The worst possible way to begin a weekend

Watch Dan Olson explain blockchain, bitcoin, ethereum, NFTs and what feels like hundreds of odd acronyms behind the latest series of scams. It’s 2 hours and 18 minutes of dense descriptions, all to expose the guts of a gigantic grift. It’s information-rich, but good god, how depressing. Keep that crypto away from me!

I learned a lot, but also forgot even more instants after it got machine-gunned into my ears. The gist of the story is that blockchain is bad and inefficient, and cryptocurrency relies on buying intangible assets on the basis of their potential, and that potential is simply the likelihood that later adopters will pay early adopters more for those hypothetical assets, and that NFTs are a gimmick with the sole purpose of selling more crypto. If you want the summary without all the painful background information, just listen to the last 5 minutes. What’s so attractive about crypto?

Buy in now, buy in early, and you could be the high tech future boot. Our systems are breaking or broken, straining under neglect and sabotage, and our leaders seem at best complacent, willing to coast out the collapse. We need something better. But a system that turns everyone into petty digital landlords, that distills all interaction into transaction, that determines the value of something by how sellable it is and whether or not it can be gambled on a fractional token sold via micro-auction, that’s not it. A different system does not inherently mean a better system. We replace bad systems with worse ones all the time. We replaced a bad system of work and bosses with a terrible system of apps, gigs, and on-demand labor. So it’s not just that I oppose NFTs because the foremost of them are esthetically vacuous representations of the dead inner lives of the tech and finance bros behind them, it’s that they represent the vanguard of a worse system. The whole thing, from OpenSea fantasies for starving artists to the buy-in for Play to Earn games, it’s the same hollow, exploitive pitch as MLMs. It’s Amway, but everywhere you look, people are wearing ugly-ass ape cartoons.

Yeah, you to can start your weekend with a dystopian vision of the future, where Elon Musk and Peter Thiel increase their wealth at your expense and by marketing your privacy.


  1. antigone10 says

    I had to watch the videos in chunks, so I could digest and understand what he was saying yesterday.

    I particularly like the part where he points out that the language is opaque not just because it’s technical but in the case of finance and tech so that outsiders can’t understand it. Every specialty will have niche jargon, but it does seem noticeably unclear.

  2. beholder says

    Cryptocurrency occupies an important niche. As long as banks and credit card companies are desperate to silence Washington’s political enemies by cutting off electronic transactions, cryptocurrency is a practical alternative.

    Call it laundering or criminal enterprise if you want, but the financial industry destroyed the people’s trust in them long before Bitcoin came along.

  3. PaulBC says

    I listened to Blockchain Basics by Daniel Drescher as an audiobook just so I would finally have a clear idea of what everyone is talking about. The application of cryptography is not difficult. The big question is why and it appears to be to solve this “problem”: what if financial records were kept by accountants whose goal was to enrich themselves or just screw each other over for the heck of it? How could you certify transactions anyway in that libertarian dystopia using cryptographic principles?

    Listening to repeated references to the carrot-and-stick approach suddenly made me think: what is this the “Ferengi rules of banking”?

    There are questions of professional trust that you can’t solve with blockchain. Think how much we rely on medical doctors to know what they’re doing. If society breaks down to the point that you can’t find people to keep accurate records simply because it’s their job to do that (with exceptions dealt with by law enforcement), we have much worse problems on our hand than just “who owns what?”

    Blockchain may have some applications, but cryptocurrency promotes the libertarian fantasy that you don’t need laws and social obligations. It really doesn’t solve any problem not solved by fiat currency except by those who are against government doing anything at all.

  4. PaulBC says


    As long as banks and credit card companies are desperate to silence Washington’s political enemies by cutting off electronic transactions, cryptocurrency is a practical alternative.

    First off, I’m not even sure who you mean. Maybe you could give an example. In egregious cases, such as terrorist organizations, I am in favor of freezing bank accounts.

