Yves here. Please welcome Taryn Fivek, who technically is an economist but as you will see does un-economist-like things, such as conducting her own research and even worse, talking to real people. Here, a key finding from her participation in the 2021 Bitcoin conference is that even though the participants presumably have done well with Bitcoin, they see crypto as an ideological, even evangelical movement. Taryn gives a “You are there” sense of the confab. Maybe I’ve spent too much time in the wrong places, but the cheerleading and the checkered speakers are awfully reminiscent of multilevel marketing.
By contrast, Bitcoin/crypto bullishness has cooled generally. For instance, from the lead story at SafeHaven, Why Bitcoin Could Struggle To Recover After Epic Crash:
Bitcoin has crashed spectacularly since May, losing nearly 50% in the space of two months in one of its biggest corrections by the cryptocurrency in recent years.
The market crashed in mid-May after Beijing started cracking down on the space, curbing bitcoin mining due to concerns of excess speculation and warning financial institutions against offering crypto services.
Things quickly went to the dogs after the Department of Justice seized $2.3 million in bitcoin in early June as part of its investigation into a ransomware attack that shut down the Colonial Pipeline’s gas pipeline, the nation’s largest. The DoJ seizure helped fuel concerns that U.S. officials could ramp up their crypto oversight and threw a monkey wrench into one of bitcoin’s supposed forté–non-traceability….
Bitcoin has managed to hold above the psychologically important level of $30,000 through all the turmoil, but has failed to convince anyone that it has any legs left after the mauling.
By Taryn Fivek, an adjunct lecturer of economics at John Jay College and a PhD student studying economic geography with the Earth and Environmental Sciences program at the CUNY Graduate Center. You can follow her on twitter @tarynfivek
“It’s a classic Miami scam!” A man passes the line grinning, arms outstretched, mocking us. “You pay a ton of money to stand in line for four hours and when you get in, there’s no seats.” Bitcoin 2021 begin poorly, with a line of thousands waiting up to three hours to gain entry to the conference. Attendees who shelled out up to $1,000 for a ticket, some wearing polyester suits and fistfuls of hair gel, stand melting under the fierce heat of direct sunlight. The humidity takes no prisoners, and after about an hour the complaining becomes more and more raucous.
The man in front of me is suggesting a class action lawsuit, similar to Woodstock ’99, to nobody in particular. Messages of fury and dismay populate the official conference Telegram thread. To pass the time, I ask the man in front of me what got him interested in Bitcoin, and his answer is evasive and vague. He asks the same question of me, and I tell him that I’m an economics lecturer at CUNY. “Austrian?” he asks. Absolutely not, no. I tell him that I’m considering teaching a course on cryptocurrency, and he interrupts to tell me that it should only be about Bitcoin. He then suggests that I should convince the department to let me install a Bitcoin mining rig.
In the homestretch of the line, a middle-aged female organizer begs everyone to please simmer down, insisting that it’s the City of Miami’s fault for demanding to search every attendee’s bag and wave a metal detector over each outstretched limb. This is the typical response for a libertarian conference, the unofficial political ideology of Bitcoin. When things go wrong, blame the nanny state.
The man who warned us of the “classic Miami scam” is correct. Once inside, there are no seats. Perhaps it is an issue with scaling-up. Ten people are working as staff at the conference, plus a smattering of volunteers and interns. The 2019 Bitcoin conference boasted more than 1,900 attendees. There was no in-person conference in 2020 due to the pandemic, but in 2021 there are more than 14,000 people attending what will later be labelled a Covid “super-spreader” event.
This pique of interest mirrors the sudden scaling-up of Bitcoin itself, which hit a low of $3,867 in March 2020 but reached a height of $28,990 by the end of the year, climbing exponentially higher to a dizzying $64,805 just this past April. That means that if you’d bought $1,000 worth of Bitcoin last March, you’d be sitting on a cute little nest egg of $11,228 at its all-time high, a total return of more than 1000%. And, if you’d put that amount in a decade ago – when the author first heard of Bitcoin – your nest egg would have swelled 387,035% percent to $3,871,355.
