"If it looks like a scam, it's probably a scam."
Cryptocurrency and its ugly art spin-off, non-fungible tokens (NFTs), are perhaps the 21st century's greatest example of that eternal principle.
But don't try saying that to anyone who's been sucked into the Cult of Crypto, because the next hour — or five!— of your life is about to be spent buried in technobabble jargon to make this particular form of tulip-trading sound like it's simply mathematics on a plane too high for your small brain to comprehend. And also, your interlocutar is going to be laughing all the way to the bank, mark his leetspeak-drenched words. It's maddening, and best avoided by disavowing all contact with anyone dumb enough to make an expensive NFT their social media profile.
But if you just can't help yourself, there's now an excellent resource that will break down for you exactly why NFTs, and cryptocurrency generally, is a joke. Dan Olson of the Folding Ideas video stream recently released a two-hour video essay explaining exactly why that knee-jerk instinct is right: NFTs and cryptocurrency look like a scam, because a scam is what they are.
Olson typically makes videos about the art of filmmaking but took time to create this video so that normies who are absolutely sick of hearing about what is clearly just a speculation bubble are finally armed with solid arguments to explain why. It's a fun and surprisingly watchable video, despite the soul-crushing amount of jargon that Olson painstakingly defines for his audience. It should truly be the last word on a trend that, in a more sensible world, would have died years before Matt Damon was making stupid commercials hyping this shady product.
I spoke with about the problems with cryptocurrency and NFTs, a product he convincingly argues was created for no other purpose than to sell cryptocurrency.
This interview has been edited for lengthy and clarity.
I'm sure you saw that Paul Krugman recently wrote a piece about crypto, and he had an interesting statistic. Unlike people who buy stocks, "who consist disproportionately of affluent, college-educated whites, survey research shows "44 percent of crypto investors are nonwhite, and 55 percent don't have a college degree." And I was wondering what you make of that? What kind of people are being preyed on by the crypto industry?
That by and large sums it up.
In traditional investing, you need certain licenses and whatnot in order to be a trader of regulated securities. With crypto, there isn't a line between who is running a pump and dump, who is starting a legitimate well-intentioned project, who is just a buyer, who is a speculator, who's an investor, who's a collector. It gets very vague. Similar to the structure and flow of multi-level marketing, everybody sort of exists in this nebulous state of being both a buyer and a seller.
Sellers are targeting people with a very specific economic narrative about the system, with these myths of freedom and liberation. It's like, "Oh, the man can't track your money anymore. You don't need those pesky regulations. Those regulations just exist to keep you excluded."
We live in desperate times and it makes people irrational. Because if everything else around you is irrational, why bother trying to behave rationally?
Want more Amanda Marcotte on politics? Subscribe to her newsletter Standing Room Only.
In the video, I think you do a really good job of delineating between the rich Elon Musk types out there who are hyping crypto and the people who are getting suckered into the hype. The latter group is frequently used, then, as a shield to defend crypto. Have you encountered this reaction?
Oh, tons. Like Neil Gaiman pulled out of a thing, pulled out of an auction that wound up being crypto based. So there's a tweet circulating that's basically like, "Neil Gaiman is in favor of children starving." I see that narrative constantly where there's the claims of like, "Oh, well you are just opposing this because you oppose people. You are actually trying to keep the system in place that keeps these people down."
Sure, there are a few success stories where somebody in a marginalized position got lucky. But also there's a lot of cases where those narratives aren't entirely trustworthy because people who get involved have an incentive to perform successfully because that's culturally ingrained into it and ties back to a lot of just general finance industry narratives of like: "Success comes to those who are the hungriest for it, who want it the most." Or "that you got to rent the Lambo if you want to be able to buy the Lambo. You got to perform that role." But if you dig into it a lot of the narratives of like, "Oh, I'm an artist from Venezuela, my life was changed by switching to selling NFTs," and you dig into their actual wallet and it's like — they haven't sold anything.
They just have all this fictional wealth sitting in crypto and it hasn't translated into real money yet?
One thing that I see a lot is people who have sold things and then you sort of press them on it and they're like, well, I haven't actually cashed it out. It's all still sitting in the ether. It's like, okay, so you didn't actually, the money didn't actually change your life.
Watching your video, I was also really struck by how much crypto and NFTs have a lot in common with multilevel marketing schemes like LuLaRoe, Amway, Mary Kay. They all target women, specifically housewives, the kind of people that have some disposable income but feel shut out of traditional or mainstream ways of having a career or having an income.
I mean right now that's the big thing, there are so many just "girl boss" projects. I featured a couple in the video, but I've seen like a dozen more just in the last two weeks that all cropped up in January.
The older crypto narratives are: Here's your chance to live the financial dream, loner nerd who never leaves his apartment, with a single bare mattress on the floor. The structure of that argument ends up pivoting really well to basically anyone who is isolated from downtown culture. It was really easy to repurpose for the same targets as MLM, housewives like that, and the like because they also spend all day at home. All we got to do is we just got to take this language and polish it up a little bit, but we've got decades of MLM communication that it was really easy for them to transition the pitch.
Your video is about NFTs really more than crypto, but the two are really tightly connected. In fact, you openly say in the video that NFTs exist to get you to buy crypto.
The biggest problem that's been plaguing crypto since 2009 has been a lack of things to use it on and a lack of respectability that comes out of that. It's like, "nah, it's not a currency. You don't use it to buy and sell stuff." Crypto has a long history of not being spendable. There's nothing that you can actually use it on.