    But more to the point, you are arguing for a system of cryptographic financial transactions that may be enabled by blockchain, but they don’t require cryptocurrency as such. You could exchange ownership of property using cryptographic means. You could exchange fiat currency for that matter. It is still unclear what problem is solved by inventing an entirely new form of currency that wastes resources merely to enforce artificial scarcity.

  5. Aoife_b says

    Another problem with crypto as a banking alternative is it’s no more decentralized right now than actual banks. Nearly every wallet app runs thru Open Sea’s API, and they had an outage just this week that demonstrated the flaw.

  6. iiandyiiii says

    I don’t understand much of the technical stuff, but the biggest reason for suspicion for me is the most basic question — why is Bitcoin valuable? The answer appears to be because a bunch of people think it’s valuable — not because there’s anything useful about it. You can’t do anything with a Bitcoin except trade it for something with someone who puts value on a Bitcoin.

    The same is true for any currency, but US dollars, or UK pounds, etc., have centuries of history demonstrating people value them over time, along with the backing of governments with similarly long histories.

    To me, Bitcoin just reeks of scam, or at best, fad. If it’s around and valuable in another hundred years then I’ll be proven wrong.

  7. beholder says

    @4 PaulBC

    I’m not necessarily arguing for cryptocurrency. I’m saying that people want to do anonymous transfers, and cryptocurrency is presently the only alternative to paper cash where you can do that, if you’re careful and you cover your tracks.

    All that needs to be done to put a stake in cryptocurrencies for good is for banks or credit card companies to offer sufficiently anonymous transfers to anyone in the world. I don’t think they will do that anytime soon, so cryptocurrency will remain popular in the meantime.

  8. blf says

    I haven’t watched the video, so this may be repeating some of what is said therein: One problem with so-called “crypto”-“currency” is the massive amounts of power used to “mine” (create) additional units (total annual consumption for Bitcoin alone is easily over 100 terrawatt hours), more than some entire countries (per annum). This is a fairly well-known, and very serious, problem.

    Another problem is Bitcoin’s blockchain apparently contains child pronography; e.g., Child abuse images hidden in crypto-currency blockchain (2019, BBC). Bitcoin itself of course denies this, No, There Isn’t Child Porn on the Bitcoin Blockchain (2018), but their denial is unconvincing for multiple reasons. Two of them: First, the earlier reports (2018 and previously) were the blockchain contained links, not actual images; Bitcoin muddles that by imply the blockchain contains images and pointing out that, at that time, there was insufficient payload space to contain an image. However, as the later (2019 and subsequent) reports point out, the available payload space was increased, and the specific instance reported by the BBC of the blockchain containing an image was confirmed. (That instance was apparently detected quite early on and it’s possible was not propagated into other blockchains.)

    Both problems can apply to other so-called “crypto”-“currency”, albeit at the present time, as far as I currently understand, only Bitcoin has had a confirmed instance of containing child pornography in its blockchain.

  9. says

    @iiandyiiii #6
    Dollars are valuable because you need those to pay taxes, and the US has an army! Bitcoin is valuable because somewhere down the line is a bigger fool, and a bigger one, ad infinitum.

  10. Allison says

    Siggy @9

    Dollars are valuable because you need those to pay taxes, …

    Other reasons:
    2. There’s the “legal tender for all debts….” thing. If you owe someone money (in the USA), and you offer them the right number of dollars, legally you’ve paid the debt (even if they refuse them.) If you offer them BitCoin and they don’t want it, you still owe.
    3. The government of the USA goes to some trouble to maintain the value of the dollar. The same is true for other major currencies (e.g., the Euro, the British Pound.) So you don’t have to worry that your carefully accumulated dollars will suddently become worthless. Who’s going to do that for any cryptocurrency?

  11. says

    I am in awe at Dan not going completely barking insane with how thoroughly he researches a subject. To top it off, his voice becomes clearer and clearer as the years go by so that the days he needed a puppet to hide himself are long gone.

