Papa John’s pizzas using Bitcoin that was worth about $40 at the time, but would be worth roughly $400 million today.)
It’s also true that the value of cryptocurrencies has grown enormously since the early Bitcoin days, despite them not being most people’s daily spending money.
Part of that growth is speculation — people buying crypto assets in hopes of selling them for more later on. Part of it is because the blockchains that have emerged since Bitcoin, like Ethereum and Solana, have expanded what can be done with this technology.
And some crypto fans believe that the prices of cryptocurrencies like Bitcoin will eventually stabilize, which could make them more useful as a means of payment.
What are the actual uses of crypto, beyond financial speculation?
Right now, many of the successful applications for crypto technology are in finance or finance-adjacent fields. For example, people are using crypto to send cross-border remittances to family members abroad and Wall Street banks using blockchains to settle foreign transactions.
These non-financial uses are still fairly limited. But crypto fans often make the case that the technology is still young, and that it took the internet decades to mature into what it is today. Investors are pouring billions of dollars into crypto start-ups because they think that someday, blockchains will be used for all kinds of things: storing medical records, tracking streaming music rights, even hosting new social media platforms. And the crypto ecosystem is attracting tons of developers — an auspicious sign for any new technology.
I’ve heard people calling crypto a pyramid scheme or a Ponzi scheme. What do they mean?
Some critics believe that cryptocurrency markets are fundamentally fraudulent, either because early investors get rich at the expense of late investors (a pyramid scheme), or because crypto projects lure in unsuspecting investors with promises of safe returns, then collapse once new money stops coming in (a Ponzi scheme).
There are certainly plenty of examples of pyramid and Ponzi schemes within crypto. They include OneCoin, a fraudulent crypto operation that stole $4 billion from investors from 2014 to 2019; and Virgil Sigma Fund, a $90 million crypto hedge fund run by a 24-year-old investor who pleaded guilty to securities fraud and was sentenced to seven and a half years in prison.
But these cases aren’t usually what critics are talking about. They’re generally arguing that crypto itself is an exploitative scheme, with no real-world value.
And are they right?
Well, let’s try to understand the case they’re making.
Unlike buying stock in, say, Apple, a purchase that (theoretically, at least) reflects a belief that Apple’s underlying business is healthy, buying a cryptocurrency is more like betting on the success of an idea, they say. If people believe in Bitcoin, they buy, and Bitcoin prices go up. If people stop believing in Bitcoin, they sell, and Bitcoin prices go down.
Crypto owners, then, have a rational incentive to convince other people to buy.And if you don’t think that cryptocurrency technology is inherently valuable, you might conclude that the entire thing resembles a pyramid scheme, in which you primarily make money by recruiting others to join.
I’m sensing a “but” coming on.
But! Even though there are scams and frauds within crypto, and crypto investors are certainly fond of trying to recruit other people to buy in, many investors will tell you that they are going in with their eyes wide open.
They believe that crypto technology is inherently valuable, and that the ability to store information and value on a decentralized blockchain will be attractive to all kinds of people and businesses in the future. They would tell you they’re betting on crypto the product, not crypto the idea — which, on some level, isn’t all that different from buying Apple stock because you think the next iPhone is going to be popular.
Matt Huang, a prominent investor, spoke for many crypto fans when he said on Twitter: “Crypto may look like a speculative casino from the outside. But that distracts many from the deeper truth: the casino is a trojan horse with a new financial system hidden inside.”
You can argue with that position, or dispute how much this “new financial system” is actually worth. But crypto investors clearly believe it’s worth something.
Only slightly. In the United States, certain centralized crypto exchanges, such as Coinbase, are required to register as money transmitters and follow laws like the Bank Secrecy Act, which requires them to collect certain information about their customers. Some countries have passed more stringent regulations, and others, like China, have banned cryptocurrency trading entirely.
But compared with the traditional financial system, crypto is very lightly regulated. There are few rules governing crypto assets like “stablecoins” — coins whose value is pegged to government-backed currencies — or even clear guidance from the Internal Revenue Service about how certain crypto investments should be taxed. And certain areas of crypto, like DeFi (decentralized finance), are almost completely unregulated.
Partly, that’s because it’s still early, and making new rules takes time. But it’s also a property of blockchain technology itself, much of which was designed to be hard for governments to control.
This question comes from the (apparently crypto-curious) rapper Cardi B: Is crypto going to replace the dollar?
Sorry, Cardi. The dollar is the world’s reserve currency, and dislodging it would be a huge, costly project that isn’t likely to happen any time soon. (To give just one small example of the enormity of the task: every financial contract that is denominated in dollars would have to be re-denominated in Bitcoin or Ether or some other cryptocurrency.
There are also technical hurdles crypto needs to overcome if it’s ever going to displace government-issued currency. Today, the most popular blockchains — Bitcoin and Ethereum — are slow and inefficient compared with traditional payment networks. (The Ethereum blockchain, for example, can process only about 15 transactions per second, whereas Visa says it can process thousands of credit card transactions per second.)
And, of course, for a cryptocurrency like Bitcoin to replace the dollar, you’d need to convince billions of people to use a currency whose value fluctuates wildly, that isn’t backed by a government and that often can’t be retrieved if it’s stolen.
What kind of people are investing in crypto? Is it all — to quote a recent “Curb Your Enthusiasm” episode — “nerds and Nazis”?
It’s hard to say who’s investing in crypto, especially since a lot of activity takes place anonymously or under pseudonyms. But some surveys and studies have suggested that crypto is still dominated by affluent white men.
Sample of 5,530 American adults, weighted to reflect census composition.
Gemini, a cryptocurrency exchange, estimated in a recent report that women made up only 26 percent of crypto investors. The average crypto owner, the group found, was a 38-year-old man making approximately $111,000 a year.
But crypto ownership does appear to be diversifying. A 2021 Pew Research Center surveyfound that Asian, Black and Latino adults were more likely to have used crypto than white adults. Crypto adoption is also growing outside the United States, and some studies have suggested that crypto adoption is growing fastest in countries like Vietnam, India and Pakistan.
Sample of 10,371 American adults, weighted to reflect U.S. population demographics.
My colleague, Tressie McMillan Cottom, has made the case that crypto — because it relies on permanent, irrefutable records of ownership of digital goods and currencies — is particularly attractive to people from marginalized groups, who may have had their property unjustly taken from them in the past.
“If I live in a community where the police absolutely use eminent domain to claim my private property and I cannot do anything about it,” she wrote, “that sense of everyday powerlessness would make the promise of blockchain sound pretty good.”
And what about extremists? Are they into crypto?
Some are. Because you can buy and sell cryptocurrency without using your name or having a bank account, crypto in its early days was a natural fit for people who had reasons to avoid the traditional financial system. They included criminals, tax evaders and people buying and selling illicit goods. They also included political dissidents and extremists, some of whom had been kicked off more mainstream payment services like PayPal and Patreon.
As a result of their well-timed entry into the crypto market, some extremists have gotten rich. A recent investigation by the Southern Poverty Law Center found that several prominent white supremacists have made hundreds of thousands or millions of dollars by investing in crypto.
Of course, there are millions of crypto owners, the vast majority of whom are not white supremacists. And the same properties of anonymity and censorship-resistance that make crypto useful to white supremacists might also make it attractive to, say, Afghan citizens fleeing the Taliban. So labeling the entire crypto movement an extremist group would be overkill. Regardless, it’s safe to say that crypto has become attractive to all kinds of people who would rather not deal (or can’t legally deal) with a traditional bank.
Another criticism I’ve heard is that crypto is bad for the environment. Is that true?
Let’s start with what we know for sure. It’s true that most crypto activity today takes place on blockchains that require large amounts of energy to store and verify transactions. These networks use a “proof-of-work” consensus mechanism — a process that has been compared to a global guessing game, played by computers all competing to solve cryptographic puzzles in order to add new information to the database and earn a reward in return. Solving these puzzles requires powerful computers, which in turn use lots of energy.
The Bitcoin blockchain, for example, uses an estimated 200 terawatt-hours of energy per year, according to Digiconomist, a website that tracks crypto energy usage. That’s comparable to the annual energy consumption of Thailand. And Bitcoin’s associated carbon emissions have been estimated at roughly 100 megatons per year, which is comparable to the carbon footprint of the Czech Republic.
This ignores the vast environmental and economic impact of computer waste from mining.
Holy moly! How do crypto fans justify that kind of environmental impact?
• Our existing financial system also uses a lot of energy, between powering millions of bank branches, A.T.M.s that sit idle for most of the day, gold mines and other energy-intensive infrastructure.
• Many crypto-mining computers are already powered by renewable energy sources, or by energy that would otherwise be wasted.
• Most newer blockchains are built using consensus mechanisms that require much less energy than proof-of-work. (Ethereum, for example, is scheduled to switch to a new type of consensus mechanism called proof-of-stake sometime in 2022, which could reduce its energy usage by as much as 99.5 percent.)
And are those arguments valid?
Partly. It’s true that most newer blockchains are designed in a way that requires considerably less energy than Bitcoin, and that Ethereum’s switch to a proof-of-stake consensus mechanism will greatly shrink its environmental footprint, if and when it happens.