Bitcoin is the first-ever cryptocurrency, a distributed ledger technology that operates via a peer-to-peer network, the same kind of network that brought us Napster and BitTorrent. Its creator, the pseudonymous Satoshi Nakamoto, famously engravedhis motivations for creating such a thing on the first block of transactions recorded in this ledger: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” The cause of the financial crisis, he and others in his milieu reasoned, was a financial system spinning out of control thanks to the government’s ability to print endless amounts of money to shore up the international banking system.
Bitcoin not only solved the double-spending problem that complicated previous attempts at digital cash, but would also solve the problems of capitalism more generally by limiting its supply to 21 million coins. All transactions would be engraved in the decentralized ledger (also known as a blockchain) to preserve transparency, albeit pseudonymously. This ledger is protected by advanced cryptography and defended by a network of miners, vast warehouses of computer processors that compete to solve a math problem of varying difficulty every 10 minutes and win a prize of Bitcoin if they do so faster than any other miner. Every four years, the amount of bitcoin awarded to miners is reduced by 50%, assuring scheduled scarcity of a digital asset that will ultimately no longer be available to mine in the year 2140. If this seems confusing and abstract, don’t worry. Few who use and covet the US Dollar understand how it works, but know that it’s worth something. Indeed, a 387,035% return on a ten-year investment is nothing to sneeze at.
With this meteoric rise in Bitcoin’s price came institutional interest, with Wall Street investment banks changing their tuneson crypto and opening desks to consider trading in it. PayPal, Venmo, and Cashapp all offer Bitcoin to users. The IRS asked you about cryptocurrency on your taxes last year. With each bull run, Bitcoin attracts more attention and more buy-in, edging closer to widespread acceptance and adoption, what the fans call “hyperbitcoinization.”
Yet, after the all-time high April, the price of Bitcoin declined nearly 50% in May, dropping back to $36,320. It’s a notoriously volatile asset, with veterans throwing around the acronym HODL (hold on for dear life) to encourage the Bitcoin community to refrain from selling during such painful dips. Such volatility often scares off new investors. The veterans scold that you shouldn’t sell your Bitcoin to the big banks, and, given how much the average person understands blockchain surveillance, whale manipulation is entirely possible. Whales are one of roughly 2,000 entities that happen to own more than 1,000 bitcoins. Elon Musk’s Tesla, for instance, would be considered a whale, as would Satoshi Nakamoto, who owns more than one million bitcoins. Given Musk’s callous impact on the price of assets such as Dogecoin, which has likely raised eyebrows at the SEC, such whale manipulation isn’t completely outside the realm of possibility. The centralization of a decentralized asset entails risk. Indeed, Mircea Popescu, a “whale” who allegedly drowned off the coast of Costa Ricalate in June, was said to own nearly one million bitcoins himself. Were his lost to the sands of time, or were they perhaps retrieved by one of the sex slaves he owned and blogged about? The disappearance or sale of one million bitcoins would obviously affect the market somehow.
While the unofficial motto of the Bitcoin community is “Don’t Trust – Verify”, there sure is a lot of faith on display at Bitcoin 2021. Faith that despite its volatility, Bitcoin will be worth more in four years than it is today. Faith that the whales won’t crash the ship. And, above all else, faith in the underlying economic principles of Bitcoin, which necessarily includes faith in its higher purpose as a political project.
Several times over the course of the conference, speakers make claims such as Bitcoin is the second greatest human innovation next to our ability to harness the power of fire, that Nikola Tesla’s understanding of electricity was ultimately to bring about Bitcoin, that one should sacrifice their family rather than pay a ransom for their safety in Bitcoin. Fix the money, fix the world. Twenty-one million bitcoins to rule them all.