So NFTs effectively get built as a thing to spend crypto on. The two end up being unextractable from one another. NFTs, they're literally built on top of cryptocurrency. They literally share the same technological foundation. NFTs were basically these goods being wheeled into existence in order to provide something crypto can be spent on.
Honestly, again, it reminds me so much of multi-level marketing schemes, where there's always some "product" that's being propped up. There's the LuLaRoe legging, there's the Amway cleaning products, but that's not really what these companies are selling. That's just vaporware to get people to lure other people into the system.
The product exists to sell the culture and the culture exists to get people to buy into the ecosystem and buy the starter pack and sign up and develop a downstream and recruit, recruit, recruit.
I think people accurately recognize that just by watching people get involved in crypto. You watch an artist who starts selling NFTs, and over the course of months, their artwork itself shifts and it starts becoming more and more about crypto itself. We see those shifts in the people around us and the people who get involved in it, it's like it becomes the singular thing that they talk about. It very much mirrors the same cultural trajectory of somebody getting involved in multi-level marketing.
One of the things that is really difficult is, if you've ever seen anybody get into multilevel marketing or into crypto, trying to get them out is so hard because there's a lot of defensiveness around it.
Yeah, it's built to be sticky.
The systems share the general sunk cost fallacy. You were promised returns, you put a bunch of money in, you haven't seen those returns, and in fact, you're probably massively in the red. Nobody wants to see themselves the fool. Nobody wants to admit that they got had. Nobody wants to admit that they fell for something. Nobody wants to admit that like, "Hey, I just basically burnt a bunch of money that I didn't have to spend." Both ecosystems utilize the twin demons of sunk cost and shame.
You did this video, it's really gone viral. When we first watched it at my house, it was just a couple 1000 views. Now it's like millions of views on it. You usually do videos about cinematic language and narrative storytelling. Why did you decide to do a video about NFTs and crypto?
Because they're an ecosystem that exists entirely in the language of stories. That's the main thing that's being sold here. Crypto isn't functional. It doesn't do what the builders claimed it was being built to do. It has succeeded at very few of its public-facing goal. But it still transacts based on those stories, based on what it could become, based on what it intends to do, based on what it, in theory, might do in the future. It's a cultural moment that intersects with entertainment and the business of entertainment and the business of culture in a way that is just unavoidable.
How do we maintain sympathy for the victims of this, the people who are sucked into what is basically a scam? It's so hard sometimes, with all the online rhetoric, to tell the difference between the victims and the people perpetuating this particular scam?
These systems — and MLMs are another great example of this — they blur the lines between the victim and the victimizer, because in order to succeed, particularly the further down the line you are, the more aggressive you need to become. You need to become a victimizer yourself in order to get your head back above water. Sympathy ends up being tricky and fraught. The best way of maintaining sympathy is in remembering that fraught relationship there. That this is a system that is set up to turn victims into victimizers. Beyond that, remember it's a very individual thing. Everybody gets into it for granularly different, local reasons like personal incentives and personal circumstances, but it's hard. It's hard and it's made hard on purpose.
What would you like to see in terms of a response from the government? What would you like to see happen to stop this, to save our economy and save the people that are getting suck into this?
Minimum wage corrected to inflation, public housing, equitable public housing policies, student debt forgiveness.
We need fundamental changes to our economic policies and to our social policies that remove or that mitigate the desperation that allows schemes like this to take root. That's the only answer. Anything else is just...
Regulating NFTs as securities is useful, but it's not going to fix the problem. The problem is metastasizing out of deeper structural problems, deeper social policy issues. We've got minimum wage that is so stagnant. We need to actually address the root problems. The material existence of people sucks at the moment because we've allowed a lot of rot to get very deep into our society. It's squeezing people, it's making people feel like the future doesn't exist. That leads to desperate reactions. There's a good article in from Mother Jones that argues this.
If the normal world is so broken, if the future looks so broken by the normal systems, then why not gamble on crypto? Is it any less insane than this other broken system? I think that is an accurate assessment of the place that people increasingly find themselves in and the answer is to fix that problem.
It's like buying a lottery ticket is irrational, but is it when you have no other opportunities to build wealth?
Yeah, if all you've got is five bucks left at the end of the week, it's like, well, you're never going to buy a house off of five bucks a week. You're never going to buy anything off of five bucks a week, so why not a lotto ticket?
To end on a more fun note, I have a question that you bring up in the video: Why is the art of NFTs just so dang ugly?
Because they don't care.
The folks who are steering all of this, the guys who are in charge, or the guys who go out and make something like Bored Ape Yacht club, like they're just hollow inside. They don't understand art. They don't understand culture. They don't watch television. They don't watch movies. They don't read books. They don't read comics. They just, they know that these things exist and they know that other people care about them and they're just performing culture because they see culture just as a commodity.
Once the tempo is set, once larval labs and bake set the rhythm with crypto punks and Bored Ape Yacht club, it's all downhill from there. It's like, oh, well we can just copy this. We don't need to up our game because look at these jackasses! Look how much money they're making off of this! Look at how much lazy lion is making off of their garbage! We don't need to try! Trying is for suckers!
The market has, to use their own language, the market has signaled that quality is not relevant. So people optimize for responding to that, which is that it's like, oh, well, if I don't need to worry about quality, that saves me a bunch of time and effort.
Want more Amanda Marcotte on politics? Subscribe to her newsletter Standing Room Only.