But it’s also a bit convenient to steer attention away from Bitcoin, which is still the most valuable cryptocurrency in the world. Bitcoin’s energy needs aren’t expected to fall significantly anytime soon. And even if every Bitcoin miner ran entirely on renewable energy — which, to be clear, isn’t the case — there would still be an environmental cost associated with maintaining the blockchain.
All told, it’s clear that crypto as we know it today has a significant environmental impact, but it’s hard to measure exactly how significant. Many frequently cited statistics come from industry groups, and it’s hard to find trustworthy, independent data and analysis.
But few crypto fans would dispute that blockchains consume substantially more energy than a traditional, centralized database would — just as 100 refrigerators use more energy than one refrigerator. They just argue that crypto’s environmental impact will shrink over time, and that the benefits of decentralization are worth the costs.
Got it. And those benefits, again, are …
Some crypto proponents will tell you that the biggest benefit of decentralization is the ability to create currencies, apps and virtual economies that are resistant to censorship and top-down control. (Imagine a version of Facebook, they’ll say, in which Mark Zuckerberg couldn’t unilaterally decide to kick people off.)
Others will say that the biggest perk of decentralization is that it allows artists and creators to control their own economic destinies more directly by giving them a way (in the form of NFTs and other crypto assets) to bypass platform gatekeepers like YouTube and Spotify, and sell unique digital works directly to their fans.
Still others will say that crypto is most useful to people who don’t live in countries with stable currencies, or to dissident groups living under authoritarian regimes.
There are a million other hypothetical benefits of decentralization and crypto, some of which are realistic and some of which probably aren’t.
How do you actually use crypto? Is it like sending a payment over Paypal or Venmo?
It can be. The quickest way to get started using cryptocurrencies is to set up an account with a crypto exchange like Coinbase,which can link to your bank account and convert your U.S. dollars (or other government-issued currency) into cryptocurrency.
The “user friendly” suggestion of Coinbase here directly contradicts the “anonymous” and “decentralized” arguments up above.
But many crypto users prefer setting up their own “wallets” — secure places to store the cryptographic keys that unlock their digital assets.
Once you’ve got some crypto in your wallet, the process can be pretty simple — just type in the recipient’s crypto wallet address, pay a transaction fee (if applicable), and wait for the payment to clear.
Other types of crypto transactions, like buying and selling NFTs, can be significantly more complicated, but the basic act of sending a payment to someone typically takes only a few minutes.
I’m ready to dive into the rest of your explainers. But first, I have one final question about crypto’s culture: Why is it so weird and insular?
This is maybe the question I get asked most about crypto. People see their friends, co-workers and relatives diving down the crypto rabbit hole and emerging days or weeks later with a new obsession, new internet friends, a bunch of new jargon and the seeming inability to talk about anything else. (There’s even a word for this — getting “cryptopilled.”) People who believe in crypto tend to really believe in it — to the point that they can appear to the outside world more like evangelists for a new religion than fans of a new technology.
I was a religion reporter once, and I don’t think the comparison is totally inapt. (It’s also not necessarily a bad thing: Plenty of people find meaning and community and intellectual stimulation in religion.) As people like the Bloomberg journalist Joe Weisenthal have pointed out, crypto has similar elements to an emerging religion: an enigmatic founder (the still-anonymous Satoshi Nakamoto), sacred texts (the Bitcoin white paper) and rituals and rites to mark yourself as a believer, such as tweeting “gm” (crypto speak for “good morning”) to your fellow believers, or photoshopping laser eyes onto your profile picture.
This would also describe many cults.
It’s fun to laugh at the (often cringeworthy) ways crypto fans try to entertain and inspire each other. But focusing too much on their behavior and customs might mean missing what’s genuinely novel — and, depending on where you sit, either exciting or dangerous — about the technology itself. Which is why, when my friends ask me how to talk to their cryptopilled relatives, I advise them to start by trying to understand what’s gotten them so excited in the first place.
Dr. Catherine Flick – a senior researcher in the ethics of emerging technologies at the Centre for Computing and Social Responsibility, De Montfort University, UK
David Gerard – an analyst and author of two books about blockchains and related topics, as well as numerous blog posts on the same
Neil Turkewitz – a consultant and copyright activist, who is President at Turkewitz Consulting Group and a member of the Artist Rights Alliance. He was previously an executive at the Recording Industry Association of America (RIAA) and served on the Board of the Chamber of Commerce’s Global Intellectual Property Center. More of his writing can be found on Medium.
Ed Zitron – an author, journalist, and media relations company CEO, who also writes on Substack
…and several contributors who would prefer to remain anonymous.
Three of the contributors have also published their longer-form thoughts on this New York Times article: Ed Zitron, Neil Turkewitz, and Stephen Diehl.
Copyright to the New York Times article belongs to the Times, and the article can be read in its original form in full at nytimes.com. It is republished here for the purposes of critical commentary. Copyright of the annotations belongs to their respective authors, as noted inline. Those without authors noted inline are combined commentaries from several annotators.
Molly White has a cryptocurrency disclosure. Some of the other contributors do as well, on their personal websites.
Increasingly, I’ve found myself enraged by the White Man With A Newsletter pundit set using to tell the world that because I am doing everything in my power to protect my 17-month-old from being that could kill him, I am a paranoid ideologue who rejects science and reason. These Davids, Jonathans, and Alecs fundamentally predicate their arguments on the notion that I can and should “go back to normal” and “move on” with my life because, I, individually, am vaccinated, so the risk of “normalcy” turning fatal for me, specifically, is low. In the process, they have rendered invisible the children under five, the immunocompromised, the vulnerable, and the people who love anyone within those categories.
As someone who reported on Congress and politics for almost a decade, I already was cynical about the , aware that death could be our politics’ collateral damage and fearful that a national media built on a “both-sides” ethos of coverage would not hold a breaking government to account. The 22-year-old Meredith who moved to Washington with high ideals of public service had faded away long before the pandemic hit. But the person who emerged to replace her was not fully actualized by the time I decided to be a mother, or later, when I had to sequester my physical self in my apartment while sitting largely alone with my emotional self. I could not have imagined the despair I would feel at our nation’s collective shrug as it hurtles toward a million deaths as a result of a pandemic we, as a society, have quit trying to contain. For as much as the “move on” pundits question the thinking of people like me, it’s hard for me to understand how—looking at the same set of facts—they can magically flip a switch and be who they were before. Must be nice.
These “go back to normal” proponents, because of their media influence, have undue power over the narrative of how Americans feel about the pandemic—which in turn has influenced politicians across the country to ease back protections based on a vague sense that “people are done,” and in defiance of both and polls safety rules. More than that, though, these talking heads also represent a growing sect of privileged people, people we see and know in our everyday lives, who have no pressing need to adjust their behaviors, are unwilling to make even the smallest concessions for the greater good, and cannot understand why every other person on earth does not want to join them in the freedom they already have but purport to be missing.
They want to return to a time when there never was a pandemic, because to return to that unreachable place is to enjoy their freedom without guilt, to avoid grappling with how many lives have been lost or changed, and to never consider how their words might have played a role in incalculable loss. They are moving forward without looking back. The rest of us are stuck.
It feels like I’m treading water in an ocean where one current is the futility of our collapsing society and the cross-current is my desire to figure out who I am supposed to become, and the thing I’m holding up above the surface is a baby—whose birth was one of the most profound acts of hopefulness of my life—just so he can feel the sun. There is no old “normal” left for me. These past two years have changed me forever, and I cannot go back to a person who is gone in a time that does not exist.
My initial views of and were significantly shaped by the fact that in the closing months of The Beforetimes in 2019, I lost our first son in my twenty-second week of pregnancy—a traumatic loss for which doctors could not ascribe a medical explanation, and a statistical anomaly of which I only had a .5 percent chance of facing. Missed baby showers, going to scans alone, even the prospect of laboring and delivering alone when we imagined that in Spring 2020—none of these sadnesses or fears resonated with me, when in my view, pregnancy had been flattened into a neat binary: Do I get to take a healthy baby home or not? This binary focused me. It gave me purpose. It also made me theoretically willing to sacrifice the things that I considered “nice to have,” so that no other woman would face additional odds. Every medical professional who treated me treated other pregnant women, so limiting covid exposure for them, attending appointments alone, pondering delivery alone, meant doing my small part to cut the chances of anyone having to lose something precious like we had.
In this way, 2020 felt manageable. It was oriented around survival. That my pregnancy would survive to viability. That our baby would survive his first few months when his nutrition was dependent exclusively on me. That we would survive until vaccines were available.
In 2021, however, the world shifted. People started sorting themselves into separate camps of “still living in the pandemic” and “returned to normal,” and as someone in the former camp, there was surprisingly little empathy from members of the latter. In December, I left my day job at a university because, as one of the few employees who had a child ineligible for the vaccine, I was made to feel like my concerns about working in-person in open cubicles were illegitimate. This stung, not just because being a high-achieving professional is central to my identity, but also because until we could get vaccinated and put our son into daycare, I had exhausted myself for half a year .
I was three months pregnant with him in March 2020, when covid hit the United States in earnest and everything closed in around me. The perfectly aligned timeline of my pregnancy and the pandemic means that, for me, “The Beforetimes” was a confusing mix of professional clothes that may never get worn again, a lifetime’s worth of friends I haven’t seen in years, a social calendar that wasn’t ever so big but also used to exist. These things have fallen away, and it’s hard to know the root of their disappearance: the demands of motherhood or the reorientation of life around avoiding disease. In isolation, I began separating from the survival mode that once gave me purpose—I got vaccinated and our baby grew to a young toddler—and wondered more than ever about the balance between my role as mom and what I would do with the rest of myself.
