Crypto critics: Why do they bother? Can FUD be useful?

“Anyone who says that David Gerard personally stopped their crypto getting into Wikipedia is a fuckwit,” says editor, Wikimedia spokesman and professional crypto hater David Gerard in his typically no-nonsense fashion.

“There are a lot of fuckwits.”

When Gerard is not passionately arguing against cryptocurrencies in Wikipedia editor discussions, the author of the 2017 self-published hit Attack of the 50 Foot Blockchain can be found prosecuting the case against Bitcoin, blockchain and crypto on the BBC or in the Financial Times.

Even among the most notable crypto critics, Gerard stands out. He‘s hated Bitcoin and blockchain for more than a decade since BTC was first discussed as an alternative funding source for Wikileaks after mainstream payment processors cut it off.

For Gerard, like a number of other critics, the problem with Bitcoin isn’t just that it’s a hyped-up Ponzi scheme or a glorified database with no genuine use case — he sees it as philosophically and politically wrong.

“I saw that Bitcoin was created by internet libertarians and figured that would predict everything about it,” he tells Magazine. “I was correct. People who think they don‘t need to know what they‘re talking about and can reinvent it all from first principles are certain to fuck up in predictable ways, and they have.”

For Gerard — who leans left and describes himself as “liberal” — Bitcoin appears to be a right-wing Libertarian project and that’s reason enough to oppose it.

“Libertarianism as a political ideology is fundamentally childish and dumb as hell. Growing up in Australia, I didn‘t even believe this shit was real — I thought Libertarianism was some sort of savage Swiftian satire, not a thing people would actually believe. Then I got on the internet, and oh well.”

Crypto dystopians

Gerard isn’t the only professional Bitcoin hater out there, with the sector attracting more well-known skeptics and vehement opponents than most. That may be partly because the crypto community seems to hang on their every salvo and negative tweet in a sort of sadomasochistic relationship.

The crypto haters are loud and proud, from gold bug Peter Schiff tweeting in delight at every price drop in his attempts to flog gold to economist Nouriel Roubini shouting bad-tempered invective about criminal Ponzi-like bubbles. They’re not all a bunch of Luddites either: Some have impressive credentials like Nobel Prize-winning economist Paul Krugman or Nassim Taleb who wrote the celebrated book The Black Swan but went on to interject the word ‘Bitdiot’ into every other tweet.

And, there are plenty of grassroots opponents, too, like the zeitgeist style criticisms from NFT haters in the art community who see it as environment-destroying cancer or those in the gaming community who picture it as a shameless cash grab from game developers trying to squeeze another dollar out of users.

The question is: Why do crypto critics bother? What is it about the sector that both fascinates and repels them? Why don’t they just say, “meh, it’s not for me,” and get on with their lives?

this guy works on the most useless tech on the planet… private blockchains 👇🏻 https://t.co/hMoob0qUSq

— Dean Eigenmann (@DeanEigenmann) February 1, 2022

Endless cavalcade of conmen

I ask Gerard, who spends much of his waking hours scanning the internet for negative crypto news stories to feed into his blog. Gerard sold 14,000 copies of Attack — an almost unheard-of number for a self-published book in the United Kingdom — so a certain degree of professional success is undoubtedly part of the appeal. He’s transformed the book into a blog that averages 1000-3000 hits a day, while particularly strong stories like his reports on El Salvador’s Bitcoin Law can get 10,000 hits.

He says that he just can’t look away. “There‘s always stuff to cover, but it is fascinating — it‘s such an endless cavalcade of grifters, suckers and suckers who think they‘re the grifter,” he says.

“The moral core of Attack is that scams and scammers are bad and reprehensible. But, the hilarious stupidity is inexhaustible. There‘s always another story to tell about dumb crooks.”

“If crypto people would like me to stop, probably the first thing they need to do is stop feeding me material.”

A long time ago, in a former brothel

By curious coincidence around about the same time that the Cypherpunks were dreaming up e-cash outside the control of governments in the mid-1990s, Gerard and I were uni student housemates in a shabby former brothel in Brunswick, Australia. I hadn’t seen him since until he popped up in an interview for the film Cryptopia.