  12. raven says

    Crypto Crash Erases More Than $1 Trillion in Market Value
    Bitcoin drops to below $36,000 for first time since July
    ByVildana Hajric
    January 21, 2022, 9:19 AM PSTUpdated onJanuary 21, 2022, 3:11 PM PST Bloomberg

    For Bitcoin, there’s only been one constant recently: decline after decline after decline. And the superlatives have piled up really quickly.

    With the Federal Reserve intending to withdraw stimulus from the market, riskier assets the world over have suffered. Bitcoin, the largest digital asset, lost more than 12% Friday and dropped below $36,000 to its lowest level since July. Since its peak in November, it has lost over 45% of its value. Other digital currencies have suffered just as much, if not more, with Ether and meme coins mired in similar drawdowns.

    Bitcoin’s decline since that November high has wiped out more than $600 billion in market value, and over $1 trillion has been lost from the aggregate crypto market. While there have been much larger percentage drawdowns for both Bitcoin and the aggregate market, this marks the second-largest ever decline in dollar terms for both, according to Bespoke Investment Group.

    “It gives an idea of the scale of value destruction that percentage declines can mask,” wrote Bespoke analysts in a note. “Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about both in raw dollar terms as well as in percentage terms.

    The tl;dr version
    “Since its peak in November, it has lost over 45% of its value.
    Bitcoin’s decline since that November high has wiped out more than $600 billion in market value, and over $1 trillion has been lost from the aggregate crypto market. ”

    This is one (of many) reason why I’ve never been a fan of cryptocurrencies.
    In two months, Bitcoin has lost half its value in a market crash.
    The entire cryptocurrency market has lost $1 trillion in two months.

    These currencies are wildly volatile, varying in value in a way that looks chaotic and unpredictable.
    At least the dollar or gold have some predictability to them. At least a month from now, a dollar or gold will still buy roughly what they buy today.

  13. raven says

    Money and currencies as most people know are a shared consensual reality.
    The dollar, cryptocurrencies, and gold and silver have value because we all agree that they have value. Oddly enough, most money these days is just entries in a computer database. Can’t get more intangible than 0’s and 1’s. in binary code.

    As Paul Krugman points out, the cryptocurrencies are just digital hundred dollar bills.
    What they are good for is undocumented transactions.
    And, who needs undocumented transactions? It’s basically illegal activities.
    Drug running, arms smuggling, money laundering, income tax evasion.

    My life and lifestyle just isn’t that exciting. I don’t need to hide my financial transactions and I’m not all that good at doing so anyway. I just grumble a bit and pay my taxes and don’t worry about the Feds kicking my door in one night.

  14. PaulBC says

    It’s funny that cryptocurrency is still something anyone considers new or exciting, considering it was already the focus of a cheesy TV drama StartUp (the Miami one) over five years ago. I admit I watched the whole series on Netflix, originally after seeing Martin Freeman in a promo. I thought the acting was good overall and it kept me engaged. It was not about a “startup” in any sense I would use, since it involved a criminal enterprise that kept going deeper and deeper in the hole with stolen money. (A real startup goes deeper and deeper in the hole with rich investors’ money.)

    One line I did like was “It’s the future, not just of crime, but of commerce.” At least it gets the order right.

  15. weylguy says

    That stupid drum roll is infuriating to the max. I’ve noticed that more and more so-called educational videos feature background music that is not only not necessary, but annoying, often drowning out the vocal message.

  16. Dan Phelps says

    I don’t need to watch the video. These schemes were all explained in 1841 by Charles Mackay in his book Extraordinary Popular Delusions and the Madness of Crowds.

  17. unclefrogy says

    this is computers on the internet right tell me why these computers can not be hacked into why this encryption that is accessible by me can not be opened by some other third party given the time and the power and the desire?
    invisible transactions that are recorded on computers and in databases are not completely invisible. If they were they would not exist.
    cash transactions in person or dead drops and not recorded are closer.
    is not crypto just capitalism’s extension into the digital domain and a logical extension of the abstraction of money is value.
    quatloos ?

  18. PaulBC says

    unclefrogy@20 I agree with some of your skepticism, but modern encryption techniques appear to be very secure in the sense that decryption methods would overturn longstanding conjectures the tractability of certain algorithmic problems. Usually hacking is done with simpler method, like using social engineering (e.g. phishing) to trick a human being into giving access.