Trying to make sense of my feelings, I read essays on pandemic pregnancy and new parenting, hoping to see my anger and struggle in them. I couldn’t. The pregnancy-mom industrial complex has focused so many women on the individual, on being celebrated, on “magic moments” to be curated and shared, and I understand why people lament that loss. But I realized the moments new mothers are supposed to find magical ultimately are irrelevant to who we are and the children we raise, and worse, serve as tenuous cover for the way our society devalues women, questions their ability to be mothers, refuses to guarantee pay for their maternity leave or ensure access to affordable childcare. We ask women to bring new life into the world then leave all of the work of deciding whether women maintain their value outside of being parents to each individual mother on the ground. Now, society is placing additional burden on those mothers who want or need to be more cautious in their behaviors with regard to covid. We are pushing all our weight downward and hoping that regular humans hold.
I’m not sure if I ever consciously bought into the idea that “it takes a village” to raise a child, but if the past two years have shown me anything, it’s that “it takes a village” is a lie when you view this aphorism as a promise that we’ll be there for each other and our children. Just this week, Dr. Leana Wen, another leading “return to normal” pundit, that lifting covid protections will put children under five who cannot yet get vaccinated “at greater risk,” and that “this is unfair but part of a necessary transition from government mandate to individual decisions.” Of course, it is “unfair” that babies will die preventable deaths, but why is it “necessary” to abdicate our collective responsibility to the most vulnerable around us, especially when we were not even trying that hard in the first place?
In 2022, in America, it seems to me as if we’ve decided that some unnecessary severe illness or death among children under five is acceptable to diminish any guilt felt by these White Men With Newsletters when they look out at restaurant dining rooms that aren’t at 100 percent capacity and are reminded there is still a pandemic. Meanwhile, I spend most of my spare time looking at our son, knowing his preciousness to us and thinking of other children’s preciousness to their parents, and no sacrifice feels too big.
I think about the world I brought my son into in September 2020; a country that, in the span of his lifetime, has normalized mass death because the people with the most power to do something also enjoy the privilege of being largely untouched. I think of a White House that in Spring 2021 telegraphed , instead of asking Americans to do the absolute bare minimum to protect those, like my son, who cannot protect themselves. And selfishly, I also think of myself, and the mom I will be to my son now that I’ve had these concurrent experiences of living through a pandemic and being a working new mother, now that I’ve lived these two years in relative confinement, doomscrolling and rage-tweeting my way through anxiety and profound disappointment.
For me, the most intimidating part of becoming a mom is thinking about the person I will be when my son is old enough to know me: how he’ll perceive my own beliefs about myself, what he’ll tell his friends I “do” for a living, and frankly, whether that work ever will feel big enough to me relative to what I feel is the enormity of his life. The pandemic has intensified the isolation of not just the project of new parenting but also the project of understanding and building a version of myself that reflects my current reality.
I hate that the most hopeful moment of my life, the birth of my son, happened simultaneously to my utter loss of faith in humanity and government’s role in improving people’s lives, which, for many years, helped define who I am. But I have to choose to believe more of myself, and of us, to not “move on” but to become unstuck, to change into who I want to be for myself and for our son. The truth is, I already made that choice when we decided to have him, when we were more committed to the idea of him in our lives than we were overwhelmed by the fear of suffering an improbable loss again.
For as exhausting and as isolating as this time has been—and for as unsure as I am about how it all will shake out—I know, if I am honest with myself, that my strength has been more powerful than my doubt. I want my son to know a me who’s more hopeful. I want him to know a world that is better. It’s difficult to take on both of these challenges at once, but they, like the times we are living through now, are with us permanently, a covid long-haul symptom mothers have to confront and will commit the rest of our lives to trying to cure.
If I can raise him to be someone different than the Davids, Jonathans, and Alecs, a boy and then a man who faces life with kindness and empathy and consideration of others, maybe the next time we go through this, we all will be better off.
Meredith Shiner is a writer and a communications consultant living in Chicago. She covered Congress and national politics in Washington from 2009 to 2016.
Given the company’s character and scale and long ethical rap sheet, it is reasonable to construe every message issued by the company formerly known as Facebook as a threat. The company surely doesn’t intend this, but the story of the company’s growth and success has by now been overtaken by the sum of the many, many catastrophic things that it didn’t intend or just didn’t anticipate or anyway didn’t care enough to do anything about until people noticed that the company was facilitating genocidal regimes abroad and speeding the dissociative mental breakdown of basically everyone using their technology pretty much everywhere that technology is used. When people started yelling at the company about all that, Facebook changed its name. It’s called Meta, now.
The core business, which is surveillance-driven digital advertising, is still the same, and remains preposterously profitable. Stories about the company’s disastrous last fiscal quarter, in which news of declining users caused Meta’s stock to crash, also noted that the company’s revenues were $33.7 billion, a 20 percent increase year over year; the company turned a profit of $10.3 billion. That massive profit was slightly below projections, though, in large part because Meta spent $10 billion building out its capacities in the metaverse, a wholly virtual and not yet real virtual reality gambit. When and if ever the metaverse matches the experience depicted in the company’s promotional materials, it will afford users the opportunity to experience what it would be like to attend a work meeting on their home computer, or in one of the Sims games. At some point after that, the metaverse might offer an experience that was much more nuanced without being any less virtual—the opportunity to pay in cryptocurrency (which will have been purchased with actual money) for a virtual espresso that your virtual avatar can enjoy while you yourself sit somewhere in your hilarious and unoptimized human body, wearing VR goggles and feeling faintly carsick. We are not quite there yet, though.
But if you were where Meta currently is, which is presiding over a hugely profitable but ungovernable, unwieldy, widely detested derangement engine ruled by a sociopathic algorithm and an overbearing cadre of psychotic power users, reviled and abandoned by younger users and in every sense but the most literal a haunted space station overrun by goblins and skunks, you too would want to live in the future. There was something poignant about Facebook’s insistence, in the last days before the Meta pivot, that it was actually a place for people to find other people and enrich their lives in so doing—poignant because the site was quite obviously by then a place where lonely retirees turn into blood-and-soil fascists, and also because Facebook as a company had long seemed so wildly indifferent to the experience of the people using it.
The company’s new presentation, though, is noticeably sweatier and darker. This is only partially because the technology that the company is touting doesn’t really exist yet. The true darkness of it all is latent in the sales pitch, which amounts to an admission that the old reality—the haunted space station that generates the profits and luridly deranges America’s aunts—is beyond salvaging. There are just too many goblins and skunks running around, for reasons that are not really worth going into, everyone’s at fault if you think about it and there’s no sense in laying blame and so on. It’s regrettable, but what are you going to do? Try to fix any of it?
The ambitions of our reigning tech lords tend to be ridiculous and tacky—imagine, if you dare, a reality roughly as cheesy and brutal as ours, laid haphazardly over the top of this one, with the same people in charge—but there is also something ominous about the specific ways and places in which their powerful imaginations fail. The hyped-up rhetoric about Saving The World with the wonder-working power of cryptocurrency or other web3 gimcrackery is in some ways just familiar Silicon Valley noise, the lorem ipsum text swapped in for “to profit” under the Why heading on everything these people do. But while it is clear what these interests want, which is to continue to control a large and growing amount of money and power and impunity, it is also clear that they have moved on from the systems in which the rest of humanity is left to grind it out. That all is dying, and will be left to die. The new system will have a virtual nightclub in it, where you can buy drinks that you cannot in point of fact actually drink.
Anyway, this is all kind of a long way of explaining how Meta chose to make and air this advertisement for itself during the Super Bowl on Sunday:
The ad is absolutely state of the art, they picked a fantastic song to tie it together, and this vision of the metaverse is objectively a more appealing one than Mark Zuckerberg pitched late last year, which was a virtual space in which Zuckerberg himself slipped into an avatar that looked at most 10 percent more uncanny than he does in real life and then answered text messages. That this advertisement is so well-made, though, only serves to underline what an astonishingly bleak and hopeless vision is for sale, here. Everything you have and everyone you care about will be taken from you by forces beyond your control, the ad says. You will be surplus to requirements, first fungible and ridiculous and then literally disposable. You will lose everything. Which is notably a departure from the normal types of Super Bowl ads, which as recently as last decade were 1) Draft Horse Salutes A Troop and 2) Hot Babe Eats A Hamburger.
The ostensible selling point here comes in the back third. You may get rescued from the trash compactor, maybe. And you also might get a job, and you may, should you happen to put on the right pair of VR goggles, be able to experience a simulation of the world that you remember and see the absent friends that you miss, and so enjoy something like the life you once had, albeit all by yourself and only until the goggles are removed. That’s the product, but also that’s the threat.
It is unwise to read too much into any advertisement, let alone one prominently featuring Chuck E. Cheese–style animatronics. Also it is axiomatic that you will never see a commercial for anything that is actually and authentically liberating while watching the Super Bowl; that space is just too expensive, and too valuable, for anything but the institutions invested in the opposite of liberation to be able to afford access to it. But there is something infinitely bleak in seeing a company’s ambitions laid out as plainly and mercilessly as this. The world we’ve made is going to use you up, they say, but the next one might be kinder. It’s a lot easier to trust the first half than the second.
