Above: “Cryptophecies” by Robness

Fireside chat with a crypto-savvy anon

Scott Wordsman takes us on a walk into the world outside our bubble to see what people who don't work in crypto think of crypto.

Oct 20, 2022 Art + Tech / Tech

1 month ago

I was at a party talking to people I’d never met when, of course, the topic of cryptocurrency and NFTs came up. A young man in a ballcap standing across from me cracked his mental knuckles and started unloading, answering questions I had but hadn’t yet asked. The man, who will go unnamed, had quit his job in IT a few years back to focus solely on crypto. In 2013, he purchased a good chunk of BTC and has held it since. Anyone with that much resolve and foresight is a person with whom I knew I had to sit down. After the party, we exchanged phone numbers and a week later met for drinks. We got to talking about politics, Aave, Bitcoin’s early dominance, scams, Cardano (sadly), and a bunch of other topics.

Scott Wordsman: For starters, where do you think crypto and NFT people stand politically?

Crypto started as super liberal, almost anarchist. The shortcut term “crypto” in “cryptocurrencies” actually originates from “cryptography.” When the internet was coming up back in the ’80s, the need for trustless communication grew. That’s when this small group of people, maybe 50 to 100 cryptographers across the globe, began working on the technologies that now underlie cryptocurrency. They were trying to build on this new system by imbuing it with an ethos of trustlessness at its core, removing any central authority. As far as politically, the founder of BTC had left libertarian viewpoints. He was an idealist ultimately, when he launched Bitcoin in early 2009. He mentioned the ‘08 economic collapse and what individuals can do to prevent things of this nature.

Do you think that’s why Bitcoin came up, as an antidote to the recession?

That was an inspiration. The concepts behind cryptocurrency were actually around much earlier, decades earlier, but Satoshi [Nakamoto] was one of the first to really latch onto it, launching it into the public limelight, when he released it to that crowd of cryptographers I mentioned. Satoshi was in those circles for a while, but the collapse was definitely the catalyst, the guiding force for getting Bitcoin out there.

“Money Badger” by Rare Scrilla

I feel like you see the desire for this trustless ethos more now, with the stimulus checks, and people not having faith in the US economy. Like how the $DOGE army was inspired by the Covid crash; young people were emboldened with $2000 they previously didn’t have. 

Yes. So you wanted to talk about NFTs?

Of course. 

The first real NFT project I got into was Aavegotchi, which launched in March 2021 on Polygon, which was an early Layer 2 solution. Axie had been around already. The concept behind it required a lot of transactions; they were going to launch in January on ETH, but transaction fees were exorbitant at the time so they decided to delay and port the project over to Polygon. The protocol with Aavegotchi is gamified; you have to pet your “gotchi” every day to get a “kinship score.” What Pixelcraft, the team behind Aavegotchi, first did was launch a token, GHST (pronounced “ghost”). There’s a mathematical function, a bonding curve, that determines the price of the coin depending on supply. It’s a stable way to build a coin that lasts a long time, without much volatility. A big criticism of NFTs is that you don’t own the image; what you actually own, however, is the metadata. NFTs are just ownership stakes in a contract.

Like a deed.

Exactly. What you’re actually buying is membership into a club. You own a piece of a contract. All the details added on top can be changed at any point, including the image that it generates.

So when people a year ago were screenshotting the Bored Ape NFTs and laughing about how people don’t actually “own” an NFT when they “own” it, they just didn’t really get it.

Yes. So what Aavegotchi did is build everything on the blockchain–no external servers necessary to generate the image for you. The reason why everyone doesn’t do that is because smart contract memory is limited and expensive, so you can’t physically store images. Aavegotchi uses an SVG, an old internet format for images, which is really lightweight. You get 8-bit graphics from it, but there’s no external storage needed.

“Grand Theft Crypto” by Mason London

Have there been many instances of fraud, like people selling NFTs they haven’t bought?