    If you really want to be totally secure, you can create a one-time pad consisting of true random bits (not pseudorandom). You could do it in an isolated environment using an electronic source. Fill up an external hard drive (with space for terabytes) and you probably have more than enough bits to encrypt any communication you will personally generate for the rest of your life, at least if you don’t go heavy on video.

    The other trick is getting a copy of the bits to your trusted recipient, i.e. by physical transport of a device not the internet. But once that’s done you have a single, provably secure communication channel as long as you never reuse any of the bits. In fact, you don’t even have to tell your recipient what part of the pad you’re using, since it would be relatively fast to try each of order 10^12 starting positions until the plaintext looks statistically non-random. This assumes your message is of sufficient length.

    Obviously you’re forgoing the convenience of widely supported public key protocols. I do sometimes wonder if anyone out there is doing this. There is literally nothing the NSA could do to break such encryption, since the cypher-text is statistically random except relative to the pad. There are two physical devices vulnerable to interception or confiscation, so it’s not a slam dunk. Also, you’d need to consider the security of the hardware generator.

  19. unclefrogy says

    isn’t that a digital variation of an encrypted dead drop.
    to transfer money or value you would need some mutually trusted third party wouldn’t you. involved if you did not do the transfer face to face or some secure dead drop.

  20. PaulBC says

    unclefrogy@22 I agree it would not work for financial transactions, or at least I can’t think of a way.

  21. blf says

    There is a sort-of OTP used, very commonly, in financial transactions, specifically PIN-based credit card terminals, known as DUKPT (Derived Unique Key Per Transaction). Like OTP, there is a unique key never used again. Unlike OTP, DUKPT is not a method of encryption, but of (1) ensuring there is a unique key, such that interception of the key (2) does not allow playback, nor is (3) the communications channel necessarily compromised.

    If my memory is correct, at the time I was working with such systems, Triple-DES (usually EDE (Encrypt-Decrypt-Encrypt)) was commonly-used as the encryption algorithm, albeit TDES is now considered insecure; I do not know what the PCI (Payment Card Industry) will, or presumably already is, in the process of adopting / mandating. The amount of data encrypted in a transaction is small, so I speculate the TDES-vulenerability isn’t as alarming in this particular context as it may sound.

  22. chrislawson says

    Even before I delved into the mechanics behind bitcoin, it was obviously a scam because it was promoted as (1) perfectly secure and untraceable and (2) containing its own record of past transactions which prove ownership. These statements obviously can’t both be true.

    There is also a big overlap between cryptobro evangelising and Sovereign Nation gobbledygook — an extremely red flag.

  23. chrislawson says


    Yes, properly randomised one-time pads are the only mathematically provably secure way of encrypting information. Unfortunately they are not physically secure and need to be distributed in advance of use which becomes exponentially more difficult the larger the network of communicators gets. Great if you’re running a network of a small number of trusted communicators who can be hand-delivered their OTPs, not so good if you’re a bank trying to secure millions of transactions a day from all over the world by communicators of widely varying trustworthiness.

  24. John Morales says

    chrislawson, blf: the “security” is not just the encryption, it’s that it’s a distributed ledger — it works by consensus. One would have to compromise >50% of the nodes to cheat it.

    The thefts that have occurred are where wallets or passwords have become compromised.

  25. chrislawson says

    The biggest giveaway to me was the deliberate creation of a system of scarcity that becomes increasingly costly to “mine”. This is just another variant of the old hard sell technique. There is no reason for such a system other than to make people think “I’d better get in as early as possible!”