Today, we’re going to make a nice colorful funnel using the latest data from some of the ad industry’s most reliable sources to trace a dollar spent for programmatically-bought display advertising on its exciting journey from your pocket to the bank accounts of middlemen, con men, crooks, and the Bermuda Triangle.
Adtech was created to make the buying and selling of online advertising so much more efficient. Today, about $350 billion dollars is spent on online advertising. 70%+ of it is bought programmatically. It turns out it has been wonderfully efficient for the lads and lassies in the adtech industry. Not so efficient for losers like you and me. Let’s see how it’s working…
1. You start with a dollar to spend 2. Your agency gets a 7¢ fee 3. Technology and targeting fees take another 27¢ (DSPs, SSPs,and WTFs) 4. 15¢ mysteriously disappears into the “unknown delta.” No one knows where the “unknown delta” is. My guess? Jupiter or North Korea. 5. 30% of the ads you buy won’t be viewable 6. About 20% of the stuff you buy will be fraudulent 7. Only 9% of your display ads will be viewed by a real person for even a second. Bastards. 8. Blogweasel math notwithstanding, looks like your dollar bought you 3¢ of real display ads viewed by real human people.
Covering My Ass As I’m sure you know, no one in the comical online “metrics” business can agree on anything. Consequently, to minimize the torrent of abuse I’m going to get from agency and adtech apologists, I have taken the numbers in the above illustration from the most reliable sources I could find: – The first four items come from the ISBA and PwC’s, Programmatic Supply Chain Transparency Study – Item 5 comes from Integral Ad Science – Item 6 comes from AdAge and Spider Lab’s report, Combating Ad Fraud in the Age of COVID-19 – Item7 comes from Lumen Research
Covering Your Ass Oh, and be sure to ask your agency about these numbers. And when they say, “We have systems in place…” ask to see the systems, have them explained to you, and get their version of how much value you’re getting from a programmatic ad dollar. Should be good for a few laughs.
Some Notes on the Funnel
– It’s important to note that the ISBA study alluded to in points 1 through 4 above only reported on the highest quality tip of the iceberg — the most premium end of the programmatic marketplace.
Even at the premium end, only 12% of the ad dollars were completely transparent and traceable. An astounding 88% of dollars could not be traced from end to end. Imagine what the numbers must be like in the non-premium end.
– The “unknown delta” represents about 1/3 of the fees that programmatic buyers pay. This money just evaporates. No one can figure out where it goes. Not even a famous blogweasel.
– I have used 30% as the factor for non-viewable ads. Some research reports it as high as 50%.
– I have used 20% as the fraud number at the publisher end of the funnel. Even if fraud at this end is only 10%, the math still comes out at about 3% viewable ads by real people.
– How many people actually view a display ad? The IAB defines a “view” as 50% of an ad’s pixels seen for one second. Huh? Even by this ridiculous standard only 9% of online ads are “viewed.”
Idiots on Wheels
Of all the industries that never learn anything, my vote for the dumbest goes to the auto industry. It doesn’t matter how many times they try the same stupid strategy and fail, they never learn.
The strategy in question, of course, is the “let’s target young people” strategy. It never works, but it is the knee-jerk strategy for every new product from every auto marketer in captivity.
The latest example is Lexus. They have a new SUV, the NX, which they are targeting to young “creative visionaries” (someone shoot me) with all kinds of hip media horseshit. Only problem is, the average luxury SUV buyer is 53 years old.
The auto industry’s magical thinking goes back a long way. Of course, there was the infamous “Not Your Father’s Oldsmobile” campaign that helped kill an entire brand.
More recently, in 2015, Cadillac gave us the hilarious “Dare Greatly” campaign which “tapped into the Millennial mindset.” Yeah, right. They even moved their entire headquarters to NYC’s SoHo area to prove how young and hip they were. The result? Cadillac has the oldest buyers of any car brand on the planet. Oh, and they’re back in Detroit.
In 2016, Toyota killed Scion, its entry into the “youth car” market. The “youth car” idea was all the rage in the early 2010’s. The idea was to target the ever-popular (and mostly non-existent) 18-34 year old car buyer. According to The Wall Street Journal, 88% of these “youth cars” were bought by people over 35. Scionara.
For just plain laughs, it’s hard to beat Chevy’s attempt to be young. In 2012 they hired some clown from MTV who “transformed part of the G.M. lobby into a loftlike space reminiscent of a coffee shop in Austin or Seattle, with graffiti on the walls and skateboards and throw pillows scattered around.” Average age of a Chevy buyer? 46.
Back to Lexus and its new NX. According to MediaPost, “Gen Y and Gen Z luxury buyers tend to be more diverse, more affluent…” said Lexus’ VP of Marketing.
Just curious about who these “affluent Gen Z” luxury car buyers are. The average Gen Z is now 16 years old…You truly cannot make this stupid shit up.
The auto industry, steeped in research horseshit about “creative visionaries” and decades of other socio-generational idiocy can’t get it through their thick skulls that our population is aging at warp speed; that the average car buyer in America is 53; that since 2000 the share of new cars bought by people over55 has increasedby 15%. These people are really, truly, genuinely clueless.
I’ll leave the last word to P.J. O’Rourke, “Whenever anything happens anywhere, somebody over 50 signs the bill for it.”
Quickies
I’m getting a little long-winded here today, so let’s move this thing along…
– Alternate headline for today’s newsletter: “I know 97% of my programmatic ad budget is wasted, I just don’t know which 97%.”
– From the late, great Nora Ephron, the best definition of ‘content’ you’ll ever read…“Something you can run an ad alongside of.”
– Here’s a good laugh. According to Ad Age, “The Association of National Advertisers and member marketers have begun discussing an industry self-regulatory body to handle social media issues…” Yeah, that oughta do the trick. Letting a marketer regulate himself is like giving a 14-year-old girl a cosmo, a cell phone, and a credit card.
– According to ad fraud researcher Dr. Augustine Fou, 2/3 of clicks on Google Ads are from bots. “If your agency is reporting clicks and click rates to you, you’re likely being misled.”
– And while we’re kicking Google around…there are some companies that have very G-rated names, but sell very X-rated stuff. A couple of these companies are named “Jack and Jill” and “Adam and Eve.” If you search for “Jack and Jill” you won’t find the dirty company on Google in a natural search. That’s because Google has stunning integrity! Except, of course, if Jack and Jill happen to buy some Google Ads. In which case – surprise – there they are!
A good plot for, like, an insider-trading Hollywood thriller would be if the villains hacked into the computers of the U.S. Securities and Exchange Commission. The SEC, after all, is maybe the world’s greatest repository of material information about public companies. Companies are constantly filing earnings releases, merger announcements, management changes, proxy fights, all sorts of material news on the SEC’s Edgar system. If you hacked into Edgar you could … well, in a movie, I guess you could delay every filing by like 10 minutes, to give you a chance to read and trade on it? In the real world most of this stuff gets announced after market hours, and anyway it mostly goes out on non-Edgar press wires too, so this probably wouldn’t work that well.
You know what would work, though? There are companies that provide software for public companies to use to make Edgar filings, to “Edgarize” their press releases and other documents so that they comply with SEC formatting requirements. These services frequently store companies’ material information for a while as it is being finalized, before it is filed and made public on Edgar. You could hack them:
The Servicers provide proprietary, cloud-based software platforms to facilitate public companies’ filing of periodic and other reports with the SEC. The Servicers’ public company clients’ filings include, among other things, Forms 8-K and related exhibits, which consist of press releases containing the public companies’ earnings announcements. The Servicers’ public company clients can use the Servicers’ software platforms to create, edit, and submit their filings to the SEC via the SEC’s EDGAR filing system. …
Typically, the Servicers’ public company clients begin the filing process for an earnings announcement by loading a draft earnings announcement onto the Servicer’s platform. Once loaded, the public company client can edit the draft earnings announcement on the Servicer’s platform, before finalizing the earnings announcement and releasing the final version to the public via a newswire, and filing the announcement with the SEC as an attachment to a Form 8-K called “Exhibit 99.1.” There is generally a window of several hours or days between the time that the public company client uploads the pre-release earnings announcement onto the Servicer’s platform and the time at which the client publicly disseminates the final earnings announcement through a newswire and the filing of the Form 8-K with the SEC.
That is from an SEC complaint accusing five Russians of hacking into two different (unnamed) companies that provide Edgarizing and filing services for public companies. (Here is the SEC’s announcement; there are also federal criminal charges.) One of them, Ivan Yermakov, allegedly “served as a Russian military intelligence officer in the Russian Federation’s Main Intelligence Directorate of the General Staff (‘GRU’)” and in 2018 was charged by federal prosecutors “for his alleged roles in a hacking conspiracy involving gaining unauthorized access into the computers of U.S. persons and entities involved in the 2016 U.S. presidential election.” In this caper, he allegedly hacked into the services’ computers, stole pre-release earnings announcements, and gave them to the other defendants to trade:
If the pre-release earnings announcement indicated that the public company client’s stock price was likely to increase, then the Trader Defendants bought stock in the company or CFDs referencing the company. If the pre-release earnings announcement indicated that the public company client’s stock price was likely to decline, then the Trader Defendants sold short shares of the company’s stock or sold CFDs referencing the company. …
The Trader Defendants used the information hacked and deceptively-obtained from the Servicers’ systems by Yermakov to realize at least $82.5 million in illicit profits between February 2018 and August 2020.