There are plenty of instances of fraud. A common scam you’ll see are screenshots listed on OpenSea, and people will see the image, but won’t look at the contract address, and buy it. Oftentimes, newbies get scammed by jumping into a project. There’s a site called Sudoswap, which is supposed to be a website where you can trade NFTs in a trustless manner, where people get screwed pretty easily. Scams happen all the time, mostly to people who are just getting into it. The problem is you can’t reverse transactions. A fair amount of scammers have actually been caught.

Who catches them?

There are actually some people online who volunteer their time to catching scammers. A big one on Twitter is @ZachXBT. He’s this guy who does chain analysis to trace wallets and see where transactions take place.

So he’s like a detective.

Yeah. Companies exist to trace this stuff, but the industry isn’t big enough yet. Law enforcement in general doesn’t have access to these companies most of the time. So they’ll do this analysis and trace wallets, but they usually don’t have the means or time for it to be too effective yet.

What are the punishments scammers have faced?

I mean, we’re talking about theft, and it’s prosecuted as such. Law enforcement could put people in jail for it now, but there haven’t been many instances. There was this guy at Coinbase who was caught doing insider trading recently. But in crypto, that’s not against the rules, so you don’t see too many of them getting penalized.

I’ve noticed that the market, within the past fifteen years, has these really hard crashes, but then rebounds quickly. Take the Covid crash; the market recovered within a couple months. How does the crypto market differ, if it does?

There was a big theory from this past bull cycle: “supercycle theory,” that crypto won’t behave like bull cycles of the past, and yet it basically has behaved the same. The volatility was so much higher than it was generally, starting with the March 2020 crash. A normal cycle would be volatile, but this past one was way more intense. Crypto decoupled a bit from the market a couple months ago, with the TERRA incident, but for the most part it falls with the traditional market. Lately Bitcoin has been wobbling a bit, with altcoins making bigger moves up or down.

Did you ever have any Cardano?

No. That was a flop. It was all marketing, all hype. They kept pushing back their smart contract platform. There’s not much of a chance it’s gonna hold up to ETH. I don’t see it getting anywhere.

Glad I bought so much of it last year.

It happens.

Do you think American media in general is for or against crypto?

Definitely against. You can view it as conglomerates who control the media and that it doesn’t serve their interests, but it’s more than that. There is a massive amount of disinformation, or maybe, more accurately, lack of knowledge, out there about crypto. I feel a lot of it also stems simply from people being jealous that they “missed the boat.”  There were very few people, back when BTC was $100 or $500, who believed in BTC or saw its use. This was before there were many institutional investors involved. But now it’s a threat to the market.

Where are your eyes? What do you want to do, regarding new projects or anything?

A lot of NFT projects are going into metaverse building. The metaverse concept is pretty fascinating; interest in it peaked during Covid, with everyone spending more time online and indoors.

I thought the metaverse would take off more, like with Google Glass and whatnot.

It was too early. It’s still too early. But now things like VR are much more accessible. You even have a company like Facebook, which changed its name. That’s huge–to have a company that size rebrand so strongly, to the point where it’s renaming itself. Though the push toward having no central authority is very attractive–crypto and the metaverse share this idea, so not many people in crypto expect Meta to succeed.

Another project I’m really into is FLUF World. The parent company just released a whitepaper. The broader ecosystem is a collection of fifteen or twenty different companies that started individually. These three brothers from New Zealand corralled the aforementioned companies into this one overarching goal of building out a metaverse piece by piece. I’ve never seen anything like it, as far as scale goes. This company has been building for five or six years. You can read their whitepaper at futureverse.xyz, which does a great job explaining not only the project but the metaverse concept as well.

Anything else to add?

Of course, but another day.

32

Scott Wordsman

Scott Wordsman is a writer and professor from New Jersey. His essays can be found in The Colorado Review, LIT Magazine, Map Literary, and elsewhere.

Art

Tech

Curators' Choice