    To put it another way, it is trivially easy to create the same artificial scarcity without the exponentially escalating costs. (For context, the current energy cost of a single bitcoin transaction is 2200 kWh — about 1.4 million times a credit card transaction and enough to power an average US house for 75 days.) Each bitcoin is 1 million bits long. One could easily create a system whereby a quantum-randomised 1024-bit number was auctioned at regular intervals, say 1000 every day. This is still a huge search space (it’s roughly a cubic googol) without the completely unnecessary million-bit depth of bitcoin. And one could promise to end the release of these random tokens (currency name tokerrand!) at 21 million, the same as bitcoin’s maximum minable quantity. This would take around 57 years to exhaust. Each tokerrand would be published online so anyone could check its provenance. So, same level of scarcity (21 million maximum coins/tokens) for a fraction of the mining and transaction costs.

    The reason tokerrands will never take off is that it is trivially easy to see how untethered to functionality it is. The only useful purpose here is to create liquidity for bartering — a massively important function, but already available through existing currencies or (if you are somewhat deranged) gold. The mechanism behind bitcoin involves mathematics that very few of the miners or traders grasp or are even interested in grasping — and cryptobros use that mathematical obscurity to also hide serious underlying flaws. For instance, China recently outlawed cryptocurrency trading. Bang! One piece of legislation and you can no longer trade bitcoin in the most populous and industrially productive nation on the planet. Good luck trying Sovereign Nation handwaving in a Chinese courtroom.

  26. chrislawson says

    John, yes I agree. blf and I were talking about OTPs in terms of general cryptography rather than specifically as they relate to cryptocurrencies, which do not and could not function with OTP-based encryption.

  27. microraptor says

    My favorite description of NFTs is that you’re buying content-free DRM. And I’m hopeful that this cryptobubble popping will help alleviate the cryptomining-fueled demand for computers so the demand drops off and supplies start to recover.

  28. seachange says

    @paulbc #2
    My mom would catch Bank of America making mistakes all the time, back before electronic calculators. I have found credit card companies “losing” my checks so that they can charge me for late payment, and doing so even after doing certified mail with return reciept and giving them plenty of time. After she died, I found the attorneys for her estate making simple word errors. In a profession where things turn on a word.

    People make errors. This long video is about the errors people make.

    @andy eyes #4
    You used “centuries” in regard to government money: not the right word.

    My mom was born only one century ago. It was in her living memory of the USD even though it was backed by gold and then silver, screwing up the economy, and banks’ owners totally stealing money stealing property, and otherwise damaging the poor in favor of the rich. She HATED banks. It is in my living memory of a duplicitous government changing money into fiat and then ten years later massively printing out money to pay for an unpopular criminal murderous war in southeast asia. I think (and my parents thought) it’s reasonable to DISTRUST a government of the wealthiest nation on earth (my government) that tries to shut itself down ‘because we poor’ but then spends and prints money like each dollar is a drop of rain when they get the itchin’ to kill peoples for just for funsies.

  29. PaulBC says

    seachange@32 I haven’t watched the video, but I understand the need to maintain data quality and have worked on software to do this. I’m in favor of including validations like checksums to detect errors or avoiding human input when possible (because the data is already in the system). Accountants could make transcription errors in the past (e.g. back when they were literally using a mechanical adding machine or later electronic calculator) that are now avoidable and should be avoided. Clearly, the less opportunity for error, the better.

    But the “carrot-and-stick” explanation in Drescher’s book is not addressed at errors but intentional manipulation. The “beauty” of block chain is apparently that even if people are constantly trying to make false entries in the ledger, they won’t get away with it thanks to cryptographic security and consensus. I never said accountants were perfect, but I expect the vast majority of them to be honest, and would want to see someone banned immediately if they made even a single attempt to fake a record, not just de-incentivized. Cryptographic security should be used, but it doesn’t negate the value of professional trust.

    And my point is that even if blockchain fixes the problem of crooked bankers who want to steal your money, it doesn’t fix the problem of crooked grocers who want to poison you, crooked doctors who want to make you dependent on a quack remedy, abusive child care providers, or a whole variety of con artists and bullshit artists. The world is a (somewhat) dangerous place and you take on risk trusting anyone. However, social cohesion assumes a little bit of trust. It seems that the appeal of blockchain is to find a limited domain in which maybe technology can entirely eliminate the need for trust, and the libertarian fantasy is that the entire problem of a cohesive society has been solved. We all have our “freedom” and no responsibility to others. Maybe in your one little dark domain, but you haven’t proved anything important about how human society functions.