This was actually a bit less lucrative than a previous big hacker-insider-trading case, in which the hackers got into the news wires that publish press releases, but I enjoy it more because it is a little closer to the ironic “hacking the SEC itself” scenario. There is a pipeline by which information moves from being secret to being public, and if you can hack into that pipeline you’ll get a lot of good stuff.
Pretty good stuff, anyway. That previous case led to a delightful academic study finding that knowing every company’s earnings in advance was useful, but not that useful, because, despite the SEC’s casual discussion above, it’s not that easy to tell by reading an earnings release whether it “indicated that the public company client’s stock price was likely to increase” or decline. Often the news in an earnings release is priced in! Here, the SEC complaint has a few case studies “of the more than 500 instances of trading before earnings announcements on the basis of hacked information by the Trader Defendants between at least February 2018 and August 2020”; the traders made money in each of these cases. It’d be funnier if the SEC included a case study where they read the press release, said “ah a bottom-line earnings beat,” bought stock, and then lost money as it went down instead of up.
Web3
A basic premise of Web3 is that every product is simultaneously an investment opportunity. If you sign up for a Web3 social network or chat room or trading venue or let’s-buy-the-Constitution lark, you will get some of that project’s tokens, which will entitle you to use the project’s app or exchange or Constitution, and which will give you some notional say in the decentralized governance of the project. Also the tokens will appreciate in value if the project takes off and more people want to use it. It’s as if being an early user of Facebook or Uber also automatically made you a shareholder of Facebook or Uber, and when those services got huge you got rich.
What if, to take but one example, users of social networks collectively owned them, or at least could vote on how they were run and what kind of speech they allowed? And what if similar questions could be asked of just about any tech company whose primary product is software and services—whether financial, cloud computing, or even entertainment-related? …
The answers are taking the form of services and apps that are the first outlines of what their creators hope will someday eat the internet completely: a distributed, democratically ruled “Web 3.0” or “Web3” that will rise like a phoenix of 1990s-era Web 1.0-idealism from out of the ashes of the corporation-controlled Web 2.0 that all of us currently inhabit.
For instance:
DeSo—which, confusingly, is simultaneously a not-for-profit foundation, a blockchain and a cryptocurrency token, but explicitly not a traditional for-profit corporation—is in many ways typical of the form. The idea behind DeSo is that everyone should be able to create their own social media service, but also that they could be interconnected in ways that, say, Facebook and Twitter would never be—including shared accounts and other shared data.
“The thesis behind DeSo is that if you can mix money and social, you can create new ways for creators to monetize,” says Nader Al-Naji, founder and head of the DeSo foundation. “Instead of creators monetizing from ads, they can monetize from DeSo coins.”
DeSo has created a new cryptocurrency (named DeSo) that, for example, could be used to “tip” other users for their posts, replacing likes with actual money—or at least DeSo tokens that can be traded for dollars on the usual cryptocurrency exchanges. Like other next-generation cryptocurrencies, inspired by Ethereum, these tokens also can store the data that actually makes up a social network, such as the text of posts …. This dual function illustrates the inspired weirdness that is Web3: If money can become code, then money can be way more than a means of exchange; it can also do anything that other software can do.
This core insight, a sort of E = mc² equivalence between money and software, is why true believers in Web3 think it could have such a huge impact. Suddenly every activity humans engage in, from buying and selling a house to liking a post on social media, can be made part of a token-based financial system of a scale and complexity that makes today’s look like an antique.
I feel like the really interesting financial innovation of Web3 is its pyramid-scheme-like nature. All sorts of things — social networks, financial exchanges, ride-sharing apps, decentralized file storage — benefit from network effects. 2 You log into Facebook because your friends are there, and they’re there because you’re there. You call an Uber because lots of drivers are on Uber, and the drivers use Uber because the passengers do too. You might prefer the user interface of some niche social network or ride-sharing app, but if no one else uses it you won’t either. Some niche social network might say “hey use our network and you can, like, vote on our content moderation policies or whatever,” and you might find that attractive (why?), but it’s not as attractive as Facebook’s promise that your friends are there.
This network-effect dynamic favors big incumbents: The big existing networks have better networks than small upstarts. If you are looking for a social network you will probably end up on a big popular one, not a small new one. Not always — Uber and Facebook are pretty new companies, in the scheme of things; disruption is possible — but the incumbents have advantages.
But in Web3 the economics are almost reversed. If you were an early user of Bitcoin now you’re a billionaire. If you’re an early user of some Web3 social network, you will probably accumulate some of its tokens, and if it takes off you’ll get rich. This gives you an incentive to join the next thing, because being early to the next thing will make you rich, while joining the existing popular thing won’t. As I wrote last month:
When corporations fund projects, they hope to make money, so they fund projects that they think people will like. When users fund projects, hoping to get rich, the incentive to use the project is not just “this is a useful thing for me” but also “if I use it I’ll get rich.” It turns, like, file-storage systems into also Ponzi schemes: The community of users is also a community of speculators.
People who like Web3 mostly think this is good. Here is a tweet from law professor Aaron Wright that summarizes the effect 3 :
And here is a tweetstorm from Index Ventures investor Rex Woodbury about the possibilities for creator tokens:
Tokens also let early fans share in the upside they help create. Say Lil Nas X launched $NAS back before Old Town Road. His token was worth $100 then. Today, it might be worth $10,000.
An early supporter might earn a 100x return. …
Tokens translate social capital into economic capital. This financialization of everything has its downsides (there should be protections when investing in a person’s token) but tokens can also bootstrap liquidity for a creator & deliver that creator’s community economic upside.
What if there was a way to pay millions of people to watch a specific video at a specific moment in order to ensure that video goes viral and makes enough money to cover the cost of paying all these people — and then some?
In the old world, this would be too complicated. Just getting everyone’s bank details would take forever. But in our world, it is possible. It takes about five minutes to set up a smart contract that sends tokens to an unlimited number of people. The contract can be programmed to pay these people automatically once they complete a certain action online — and to pay them again when their actions bear fruit and drive up the value of a song/product/stock/anything.
This is, essentially, a pyramid scheme. A Ponzi. But it makes sense. It will be the dominant marketing method of the next decade and beyond.
It feels sometimes like it is the dominant marketing method of 2021, anyway.
People who dislike Web3 mostly think this is bad. At least, they think — like Stephen Diehl — that “if there is any innovation in crypto assets it’s not in software engineering, but in financial engineering,” that Web3 is not about building good products in a good way but about the promise of riches. Here is Robin Sloan:
A large fraction of Web3’s magnetism comes from the value of the underlying cryptocurrencies. Therefore, a good diagnostic question to ask might be: would you still be curious about Web3 if those currencies were worthless, in dollar terms? For some people, the answer is “yes, absolutely”, because they would still find the foundational puzzles compelling. For others, if they’re honest, the answer is “nnnot reallyyy”.
I sympathize with the “this is bad” camp, but to be fair I don’t own any wildly appreciated tokens and might just be jealous. I do want to talk about incentives though. Think about traditional “Web2” social networks. If you are a user, and someone shows you a new social network, you will probably use it if you find it good and not use it if you don’t. “Good” here means some combination of (1) you like its features and design and (2) network effects (your friends are on it). And maybe there is some interaction between those things where you are more likely to use a network if you think other people will like its features and design, so that you think it will build a large network.
Meanwhile traditional social networks were funded by venture capitalists. If you are a VC, and someone shows you a social network, you will probably fund it if you think that other people will like its features and design and it will build a large network. Investors, like users, will evaluate the project based on the intrinsic quality and desirability of its product.
But what about a Web3 social network? If someone shows you a Web3 social network, your decision about whether to use it will depend on (1) its goodness, (2) its usefulness as a network and (3) your odds of getting rich. Point (3) is the new one, and it seems to dominate: If you are the sort of person who chooses to use a new social network that promises to pay people for posting, it’s probably because you like money more than you like posting.
As you evaluate a new Web3 social network, how do you calculate your odds of getting rich? Well, you get rich if the network becomes popular, so you are — like a Web2 VC — evaluating the network’s odds of taking off and becoming huge. You are trying to figure out if other people will like the network and want to use it.
But notice that your decision was in large part about the money. So everyone else’s probably will be too, recursively. Your decision to join a Web3 project depends mostly on your expectation of getting rich, which depends on your expectation about other people joining, which depends on your expectation about their expectation of getting rich, which depends on your expectation about their expectation about other people joining, which depends on your expectation about their expectation about their expectation of getting rich, which etc. Only mostly! The intrinsic desirability of the project matters too. But the money seems pretty important. “Crypto projects tend to rely on some form of momentum, where one cohort of participants gets involved because the previous cohort got rich,” writes Byrne Hobart, but the reverse is also true: Each cohort gets rich because a new cohort gets involved. If the product itself is good and enjoyable to use that is probably a plus, but I am not sure it’s essential.
What sort of incentives does this create to spend your time making good products? 4 Not none! But … attenuated, no? If you could spend a day optimizing the color scheme and messaging mechanics of your social network, or instead optimizing the payoff structure of the tokens, which one creates more value? If every product is also an investment, will the product engineers be mostly financial engineers?