For every woman at this conference, there are five men. Women who are interested in money are suspect in general, but even more so here. Later, I will hear a group of men discussing how to discern between women who are genuinely interested in them and the ones who are hired by the venue to sell more overpriced bottles of liquor. A man pats me on the shoulder encouragingly when I clap for a comment about the CPI Inflation Calculator to tell me how clever I am. He later strikes up a conversation with another woman behind me about how detrimental feminism is to human civilization. Later that day I overhear conversation about a woman’s place in the Bitcoin community. “I don’t really trust women who are into crypto,” says another attendee to his friend. “She’s either lying or looking to take your money.”
For every person of color, there are at least twenty white people. The vast majority are under the age of 34. So few people are wearing masks, maybe less than a dozen I counted all weekend, that to wear one makes you stand out. At registration, each attendee is given a fanny pack with a small vial of sunscreen, branded sunglasses, and a mask that organizers insist is for your privacy, not to protect you and other attendees from Covid-19. It becomes immediately apparent that the 1% of people actually wearing masks stand out and are treated with disdain. A representative for Huobi, a large volume Bitcoin exchange founded in China, now based in the Seychelles due to the Chinese ban on crypto exchanges, is the only speaker to wear a mask. A good portion of his audience walks out in protest, grumbling, while he seeks to publicize the company’s philanthropic endeavors for various UN agencies.
Indeed, the conference is full of strange bedfellows. Speakers slinging alt-right discourse and bemoaning cancel culture are speaking at the same event as Jack Dorsey, the man responsible for banning Donald Trump from Twitter. A talk on using Bitcoin for regime change in Cuba, Venezuela, and Belarus is followed by a discussion on how to circumvent US regulations on Bitcoin. A Mises Institute contributor whose earlier talk decried the entrance of infosec, consultants and bankers into the crypto scene later appears both infuriated and defeated as he interviews Wyoming Senator Cynthia Lummis and Ohio Congressman Warren Davidson about the U.S. government’s role in facilitating widespread Bitcoin adoption. I later review court records in New York City from when the moderator was accused of locking out tenants in SoHo as part of a gentrification scheme. He is on stage wearing a three-piece suit and massive beard in this Miami heat, sweating bullets, red in the face. I wonder how many people in attendance rushed the Capitol on January 6th.
His panel is followed by a pre-recorded audio address from Ross Ulbricht, the 37-year-old founder of Silk Road who is serving two life sentences (plus 40 years) at a Federal prison in Tuscon for money laundering and conspiracy to traffic narcotics. I wonder why the Mises fellow didn’t bring up his case to the congresspeople just before. The lights are dimmed as Ulbricht details his experience in solitary confinement, his voice represented by a moving red audio waveform on black background, interrupted here and there by a harsh automated alert indicating the call originates from federal prison. His story is compelling for sure, the boy genius given life with no parole for being pegged as the first to anonymously sell drugs online. The anguish of his mother falling ill to stress cardiomyopathy, also known as broken heart syndrome, while on a speaking tour to raise money for his legal defense. The line between such people and “legitimate” tech billionaires can be blurry at times. “I want you to understand what it means to lose your freedom” he says, again and again, to a somber audience of thousands seated in darkness.
Ulbricht apologizes for making Bitcoin famous, but some in the audience shake their heads no. Despite being used as currency for dark-web networks like Silk Road, and despite being used in elephant-in-the-room ransomware schemes such as the Colonial Pipeline hijacking, which goes unmentioned, Bitcoin’s proponents generally wave away implications that the technology is used as a medium for criminal activity. Bitcoiners reason that the internet itself owed its early success to the pornography industry. Bitcoiners reason that cash is still the preferred unit of exchange among criminals. Nonetheless, a number of privacy-advocates walk around the conference in t-shirts proclaiming that KYC (“know your customer” regulations that force buyers to submit ID information before purchasing) is the illicit activity.
