men 1955, the economist John Kenneth Galbraith published a small volume entitled The great accident 1929, a story of the Wall Street crash. In it, he recounted, with his usual caustic wit, the rampant speculation that led to the catastrophe and its striking resemblance to all speculative bubbles in one key respect: speculators’ endearing belief that they can get rich without doing any work. The book went through many editions and reprints, for many of which Galbraith wrote new prefaces. When asked by his Harvard colleagues why he kept doing this, his answer was that a good knowledge of what happened in 1929 would be the best safeguard against its recurrence.
In believing this, Galbraith was unusually naive, as even a cursory inspection of recent history will confirm. He considers, for example, the first Internet boom of 1995-2000, in which new dot-com companies that owned websites but had no revenue or customers acquired higher valuations than General Motors. Or think of Ireland’s “Celtic Tiger” moment between the mid-1990s and 2008, with the ensuing property boom fostered by a government that functioned as the political wing of the construction industry. And just to bring the story of human greed and stupidity up to date, consider the frenzy over cryptocurrencies, “Web3” and blockchain we’re in the midst of.
In the midst of so much speculative madness, it takes courage to point out that bubbles always burst. People can get very nasty when someone suggests that the nonsense they’ve invested their hopes and savings in is, well, nonsense. When in 2006, for example, the economist Professor Morgan Kelly predicted that Irish property prices would plummet by 50%, the then taoiseach criticized him. “To sit on the sidelines,” said Bertie Ahern, “to berate yourself and moan is a missed opportunity. I don’t know how people who get involved in that don’t kill themselves because, frankly, the only thing that motivates me is being able to actively change something.” (Ahern later apologized for the reference to suicide.)
All of which is reason to celebrate Molly White, a remarkable young woman who is the most no-nonsense critic of the crypto frenzy. By day, she is a dedicated software developer and editor for Wikipedia, which she has been involved with since she was 13 years old, and in which she now has over 100,000 edits to her credit. In her spare time, she has become the sharpest critic of cryptocurrency promotion on the web. His website, with its very tongue-in-cheek title “Web3 Is Going Just Great,” has become the go-to place for examples of cryptocurrency malpractice: investment scams, incompetently executed projects that collapse because of bad luck. management, hacks that drain followers’ money, etc.
At first, she told an interviewer, she was quite detached from the madness. If geeks wanted to mess around with cryptocurrencies, that was her problem. What alarmed her was when she discovered that ordinary citizens were starting to invest in crypto schemes. “She was becoming this,” she said, “where she was encouraging the average person to invest money and then being ripped off outright. So, I decided to start highlighting just project after project after project that I was looking at, that was just a terrible idea to start with, or something that they set it up for, convinced a bunch of people to put their money into it. And then they left with everything.”
In a way, her site is a catalog of what she calls “rug handles.” “Someone creates a new project, it could be a new cryptocurrency token, it could be an NFT project, and they get a bunch of people to put their money. And then all of a sudden they deplete all the funds that are in what’s called the liquidity pool. And it means that currency or NFTs suddenly have zero value when buyers expected them to be something they could trade.” In other words, they are what in an earlier age would have been called pump-and-dump scams.
But in addition to exhibits like these, White’s site has plenty of other useful stuff: a glossary that’s helpful for newcomers to this arcane subject; a carefully selected set of resources that she calls her “blockchain collection”; an excellent lecture she gave to Stanford students on the topic of “blockchain abuse”; and an impressive collective review she curated from Kevin Roose’s article, The Latecomer’s Guide to Crypto, on the New York Times.
Unsurprisingly, this carefully organized virtual cabinet of useful information has not endeared White to the more fanatical wing of the crypto cult. Since she posted a photo of herself online in 2011, she has been subject to harassment and threats of violence from internet trolls, particularly after Wikipedia’s coverage of her inflammatory topics such as “incels.” If the price of freedom in the real world is surveillance, the price of telling the truth online is harassment and worse. Something John Kenneth Galbraith never had to worry about.
what i’ve been reading
breaking up is hard
The dangers of destroying the past. A perceptual essay on noema Nathan Gardels magazine reflects on how aggressive disruption inevitably reaps a whirlwind.
And what about the frozen embryos created by IVF? An interesting editorial in the current issue of The New England Journal of Medicine brings up a thought that may not have troubled the justices of the supreme court.
Exorcising a new machine. An unusual take on David Kordahl’s 3 Quarks Daily site on the LaMDA chatbot controversy.