Weird insider trading case
The weird part is how, uh, not weird it is? Here’s the U.S. Securities and Exchange Commission press release from yesterday:
The Securities and Exchange Commission today announced charges against Daniel V.T. Catenacci for insider trading in the securities of biotechnology company Five Prime Therapeutics, Inc. in advance of the company’s November 10, 2020 announcement that it had achieved positive drug trial results for its flagship cancer drug Bemarituzumab.
The SEC’s complaint alleges that Catenacci, a Chicago, Illinois based medical school professor, entered into a consulting agreement with Five Prime to serve as a lead clinical investigator for the company’s Bemarituzumab drug trial. Through this role, Catenacci allegedly learned material nonpublic information about the positive drug trial results for Bemarituzumab. According to the SEC, shortly after he allegedly learned of the positive results, Catenacci purchased 8,743 shares of Five Prime. After it publicly announced the positive drug trial results, Five Prime’s share price increased over 300%. The next day, Catenacci allegedly sold all of his shares, realizing illicit gains of $134,142.
And here is the SEC complaint, which is incredibly straightforward. He knew he couldn’t trade:
Catenacci also received and signed Five Prime’s consulting agreement that expressly barred him from trading on that confidential information. The agreement stated in relevant part that “certain Confidential Information, including information learned in the course of performing Services under this Agreement, may be material non-public information” and that “Consultant agrees not to trade in securities of FivePrime while in possession of material non-public information of FivePrime.”
He got positive information on Nov. 9, 2020, and knew it was positive:
On the night of November 9, 2020, Five Prime’s Clinical Development Director sent Catenacci an email attaching a draft of an abstract detailing the positive results of the trial and asking for Catenacci’s comments, to which Catenacci replied, “I am pleasantly surprised and cautiously optimistic.”
He knew he specifically couldn’t trade on that information:
Following the Director’s email, the company’s Chief Medical Officer emailed Catenacci with the subject “Re: Also: do not communicate the results of the trial. SEC trading regulations.” The email specifically stated that the information Catenacci had received in the abstract regarding the trial results was “confidential and ‘material non-public information’” which “prohibited [Catenacci] from trading in Five Prime securities.” The email further stated that Catenacci could not trade in Five Prime securities until the results were made public through a press release “[a]fter 4:30 pm EST on Tuesday Nov[ember] 10.”
And then he allegedly bought stock during the call about the results:
On November 10, 2020, Catenacci attended a video meeting in which the clinical trial investigators discussed the positive trial results. During the meeting, Catenacci successfully placed an online limit order in his personal brokerage account to buy 8,743 shares of Five Prime (worth approximately $48,000). He had never purchased or sold shares of Five Prime before that day.
And then he allegedly sold the stock the next day, at a 300+% profit. There were no call options, no trading in his mother’s name, no complex system of tips to a third party in exchange for cash payoffs. He allegedly just got clearly positive news, was explicitly told not to trade, immediately bought the stock, and made a huge profit the next day. I am baffled.
I suppose I have spent too much time reading insider trading cases and writing Money Stuff? In my world, this stuff is practically pop culture; “everybody knows” how insider trading works and how insider traders get caught, and they love to think of elaborate workarounds to use inside information without getting in trouble. But I suppose that if you’re a cancer doctor perhaps you are busy doing cancer research and you don’t have time to devote to insider-trading-enforcement connoisseurship. You get positive drug trial results and you think “ooh that should make the stock go up, maybe I’ll buy some.” You get a follow-up email being like “don’t forget, don’t buy the stock!” and you think, “meh, but the stock will go up, what’s the worst that can happen?” Catenacci also faces federal criminal charges.
NFT Stuff
I assume this is a joke, in which case it’s a good one, though who knows these days:
For too long, ownership of Olive Garden franchises has been dominated by the capricious whims of the fiat system. That’s why we’re enabling anyone to trustlessly mint a nonfungible token representing 1 of 880 real Olive Garden franchises in the United States.
Our goal is to bootstrap a community of Olive Garden enthusiasts, which is why the franchise mint price is tethered to the reasonable cost of a Tour Of Italy entree ($19.99, as of Dec 20, 2021).
They are listed on OpenSea, though not for much money and they don’t trade much. There’s a good joke about minting breadsticks for free. The FAQs are also good:
Does this confer ownership of or investment in a real Olive Garden franchise?
While every Non-fungible Olive Garden is tethered to a real Olive Garden, ownership is currently limited to the Non-fungible Olive Garden Metaverse, granting owners no rights or privileges in meatspace Olive Gardens. This may change in the future (see roadmap).
Is this affiliated with Olive Garden?
No. We are simply a community of Olive Garden fans invested in both trustless future economies and delicious, reasonably-priced Italian fare.
So am I buying a picture of an Olive Garden?
No. Token artwork is for representation only and confers no ownership over the photograph. You’re not purchasing art, you’re purchasing ownership of a Non-Fungible Olive Garden franchise.
Imagine showing up at an Olive Garden like “I own this Olive Garden in the metaverse, can I get a free shrimp alfredo?” How confused everyone would be.
I think that what is interesting about the idea of a “non-fungible token” is the possibility of linking some non-fungible thing in the real world, or some non-fungible slice of some real-world thing, to some transferable digital representation. And there is a strand of crypto thinking that is like “we are going to build a new financial system that will take over the entire job of financing and paying for the real world,” and in this vein you need to think about ways to represent real economic activity. You want ways to digitize ownership of houses and factories and the contents of particular shipping containers and stuff like that.
And a lot of people who come to crypto with this way of thinking are like, well, we’ll start by building out the digital primitives first, and then we’ll figure out ways to associate them with real-world objects. So we’ll figure out a way to build and trade non-fungible tokens, starting with tokens that are just empty nonsense, but then once we have that technology, we can work on trading tokens that are not empty nonsense.
It does seem like the trading-digital-primitives part is pretty well established right now, but we are perhaps a bit stalled at the tricky part of linking them to real-world assets. I can say words like “we should put real estate title registries on the blockchain,” but actually doing that requires getting lots of local jurisdictions and courts and banks and mortgage companies and title insurers and real estate agents to coordinate around some particular blockchain solution; it is an enormous social coordination problem and seems exhausting.
Opinion. Data. More Data.
Get the most important Bloomberg Opinion pieces in one email.
By submitting my information, I agree to the Privacy Policy and Terms of Service and to receive offers and promotions from Bloomberg.
But you can sidestep it by just pretending. Instead of digitizing ownership of Olive Garden franchises, with the right to hire and fire employees and collect cash flows and the obligation to maintain food-safety standards and take out the trash, you can digitize pretend Olive Garden franchises, digital receipts associated with pictures of Olive Garden franchises. “They’re in the metaverse!” or whatever. Instead of selling an NFT that conveys ownership of my house, I could sell an NFT “of”my house, which conveys nothing except itself. (Or: Anyone else could sell an NFT of my house.) “If I buy the NFT of your house do I get your house?” No, you get the NFT of my house. “Why would I want that?” I don’t know.
Things happen
Turkey’s Hidden Rate Hike Buys Erdogan Time But Raises Risks. How Erdogan’s Plan to Halt the Lira’s Fall Is Meant to Work. Morningstar ESG Chief Asks Herself: What Do Those Trillions Do? What Is Company Culture If You Don’t Have an Office? Nikola Corporation to Pay $125 Million to Resolve Fraud Charges. The secret Uganda deal that has brought NSO to the brink of collapse. Tesla Sends S&P 500 Crowd on a Wild Ride of Surges and Crashes. SEC demands more risk disclosure for Chinese companies listing in US. Robinhood’s Top Lawyer Takes On an Old Frenemy at the SEC. McDonald’s Japan to ration fries after supply chain crunch. The $1 Pizza Slice Becomes Inflation’s Latest Victim. TikTok is opening 300 restaurants to deliver some of its most viral food trends like feta pasta and corn ribs across the US. H&R Block is suing Block, formerly Square, over its new name.
If you’d like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks!
Of course by today Dorsey was out of the Web3 club: “Jack Dorsey Stirs Uproar by Dismissing Web3 as a Venture Capitalists’ Plaything,” reported Bloomberg News.
Here’s another example, from a recent Bloomberg article about Web3: “In October, Dish Network Corp. partnered with startup Helium Inc. for 5G wireless connectivity. Hotspot providers get paid in the token HNT for offering coverage. ‘What people are starting to realize is this is a very new opportunity that’s reminiscent of Airbnb or Uber,’ says Helium Chief Executive Officer Amir Haleem. The city of San Jose is setting up 20 Helium hotspots to earn HNT tokens to help cover internet access for some low-income residents.”
I am not sure the second graph is right, though I am also not sure exactly what it is graphing. If you are a user of a Web3 product, you get your highest utility from joining it when it has few users and then watching it grow to many users.
Possibly also relevant here is this New York Times article about people quitting big tech companies for crypto, specifically, for the ability to dump crypto tokens into a rising market: “Those leaving behind a Big Tech salary do not have to wait as long for a payoff at a crypto start-up as those at traditional tech start-ups. While employees generally accept a smaller salary at tech start-ups in the hope that the company’s stock will hit it big one day, workers at crypto start-ups are provided ‘liquidity,’ or the ability to cash out their shares, much earlier. Often, they can do so in the form of trading their company’s cryptocurrencies, according to Dan McCarthy, a recruiter for the investment firm Paradigm who haswrittenon the potential upsides of crypto start-ups for tech workers. In some cases, crypto start-ups offer compensation packages on a par with the biggest tech firms because of how easily employees can convert their company’s ‘tokens’ — or the underlying cryptocurrency backing the start-up — into cash.”