Back then, he was a greasy-haired music nerd and student newspaper editor who got into a massive fight with local Scientologists after running an expose on the cult-like aspects of the church and revealing its secrets about the alien Xenu who… well, you can look it up. The Scientologists were incensed and stole all the print copies. Gerard then started up the Australian Critics of Scientology webpage to get the material out.

Given the almost certain legal action from the church, hosting such a site was a risky endeavor. Gerard enlisted the help of a young hacker and Cypherpunk named Julian Assange, who was the system administrator of a free speech devoted ISP called Suburbia.net.

He recounted the experience in a recent podcast, noting that Assange had “titanium balls. Depleted uranium nutsack, it was incredible.”

“For about four years there he was getting legal threats, investigators coming around […] I will say that he stood by me absolutely reliably at that time, in what most people would call quite trying circumstances. I think that‘s because we both have the sort of inclination, the sort of person whose response to any slight whatsoever is ‘bring it on.’ Neither of us knew how to back down.”

Assange later said the experience with the Scientology site helped him realize how a certain platform called Wikileaks could work.

Gerard was as passionate then about fighting the cult of Scientology as he is today about fighting crypto, and it’s hard not to conclude that he sees himself as the lone voice of reason fighting against indoctrination and insanity in both cases. In a similar fashion, both Schiff and Roubini famously predicted the global financial crisis and now take pride in their ability to see through what they believe is the hype of blockchain and expose its hollow core.

Unlike many critics, Gerard actually does his research and is quite well informed about issues in the space, so if you can handle his relentlessly negative approach and frequently 100% wrong conclusions about how irredeemably terrible everything in crypto is, you’ll probably find at least some crypto news on his blog you won’t have seen elsewhere. In fact, anyone enthusiastic about crypto should probably follow at least a couple of skeptics to ensure they‘re getting the other side of the story.

Filmmaker Torsten Hoffman tells Magazine he featured Gerard in his award-winning 2020 Cryptopia documentary because “some of his points are well informed.”

“In the film, his take on corporate blockchain projects was spot on. They are often just disguised centralized database projects that the chief technology officer re-branded into blockchain in order to get the budget approved and a NYT headline.”

But, Gerard and one or two others are the exceptions that prove the rule. By and large, crypto critics appear to have no idea what they’re talking about. Taleb wrote an academic paper suggesting that the main Bitcoin blockchain will die because all the Bitcoin will move to the Lightning Network. Krugman has been recycling the same views he had more than a decade ago that Bitcoin‘s a bubble based on nothing that sets the monetary system back 300 years and is comparable to Bernie Maddoff‘s Ponzi scheme.

skeptics imagining all the scenarios in which crypto fails but ignoring the one reality in which its working pic.twitter.com/oi4HO6rcfg

— David Canellis (@dcanellis) March 28, 2022

Nothing like good criticism

Economics Professor Jason Potts, the co-director of the Blockchain Innovation Hub at RMIT in Melbourne, believes there‘s nothing like good criticism to sharpen your ideas and thinking. The trouble is, most of the current crop of crypto critics offer arguments that are nothing like good criticism.

“I think criticism has an incredibly important role in any intellectual endeavor. You‘re developing ideas and you need critics of ideas to help shape their development,” he says. “My perspective is that in the blockchain space, kind of since the beginning, the self-identified critics have been pretty underwhelming.”

Potts believes that the rapid evolution of the technology and the concepts involved means anyone not immersed in the topic risks being left behind.

“This is such a fast moving experimental space where just the knowledge gap between the frontiers and what we knew before is so vast, that unless you‘re actually involved in the space and building, it‘s really easy just to fundamentally misunderstand what’s going on.”

Loving the haters

So, why is it that the crypto community actively seems to enjoy the haters? Roubini has appeared at crypto conferences around the world, where he‘s dragged out like an ill-tempered performing monkey to rehash the same arguments for money in debates against crypto proponents from BitMEX founder Arthur Hayes to Bitcoin Cash’s Roger Ver.