The political contradictions of the conference are both electric and subliminal. A miner from Kentucky praises the state’s tax incentives,with up to 50% of local hires being subsidized by the government. Steve Lee of Square, a payments company co-founded by Twitter’s Jack Dorsey, claims that Bitcoin mining will incentivize renewable energy adoption through partnership with state and local governments. An art installation called “Trash Cash” is set up between stages – a branded dumpster full of Venezualan Bolivares. The contradictions aren’t directly addressed, though they are expressed often enough. They seem to exist in cacophony with one another. Perhaps yet another issue related to scaling up.
The keynote for the second day is from Tony Hawk, a presentation called “When a Counterculture Goes Mainstream”. He bemoans the skater community considering him a sell-out for embracing his name as a personal brand. He bemoans being labeled “King Sell-Out” by the skater community. “I didn’t change my values system to do any of those endorsements. I used to eat at McDonalds. I still do. Bacon egg and cheese biscuit – whut! This was awesome. These companies that I enjoy are actually paying me to endorse them!” He says that thanks to his pioneering work in selling out skater culture, professional skateboarders no longer face criticism for similar work. He says that his recent work with Subway was “fun.” Conference tickets that included a Tony Hawk meet-and-greet cost $5,400.
The closing plenary headlines Strike founder Jack Mallers promoting the adoption of Bitcoin in so-called developing and emerging markets. Next to 50-foot photos of him with his arms around a Salvadorian child, he claims to be on-boarding 20,000 Salvadorians per day to his Bitcoin remittance and payment system. He sniffles and begins to cry as he announces that, thanks to a bill “they asked me to write – to help write”, there are plans in El Salvador to adopt Bitcoin as legal tender. He cues up a pre-recorded address from the President of El Salvador, 39-year-old Nayib Bukele, who speaks in English and says that he plans to introduce the bill to the Salvadorian congress next week. “In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” he says. His following sentence and the rest of his address, what it means for the medium and long term, is completely drowned out by the raucous celebration erupting in the main speaking hall. Mallers is crying openly now, tearing off his shirt to reveal the Salvadoran football jersey underneath he says he received as a gift from President Bukele. Others in the audience are bursting into messy sobs, what might otherwise be considered a strange sight in such a testosterone-soaked space.
“Don’t let people tell you otherwise. That you’re mean on the internet. That you made a meme that offended somebody…They can come after me. They can come after any individual. I will die on this hill but they can’t stop this idea and all the individuals, everyone in this room, is gonna fight for what’s right. And this is why we’re all here, and it’s so important. And I hope you can get out the shower and look yourself in the mirror and say “YOU’RE IMPROVING HUMANITY!” And don’t you dare let anyone tell you otherwise!”
The accompanying slide says that El Salvador has become the first country to accept Bitcoin as an official currency, and the energy in the room is absolutely electric. I find out later that there are only two Bitcoin ATMs, and that Bukele plans to strong arm the national bank into handling Bitcoin. The fact that this “one small step for Bitcoin, one giant leap for mankind”, this new beachhead of freedom, is to be ushered in by a 39-year-old former FMLN-turned-MAGA populist strong arming the rest of the population into acceptance by circumventing the democratic processis just one more contradiction encountered in a space already full of them. Bukele’s connection to the US-backed Venezuelan opposition– whose Bolivares are outside in a dumpster as an art exhibit — is not mentioned. The fact that this announcement precedes the bill’s passage by the Salvadoran government doesn’t seem to matter. The conclusion seems foregone.
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Sounds like a tent revival with out of town guest speakers ….
Or a Neal Stephenson novel.
Taryn Fivek certainly writes in a style close to Neal Stephenson’s.
I was half expecting a description of a large man with “POOR IMPULSE CONTROL” tattooed on their forehead walking by.
I was thinking of the scene from Cryptonomicon when there were rumors that the FBI was about to raid a crypto firm, and the cast of characters and factions that assembled to observe (and maybe intervene). It’s a good reminder that the whole crypto-anarchist scene that Stephenson was satirizing in that passage does have an actual basis in reality. I’m not surprised that Bitcoin would be very attractive to them.