What happens when fans of Joss Whedon grow up and start working in television and movies? Netflix’s remake of Cowboy Bebop.
I can’t say for sure if the writers and showrunners on Bebop were, like I once was, huge fans of Buffy or Angel, the two shows that put Whedon on the map. Based on the way the characters speak, it sure sounds like it, though. Over the years, I’ve begun to notice more and more “Whedonspeak,” as the phenomenon used to be called, in mainstream television and movies. Describing the qualities that make dialogue sound Whedonesque is now difficult though, because those qualities are ubiquitous.
Before Joss Whedon was given the keys to the Marvel Cinematic Universe as director of The Avengers, long before his now ex-wife wrote a story calling him a “hypocrite preaching feminist ideals” and cast members spoke out about his abusive behavior on set, he was the showrunner for Buffy the Vampire Slayer. The show is a cult classic whose reputation precedes it, inspiring not only burgeoning young people to become feminists but also inspiring future television writers to get into the business. It’s difficult to overstate how influential that show has been, not just in terms of its portrayal of women in science fiction, but also because of the particular quirks of Whedon’s dialogue.
Characters in Whedon’s shows talk a lot, and they talk in very particular ways. Characters are often imprecise in their language, letting sentences trail off as they struggle to articulate themselves. They turn nouns into verbs and vice versa. They say “thing” or “thingy” or “stuff” in place of more descriptive terms. Often these characters metatextually comment on their surroundings or the environments they’re in, usually in a sarcastic or snarky way. The tone of this is pretty “wink wink, nudge nudge,” as if the writers are speaking through the characters to the audience, rather than the characters commenting on the situation they are in.
When Buffy Summers says, “Well, if this guy wants to fight with weapons, I’ve got it covered from A to Z, from axe to… zee other axe,” that’s a prime example of Whedonspeak. When, in long-running BBC show Doctor Who, the titular Doctor says, “This is my timey-wimey detector. It goes ding when there’s stuff,” that is also Whedonspeak. This clip, where the lead characters of Star Wars movie The Rise of Skywalker say “They fly now? They fly now!” to each other shows you how far the phenomenon of Whedonspeak has spread.
This is fine in Buffy, which is a show about teenagers in a heightened universe where vampires are real. When this style of dialogue shows up elsewhere, it’s not just incongruous, it feels lazy. The characters in Netflix’s remake of Cowboy Bebop talk in this way. It isn’t that the universe is more grim, it’s that the tone of the show, the actions of the characters, and the way that they all talk to each other don’t jive.
Whedonspeak is all over Cowboy Bebop, especially whenever Faye Valentine talks. In particular, the scene when Faye is handcuffed to the Bebop’s toilet in its opening episode has that particular veneer of insincerity that is endemic to this style of dialogue, especially when it’s done badly. The characters aren’t talking to each other—they’re speaking in quips and asides, lines meant to make the audience laugh more than they’re meant to convey who these characters are.
“Hey dick-hole!” Faye says, “Super cool accommodations, but do you think you could handcuff me to an even bigger, more disgusting toilet? Cause that would be great.”
Other scenes are also plagued by Whedonspeak. When Jet Black goes to turn in a bounty, he speaks to a police officer who apparently slept with his ex-wife.
“Personally, I wouldn’t cross the street to piss on you if you were on fire, but your ex-wife asked me to throw you a bone every once in a while,” he says.
“While you were throwing her your own bone, I bet,” Jet replies.
One scene between Jet and Spike on the ship has them quip at each other simultaneously in a way that makes the audience feel like they’re not even having a conversation. While investigating a bounty, Spike objects to going to New Tijuana.
“Do you know what I got the last time I was on TJ?” Spike says.
“Herpes?” Jet replies, while laughing.
“Stabbed,” Spike says. “You know what I was doing? Buying a churro.”
It isn’t that there aren’t occasions where characters should act detached or sarcastic in Cowboy Bebop. It’s just that when every character is this detached, all the time, it’s alienating. These characters aren’t being detached for a reason, but saying quippy things because it is the most clever or writerly way to say them. These are things you might put on a graphic T-shirt, not the way that fully defined characters react. Seriously, why is Jet even talking to that guy? Why does he just let that woman say that very racist thing to him?
It isn’t that the original Bebop was devoid of humor, but the humor came from the characters. There were more sight gags than one-liners. It’s expressed in things like Jet, Spike, and Faye running around all day looking for information on an elite hacker and getting conflicting information, eventually describing them as a “seven-foot tall ex-basketball pro Hindu guru drag-queen alien.”
My personal favorite joke of the original series is when Spike points out to Jet that he’s told him that his three least favorite things in the world are pets, children, and women with attitude, right after all a pet, child, and a woman with attitude join their crew. These aren’t jokes for the sake of jokes, quips to get the audience to chuckle, but humorous situations that the characters are put into and react to. But Whedonspeak dialogue isn’t about characters and their reactions. It’s about the audience and its much more distant reaction. It’s a little like eating cotton candy; it’s enjoyable, but it disappears the moment it hits your tongue, and afterward there’s not much to say about it at all.
ORIGINAL REPORTING ON EVERYTHING THAT MATTERS IN YOUR INBOX.
By signing up, you agree to the Terms of Use and Privacy Policy & to receive electronic communications from Vice Media Group, which may include marketing promotions, advertisements and sponsored content.
It’s easy to understand why Netflix felt it might be able to pull off a live-action “Cowboy Bebop,” just as it’s easy to understand why it all went so horribly, horribly wrong.
On the one hand, Shinichirō Watanabe’s epochal 1998 anime series just begs to be remixed, inverted, and maybe even chopped and screwed. An impossibly cool retro-futuristic western space-noir that blasted hyperspace gateways between its various genres with all the exuberance of Yoko Kanno’s freeform jazz soundtrack — and forever galvanized a more global audience for its entire medium along the way — Watanabe’s stir-fry serial about a motley crew of interstellar bounty hunters doesn’t only endure as a masterpiece of pop art mish-mash, the original “Cowboy Bebop” also lingers with fans as a bittersweet ode to the mad scramble of their own existence.
Watanabe took a wild slew of disparate elements and harmonized them all together into a wabi-sabi cartoon saga about the beautiful dissonance of being alive; his show introduced a ship full of mangy orphans and runaways, most of whom were hopelessly tethered to the same memories they were so desperate to piece together or leave behind, and listened along for the length of a dream as these unlikely session partners made some unforgettable music together. Whether paying homage to John Woo in a massive shootout on Mars or sifting through the ruins of Earth for the last Betamax player in the universe (so that amnesiac Faye Valentine might be able to watch a tape containing footage of her former self), “Cowboy Bebop” created such an ephemerally special future because it knew in its bones that people are always responding to their pasts. Even in the outer reaches of Jupiter’s moons, we bring ourselves with us wherever we go. To quote the end scrawl from the final episode: “You gotta carry this weight…”
Related
Related
The live-action version of “Cowboy Bebop” exists for the same reason that so many other pieces of undead IP have been dug up and Frankensteined back to life in the streaming age, but few shows are more intrinsically sympathetic to the difficulties of letting sleeping dogs lie. From a certain perspective, you could even make the case that even the worst attempt to revisit “Cowboy Bebop” would honor the spirit of Watanabe’s series better than leaving it alone ever could.
At the same time, however, “Cowboy Bebop” was also haunted by the fact that the past is full of lost things people can never get back (its story takes place in 2071, 49 years after an Astral Gate explosion cut history in half, rendered Earth almost uninhabitable, and scattered humanity across the cosmos). It found something immensely sad in how its characters were lured back toward their buried trauma, often at the direct expense of the found family that had shown them a way forward. They were almost powerless to fight that feeling — everyone has to snap out of their dreams at some point — but Netflix’s “Cowboy Bebop” doesn’t have the same excuse.
This new show is the product of a culture that exhumes yesterday because it’s run out of fresh ideas for tomorrow, and its vision of the future is so sterile and uninspired that it often feels like nothing more than a cheap vision of the waking life that everyone in Watanabe’s original was trying so hard to sleep off.
To a certain extent, it seems that showrunner André Nemec and screenwriter Christopher Yost recognized the devil’s bargain of returning to “Bebop.” Adapting one of anime’s holiest cows is something of a fool’s errand — just ask the 319 directors who’ve tried to remake “Akira,” or the unfortunate souls who actually managed to shoot live-action versions of properties like “Death Note” and “Dragon Ball Z” — and in true “Bebop” fashion these guys may simply have loved the idea too much to let it go. After all, the Bebop crew had a knack for rescuing victory from the jaws of defeat, even if they usually squandered their rewards before they could spend them.
It’s possible that Nemec and Yost also self-doubtingly shared the internet’s skepticism that the writers of “Max Steel” and 2014’s “Teenage Mutant Ninja Turtles” could re-capture lightning in a bottle (though the decision to split these episodes between directors of “Daredevil” and “Gilmore Girls” suggests more of a doubling down), but the reality is that Watanabe’s series should never have worked so well in the first place.