And, Schiff‘s following seems to be overwhelmingly Bitcoiners. When his son Spencer decided to go all-in on Bitcoin rather than gold, the elder Schiff put up a Twitter poll asking: “Whose advice do you want to follow? A 57-year-old experienced investor/business owner who‘s been an investment professional for over 30 years or an 18-year-old college freshman who‘s never even had a job.”

Against my advice my son @SchiffSpencer just bought even more #Bitcoin. Whose advice do you want to follow? A 57-year-old experienced investor/business owner who’s been an investment professional for over 30 years or an 18-year-old college freshman who’s never even had a job.

— Peter Schiff (@PeterSchiff) September 7, 2020

The fact that 81% of 83,000 respondents picked “the kid” suggests a large part of his 650,000 Twitter followers are actually just Bitcoiners that love to hate-read his posts.

It’s possible that the fascination comes from a perverse sense of pride and enjoyment in listening to the haters, given Bitcoin has been declared dead by the media 446 times. Yet, the price keeps going up year after year as more and more institutions come on board. Vindication is a great feeling.

Hoffman, who‘s currently working on re-releasing his 2015 documentary Bitcoin: The End Of Money As We Know It, points out that Schiff exploits this dynamic for his own ends.

“Let‘s give the man some credit. He‘s a master troll. His crusade against Bitcoin — and Bitcoiners crusade against Schiff — just helps with getting more retweets, podcast downloads and page views. See, we‘re talking about him right here”

Rumor has it that Roubini could almost retire off a few more crypto conference appearances.

“Roubini has allegedly made a nice side career with six-digit speaking fees ranting about crypto,” says Hoffman. “That doesn‘t make everything he says wrong, but maybe we should look at people 40 years younger when it comes to understanding the crypto economy.”

BitMEX founder Arthur Hayes said something similar after the famed Tangle in Tapei debate with Roubini in 2019.

“It was quite clear that Roubini is a one-trick pony,” he added. “He increases his publicity by being hyper-critical of Bitcoin regardless of the actual facts. And that is why the media trots him out whenever they need someone to bash Bitcoin and the cryptocurrency industry.”

Hayes, of course, later pleaded guilty on charges related to Anti-Money Laundering provisions and agreed to pay a $10 million fine, which lends some credence to Roubini’s criticism that “BitMEX is just an example of everything that is sick and wrong in the industry.”

sometimes it seems like it is, given the fondness for replies like these pic.twitter.com/t01LM905TY

— Molly White (@molly0xFFF) March 27, 2022

The old guard

Everything new has its critics, of course. When mobile phones came out, anyone seen carrying one was reviled. When MP3 players arrived, no one thought carrying around a flash drive with three albums of low-quality music files was going to take off.

But, as Potts points out, disruptive tech also has to fight against those who benefit from the existing system.

“A lot of what is coming as criticism of the Bitcoin blockchain, crypto space is really just straight-up standard defensive maneuvers from existing power structures, and that doesn‘t strike me as an effective critique, that strikes me as just defensive of the status quo,” says Potts.

Potts says Berkshire Hathaway’s Warren Buffet and Charlie Munger are a case in point. Buffett thinks Bitcoin is “rat poison squared” and Munger compared it to venereal disease:

“They‘re invested in a previous set of institutional technologies and business models that are heavily reliant on the ways in which money and payments and registries and incentive structures organizations work. This is highly disruptive […] Therefore, just for purely shareholder self interest reasons, they don‘t like it.”

Krugman has been quite explicit about the need to defend the existing financial order against Bitcoin since he first criticized it in the New York Times in September 2011.

He argued that if Bitcoin became a reserve currency, its fixed supply would mean central bankers couldn‘t inflate the money supply to stimulate the economy. In 2013, he approvingly quotes Charlie Stross in a blog post titled “Bitcoin is evil.”

“BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions.”

Bitcoiners like to respond to his criticisms by pointing to his 1998 prediction that “By 2005, it will become clear that the internet’s impact on the economy has been no greater than the fax machine’s.”