I don’t know that there’s an attraction element, more that Gibson, Wachowski et al are the cultural meat and potatoes these boys grew up on.
Even right down to Tony Hawk, 20 years past his prime, even his branding era prime. Erik Estrada must have been busy.
I was thinking more along the lines of Miss Cleo.
More like 30 years past his prime. In the 80’s all the cool kids in the neighborhood skated and surfed, listened to Minor Threat and the Dead Kennedys. I’m sure that there are still lots of cool kids in the neighborhood, but nobody skates. Maybe it’s because Tony Hawk is now as uncool as their parents.
Dude would be a legend right now instead of a joke if he’d just stopped licensing after Tony Hawk’s Pro Skater came out on PlayStation (1999!).
fabulous games though, for a time until sequelitis struck. The rerelease of 1 & 2 last year were very well received and rightly so.
All this sounds unique because it is about tools for extortion, but it is also very familiar. There have been similar conferences promoting penny stocks and start-ups, science-based medicine conferences encouraged by big pharma (where plebs gather to sneer at anyone purporting to know something about medicine without a double-blind trial), political conventions (see: “Fear and Loathing on the Campaign Trail, ’72,” and “The Boys on the Bus”), gun shows, Star Trek conventions, comic book and baseball card fairs, etc., etc. This is just how some Americans try to feel significant.
The numismatrix seems to be similar to numismatics in one salient way, in that its completely male dominated. I think there were a grand total of 3 women coin dealers in the world when I was pushing old metal, to give you an idea of what’s what.
Was Carlos there? If not, I’m not interested…
http://www.youtube.com/watch?v=lCcwn6bGUtU
OT, but I gotta say, John Jay has a pretty slammin’ econ department for a criminal justice college.
Libertarians are clueless. This mania is fueled by pure financial ignorance. Monetary sovereign nations, which are most nations outside the EU, get their sovereignty because they have a monopoly over the domestic currency. You have to pay your taxes in that currency. You cannot do business in that sovereign nation without using that nation’s currency. Introducing a foreign currency into the equation destroys that sovereignty. Destroys the fiscal powers to tax and to spend. The federal government’s fiscal statement of expenditures and receipts cannot break down or get sick. It is simply a record of dollars spent into existence and dollars taxed out of existence. Unemployment hurts people. Inadequate public infrastructure and public services hurts people. An inadequate material standard of living hurts people. Trashing the environment hurts people. Social exclusion hurts people. High levels of stress caused by unemployment or precarious employment hurt people.
In other words, it is the functional purposes served by fiscal policy that matter. Not the fiscal statement (fiscal statement is the technically correct term because the word “budget” brings up household connotations that are completely irrelevant to a currency-issuer with a floating exchange rate).
Monetary sovereign nation’s should never borrow in a foreign currency. Whether that foreign currency is bitcoin or the dollar.
Many of them know all that, and for them that’s the point. The absolute worst thing about Bitcoin is it’s fan base. Truly the scum of the earth.
They think that they will become members of the new over-class, and the rest will have to pander to them for hand outs.
That’s why they are hoping to Uber it through anyway, and with the ease at which our legislators can be bought, they might yet succeed.
Bitcoin is completely transparent and totally anonymous….
Okey Dokey.
Taryn Fivek writes well and sometimes reminds me of Tom Wolfe’s style of describing insanity at work. I was thinking why all the people here that believe in so many different things, some of whom you would expect to be fighting it out against each other, have yet come together in the belief of one idea. No, not bitcoins – money! Bitcoins is the means but money is the end. You can almost smell money floating in the air along with the scams but these people are prepared to accept the risks. And I have no problem with that. But when some of these people want society to accept the risks so that they can reap the rewards, well, we already have Wall Street for that.
While I am not sure about how accurate the stories of the tulip mania are, crypto sounds something like that.
From an investment perspective:
The question is, how long will it last?