And so rather than re-trace the original or risk telling brand-new stories in the show’s beloved sandbox, Nemec and Yost have wisely split the difference. Their adaptation recognizes the sacred nature of its source material by acting as more of a gospel to the holy book of Bebop than anything else; it’s the same board you might know and love, the pieces have just been moved around a little. For example, Faye no longer waits until the third episode to make her introduction, as she and Spike now cross paths during their first-episode pursuits of a rogue mafioso.
Likewise, the exhilarating air chase that capped off the anime’s pilot has been largely replaced by a nighttime shootout in a parking lot, a scene so utterly lifeless it’ll leave you begging for more of the consumer-grade CG this show busts out during the rare moments when it remembers that it’s set in outer space. Alas the $25 that Netflix apparently budgeted for each of the show’s 10 episodes isn’t enough to make a convincing interstellar epic. And that’s really the whole ballgame, as the original “Cowboy Bebop” cooked up one of modern fiction’s most vivid, intoxicating, and transportive visions of the near-future by sublimating style into substance; by creating a world in which the tension between conflicting tropes and archetypes might crystallize our search for meaning amid the existential chaos of the universe, and make it possible to find a mythic weight in the paper-thin rivalry between a fluffy-haired ex-gangster and an edgelord named “Vicious.” Watanabe’s anime wasn’t cool because it was good, it was good because it was cool.
Like so many of the great Westerns did for the past, “Cowboy Bebop” left you itching to visit its floppy-disk vision of the future, even if a trip there promised certain death. The azure oceans of Mars. The patches of land that floated above Venus and rained flowers below. The terraformed planets that contained Hong Kong-inspired megalopolises inside of glass domes like the world’s seediest wedding cakes. Even the rundown New Tijuana asteroid colony seemed more exciting than any place on Earth. In the third episode of the Netflix show, by contrast, our heroes visit a red-light district where a flashing neon sign reads “PORN” and the Space Needle has been composited into the background for texture.
It was always going to be a challenge to infuse a live-action “Bebop” with the same magical atmosphere, but the Netflix version of the show falls so far short of creating that mood — or any sustained sense of place whatsoever — that it’s hard to imagine how it got past the concept phase. For Watanabe, tone was an instrument that he played with the virtuosity of a first chair violinist. For Nemec, it’s a single note stretched between planets, every episode dulled by the same “Xena”-level production design and one-size-fits-all ambivalence that even a climactic riff on the anime’s most iconic episode (“Ballad of Fallen Angels”) can’t help but swan dive into a safety net of lame jokes and bad soap opera. Considering that fans could probably retrace the original show with their eyes closed, it’s unforgivable that these episodes hardly offer a single memorable image of their own.
“Bebop” diehards will be appalled, while newbies will struggle to imagine why people have been making such a big deal about the anime for the last 20 years. The New Zealand sets are so crummy, the cinematography so flat and colorless, and the ambiance so non-existent that it would be hard to remember this is supposed to be “Cowboy Bebop” at all if not for the show’s three main characters (it pains me to say that even Kanno’s generic contributions to this adaptation sound like reheated leftovers, and do little to give the Netflix series any life of its own).
The casting of Netflix’s “Cowboy Bebop” is a saving grace that ranges from the smart to the divine. The actors are often the only thing that pulls these episodes back from the brink of catastrophe, even if they can’t do much about the wretched dialogue that keeps the show dangling over the edge. First and foremost, John Cho is an inspired Spike Spiegel; no one could ever hope to embody a character drawn to be equal parts Clint Eastwood, Elliott Gould, and Bruce Lee, but Cho’s breezy and humanizing performance nails the disaffected cool of a death-obsessed bounty hunter in a blue leisure suit.
If he can’t be as self-actualized as Spike was in the anime, Cho still hints at shifting layers of regret and spiritual purpose even when he’s forced to pretend there’s nothing under the surface. In a show that clumsily deploys Joss Whedon levels of sarcasm to fill in the “Le Samouraï”-like silences that punctured the original, Cho makes those quips feel like the defense mechanisms they are. It doesn’t hurt that he can hold his own in a fight, devastating knee injury and all. Netflix’s “Bebop” is very short on memorable action setpieces (the ostensibly explosive “Pierrot le Fou” episode is so botched that fans will be doing its villain’s demented cackle from their couch), but Cho exudes a calm during even the most intense battles, and in the second episode even gives Tom Cruise a run for his money during the messiest bathroom brawl this side of “Mission: Impossible — Fallout.”
It’s Mustafa Shakir, however, who emerges as the clear MVP. The “Luke Cage” alum is both an uncanny personification of the level-headed and fabulously named ex-cop Jet Black (aka “The Black Dog,” whose bark is worse than his bite), and a well-realized growl of a man in his own right. Even without a bonsai-pruning scene to hammer the point home, Shakir’s lovable performance radiates the serenity now energy of a workaday stiff who just wants to survive this craziness without killing anyone he doesn’t have to. Shakir’s turn is so complete that the decision to saddle Jet with a young daughter he’s never home to see feels like overkill, even though it helps the show’s seventh and best episode (“Galileo Hustle”) build into a broader comic reflection on the space-time distance between parents and their kids.
Typical of this series’ abject inability to accommodate genre, let alone reckon with the heightened realities that come with it, Jet’s daughter is also roped into a “save the cat” scenario that epitomizes the extent to which “Cowboy Bebop” has been denatured for its Netflix adaptation. Of course, it’s the pre-existing characters who bear the brunt of that. Daniella Pineda brings admirable verve to the role of Faye Valentine, the mysterious and volatile one-woman wrecking crew who brings the Bebop together in spite of everything; her performance brings an anime-proportioned femme fatale down to human measurements without losing any of her spark, or the even more crucial sense that Faye is a go-it-alone girl interrupted. But Nemec and Yost aren’t sure how to elaborate on someone previously defined by her absent sense of self, and so Faye is often reduced to a plucky space-age girlboss who calls Spike a “dickwad” and takes out a room full of goons while shouting “Welcome to the ouch, motherfuckers!” This is not the retro-futurism liberals want.
The issue of how to expand on the anime’s characters with hours of time and not a second’s worth of style inevitably weighs heaviest upon Spike’s old syndicate partner Vicious, who was never more than an adjective in the original series. Played here by Alex Hassell, a brilliant Shakespearian actor whose Ross is among the many highlights of Joel Coen’s “The Tragedy of Macbeth,” Vicious is stretched into a British-accented big bad with enough backstory to fill out an entire Greek tragedy. Hassell can’t be blamed for embracing the cartoonish melodrama of it all — going full “Eddie Redmayne in ‘Jupiter Ascending’” might be the only way for such a gifted actor to keep themselves engaged across 10 hours of snively bloodletting and hackneyed villainy — but Vicious’ sadism is spread far too thin to take him seriously as a real person, and he lacks even a fraction of the menace his anime counterpart achieved through omission.
The most consistent element across these 10 episodes might be how much they fumble the ball whenever trying to mine new depth from the aspects that Watanabe intentionally left superficial. Julia (Elena Satine), the blonde who haunts Spike’s dreams, is very different in ways that misapprehend her meaning to this story, while much of the overarching drama surrounding Spike’s past is bafflingly placed on the idea that Jet doesn’t know about his previous life as a hitman for the Red Dragon crime syndicate. The show fails to makes a good case why Jet would care. Because he’s an ex-cop? So what. Spike is the only reliable partner the guy has left, and vice-versa. Besides, everyone on the Bebop is running away from something. That’s how they all ran into each other, and why they’re able to live at the same pace.
Underneath its badass façade, “Cowboy Bebop” has always been a wistful story about people who can’t shake free of their own pasts, especially in the embrace of a found family that doesn’t give a damn about who they used to be — only who’s going to pay for their next meal. Even supporting characters like Gren (re-imagined here as a frothy non-binary jazz club host played by Mason Alexander Park), Shin, and Alisa ask to be defined by the paths they’ve lit for themselves through the darkness of space, and the reluctant heroism of the Bebop crew often hinges on whether they agree to honor those terms. Sometimes being a bounty hunter means that Spike and Jet can’t afford their feelings, while at other times their freelance existence is exactly what permits them to offer people their kindness of non-judgment. The Bebop itself is a floating oasis of scrap metal, a respite from a world in which the past clings to your legs with its teeth, and so it’s mind-boggling that Jet would fail to wrap his bald head around what he and Spike really offer each other through their oil-and-vinegar bromance. Worse, it’s thoroughly boring to watch him try.
Any version of “Cowboy Bebop” is going to have a complicated relationship with the past, and that relationship remains the animating force of Netflix’s live-action show. Similar to Spike himself, this show has no hope of turning back the clock and making things as sweet as they are in our memories. But where the Bebop crew’s efforts to distance themselves from the people they used to be invariably bring them closer toward the people they really are, Nemec’s eyesore of a series only continues to lose sight of why “Cowboy Bebop” is so beloved as it drifts further into the stars — par for the course at a time when intellectual property is less prized for the ghost than its shell. “You can change your name,” Julia tells Spike, “but you can’t change who you are.” To judge by this garish adaptation, it would seem like the opposite is true. This was never going to be the “Bebop” that fans hold so near and dear to their hearts, and that’s fine. The problem is that it doesn’t become anything else, either.
Grade: D
The entire first season of “Cowboy Bebop” will be available to stream on Netflix starting Friday, November 19.