  30. seachange says

    Talking to my own finacial advisors, they themselves would not say this, but there is for the most part little difference between ”hedge funds” and what hedgies do, and what I consider crime, the kind of crime folks are talking about here, and the crime mentioned in the video. They are already sailing so close to the wind and skating on thin ice with their main investments, and the rewards are so large, that crime doesn’t look different from legal, to them. Hedge Funds do get a passing mention in the video.

    The whole Game Stop thing was started, that some very big hedgies with very big dicks decided to have a hard-on for fucking over Game Stop and the mere weight of those guys consistently and repeatedly selling this stock short as part of their hedge position. This was enough to cause little players who were not part of genx/millenial who were saying that they just liked Game Stop, and those little players who also just wanted to make money to also sell this stock short, creating an entirely artificial downward trend. So the nasty horrible things mentioned in the video about how cryptocurrencies do this? I am presuming Foldable Human is mentioning it just to point out that there’s nothing special about these fake currencies. The current government fiat money system favors the obscenely rich. Crypto fiat ‘computers doing it’ instead of government fiat money, or Etherium Board of Directors doing it instead of government fiat money ALSO favors the obscenely rich.

    It really is the five percenters against the .1 percenters, and by and large has nothing to do with us.

    Since it was a hedge position, of course crypto went wild at the time of November when it appeared that their might be some kind of government upheaval. That was not random.

  31. jo1storm says

    @seachange I advise reading the book “The Ponzi factor” by Tan Liu. Let’s just say that the fact that stock market TM has proven itself to be extremely separated from the real economy has scared the crap out of me (with a degree in economics) and most smarter and better educated economists in the world.

    We are at the stage of financialisation and capitalism as a whole that has nothing to do with basics of economics as taught, but more to do with gambling and risk taking. The last time the data was similar to this was between 1920 and 1929 and so called “Crises of hyper-production”. What it actually was the crises of “We are paying our workers too little so they can’t buy our products. Those people starve, we throw food into river to keep the price up.” . The book “The grapes of wrath” is about that time period. I advise reading it too. The similarities to what is happening now are eerie.

  32. PaulBC says

    seachange@34 Liar’s Poker by Michael Lewis is a (the?) classic on how the finance industry revels in screwing people over. A similar work I enjoyed was FIASCO by Frank Partnoy. His experience was with derivatives trading. A recurring theme was the delight traders took in “blowing up” their customers by getting them to buy a risky financial instrument they didn’t understand and watching it explode in their face.

    They justify their insane remuneration as helping to establish an efficient market, defined in Panglossian terms as whatever results from their destructive behavior.

    None of which pleases me, but I don’t see how blockchains solve the problem. If anything, they devolve responsibility further away from what in a very different world could be markets accountable to the public through legislation by their representative government (which I realize we don’t have, but a government that abdicates all responsibility is no better).

  33. chrislawson says

    There’s nothing wrong with the principle of blockchains, basically deep cryptographic deep records of past transactions that go with the entity being transacted. The problem is that they are extremely expensive in terms of energy use at a time when most electricity is still generated by carbon emission which makes them a poor choice for what is supposed to be an easily transacted currency.

    There are other weaknesses, as John Morales and others have pointed out, such as 51% attacks and 34% attacks (“tangles”), but these have only occurred a few times because they are difficult to pull off, especially with well-establised and widely-used blockchains. Interestingly, there was the case of the mining collective, which accumulated 51% hashing power in bitcoin in 2014 without specifically meaning to and with no intention of launching an attack; subsequently it voluntarily capped its power at <40% to maintain trust in bitcoin.

  34. Peter Bollwerk says

    I think it’s kind of funny that much of the important currency in the world is fiat currency, meaning it’s effectively fake and relies on faith/trust. Cryptocurrency and NFTs feel like an even worse version of fiat currency, in some respects.