How many stocks became crowd favorites, soared for a few years and then all but disappeared.
It’s pretty much the same, except without the tulip bulbs.
Thanks for this article. I am in the tech field and bitcoin mining has been a topic for a while. I have one co-worker who is all in and I’m hoping to buy a used GPU for a computer build I’m working on off him when he decides to get out of this, haha. But I’m not a financial guy and neither are the people I know who’ve invested in this. To me, it reeks of a MLM type of affair and that’s been enough to keep me far away. The convention scene doesn’t do much to turn me away from that feeling. Perhaps I’ll be wrong and my mining co-worker is right. Maybe that’s why he’s become allergic to coming into the office. But I have a feeling he’ll be lucky to break even on all the mining equipment he’s bought.
Yes, I’m very glad to join the welcome of Taryn Fivek.
This is a very good report. I laughed out loud several times and chuckled through a lot of it. In contrast to most of what I read at NC, which leaves me feeling better informed but psychically drained, this deadpan reporting of something inherently funny is simultaneously informative, entertaining and uplifting.
This is the first time I’ve ever been advised to become more deadpan. I’ll have to work on that…
Every time I talk to these libertarian types that are pushing crypto, I just ask how this would work for a regular working person. If you have a ton of time and experience in financial markets, you can play around and make money (which I don’t think provides any social value). But, a regular person that has to exist in a country that did away with the national currency and instead allowed a sea of cryptocurrencies? How would they do something as simple as buy a pair of pants? Have yet to get a good response. How would taxes be paid if there were no national currencies? How about economic planning?
This is perhaps the most entertainingly written article about crypto that I’ve read to date. Thanks!
I’m not sure why, but somehow this strikes me as the sort of operation that the CIA might undertake (or, at least, take advantage of the money laundering/bribery/ransom potential).
Forced bit-coin of El Salvador might make it a pioneer crypto-currency laundry and therefor of interest to the intelligence communities and the tax-dodging rich.
El Salvador appears to be a failed state which no longer has its own currency, relying instead on US dollars. I doubt that many Salvadorans will own a bitcoin.
There’s lots of the conference you can view on youtube. Max Keiser in convo with Michael Saylor was particularly over-the-top.
Fascinating to hear about all the different narratives around bitcoin. Here is another great article by Jeff Snider describing a bit of history and the role of ledger money, thus helping to put some of the financial uses of the technology in perspective as well as why El Salvador.
https://alhambrapartners.com/2021/07/13/bitcoin-el-salvador-and-the-eurodollars-ghost/
I have noted here before that groups such as DFinity are demonstrating important adaptations of the technology outside of the financial system, such as an open sourced, encrypted, hack proof internet or combining the technology with zero knowledge proofs to control access to your data. Releasing only what info you’ve given permission to access in that particular case. You might someday soon be able anonymously, yet verified as you, vote from a cell phone as the technology already exists.
Great.
Making Shit Up is a violation of site Policies.
El Salvador has not passed enabling legislation. And even if it were to, bitcoin would be worse than other foreign currencies, like the dollar, due to transaction times and FX volatility.
We have completely debunked the idea of internet voting and any use of blockchain. You can’t validate using blockchain. Authentication and validation are utterly different issues.
From one of many posts:
https://www.nakedcapitalism.com/2018/09/why-is-calpers-aggressively-promoting-internet-voting-despite-experts-like-the-national-institute-of-sciences-engineering-and-medicine-saying-hell-no.html
Smells like a rebranded Direct Democracy argument which at the end of the day would be better described as Market Democracy and that would square with the libertarian minded cypto crowd.
Just to add to this, an article that I just came across – ‘Dogecoin Creator Says Crypto Is a Scam’-
https://gizmodo.com/dogecoin-creator-says-crypto-is-a-scam-1847292956
And here is his kill shot-
“After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight and artificially enforced scarcity.”
“I don’t really trust women who are into crypto,”
That seems to be half right: don’t trust *anyone* who is into crypto.