“He‘s far smarter than I ever will be,” says Potts “But, he‘s been very brave and making a lot of claims out loud that, in retrospect, they‘ve just been laughably wrong.”

“There are other economists, people like Larry White and others, macro monetary specialists and theorists who provide far more nuanced and sharper critique and are advancing an interesting critique of the space.”

This you bro? 😂
Wrong about #Bitcoin since 2011
— citing Paul Krugman! 🤡 https://t.co/fIprnim8ao pic.twitter.com/wwJ9DxWvNY

— Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) June 6, 2021

Scams and fraud

The lack of regulation and a plethora of get-rich-quick investors who don’t understand the tech make crypto easy pickings for scammers. This is a driving motivation for critics like the Twitter influencer Mr Whale — whose bearish and contrarian takes have seen him amass over 430,000 followers — and independent “nocoiner” journalist Amy Castor. (Both declined to be interviewed for this piece.)

They believe the entire industry is wracked with financial fraud, from the QuadrigaX scandal (involving lost wallet keys, sudden death and an insolvent exchange) to the truth about the stablecoin issuer behind Tether.

While many journalists in crypto have reservations about Tether, some critics believe that it is an unquestionable fact Tether is unbacked and essentially printed $83 billion in USDT out of thin air.

This appears to be the logic behind Castor’s most famous and often referenced tweet, which makes no sense from a Bitcoin proponent‘s perspective, but makes total sense if you believe that everything about crypto is manipulated:

“When you see the price of Bitcoin hitting new highs like this, it means large holders are cashing out—ahead of the crash, which they all know is coming.”

Tether has survived a New York Attorney General’s investigation and court case about its reserves, so if it is a perpetual money printing machine, they‘ve done very well to keep it going. Of course, given some of the stuff that really does go on in crypto, that‘s not a non-zero possibility.

Political enemies

As Gerard’s hatred of Libertarians suggests, a reaction to the perceived politics of Bitcoin is a strong motivation for many. While technology is arguably politically neutral, that’s not how crypto critics see it.

David Golumbia wrote The Politics of Bitcoin: Software as Right-Wing Extremism, which argues that Bitcoin was borne out of the right-wing conspiratorial Libertarian culture of the Cypherpunks and that the technology itself is inherently right wing.

I‘ve interviewed Golumbia at length on the subject and found him to be a fascinating and insightful person with deep background knowledge, but even leaving aside the highly contested idea the Cypherpunks were right wing, the contention seems a little bit similar to arguing that because the Volkswagen Beetle was the brainchild of Adolf Hitler (and Ferdinand Porsche) then everyone who drives one must be a Nazi.

Gerard, however, believes the basic thesis is correct and says it informed a chapter of his book. Curiously, he also doesn’t think Ethereum fans are any less right wing than Bitcoiners.

“‘ETH is left wing’ is nonsense. Buterin espouses basic Silicon Valley techno-libertarianism with subtle anarcho-capitalism underneath that pretends to hide its power level. His parents are ardent ancaps and brought him up with this stuff. His main sponsor is Peter Theil. He might be ‘left’ of the most rabid Bitcoin ancaps, but not of any sort of political spectrum outside the weird world of crypto.”

As you might expect, Potts reacts strongly against the characterization of crypto as inherently right wing and says both left and right are involved in crypto as a way to overcome the centralization of power, whether political or monopolistic corporations.

“It‘s both a left-wing and a right-wing story about trying to remove concentrations of power, whether its political power or market power from systems,” he says.

“The fundamental story of a lot of different people involved in the space and a lot of different political or motivational backgrounds that generally share the same overarching narrative is that we don‘t like centralization of power. And, we don‘t like arbitrary control of systems.”

“The critics are the ones that are defending the status quo. And, I just find it sort of ironic that‘s the real battle here. I don‘t see it as a left versus right story, I see it as a protection of the status quo, political hierarchies, versus an attempt to innovate with new institutions. And, I would love the critics to represent that idea.”