On January 27, 2021, GameStop (GME) closed out at its highest stock price at $347.51/share since the reddit community of r/WallStreetBets (WSB) sent the stock soaring, in their nomenclature, “to the moon,” a curious phenomenon that many within the mainstream press gave revolutionary significance due to the working and middle class status of some of the volatile stock’s big winners.
I wrote last year that despite some of its “populist” character, the supposed gatecrashing by lay people into Wall Street was nothing more than a bubble created by Wall Street actors and carnival barking billionaires in which some previously precarious individuals made instant fortunes while many others lost their shirts. In the year since the GameStop rollercoaster, the increasing presence of words like “crypto”, “DeFi”, and “NFTs” has come to dominate the fintech space. This emergent language has filtered into the mainstream due to the opening of a portal into the long-prophesied techno utopian dream known as the metaverse.
As our current physical existence has had to deal with the harsh realities of a world in which capitalism has made social and political institutions inert in the face of a global pandemic, a longing to escape the dire circumstances of toiling in the face of human suffering has gripped many across the world. The proliferation of work from home arrangements has alienated office workers even further from circumstances and conditions that would be conducive to union organization.
Retail, fast food and healthcare workers have been quitting en masse in the face of “frontline heroes” rhetoric that has not brought any change to their material circumstance. While union activity was up in response to these conditions at the end of 2021, a greater number of workers in the United States were simply walking off the job, with a record 4.5 million workers leaving their jobs in November 2021. This phenomenon has been dubbed “The Great Resignation,” and its beating heart, like the GameStop stock climb, lives on a reddit forum (r/antiwork).
Yet in terms of any sort of mass coordinating effort that rivals the “populist” bent of WSB, r/antiwork’s reach is still significantly behind, with only approximately 1.7 million subscribers compared to WSB’s approximately 11 million. The rhetoric on r/antiwork is also consistently muddled due to conflicting feelings about the ideas of socialism as well as moderators determined to be “apolitical.” r/antiwork functions more as a sounding board for worker discontent than anything (with some online union supporters aimlessly throwing slogans around, which is a microcosm of the state of the Western Left).
The idea of escape within the context of the United States is one so frequently foisted upon us through films, television, books, magazines, and advertisements. The majority of working people within the US long for an end to the ceaseless grind of exploitative, thankless jobs and all of the attendant causes of grief and sadness that come with them. Due to the historical process of capitalism in an environment where not even a social safety net is proffered, the only method of escape from gnashing competition isn’t more competition but an idea of an exceptional you. An idealized form of the self that is achieved, not through the entrepreneurial spirit that the neoliberal gods of old lionized but through the unlocking of secret knowledge that only you and a select community can utilize for prosperity. Enter the blockchain.
The blockchain is a technology that is foundational to the idea of what’s known as Web 3.0 or Web3. For those who are blissfully unaware of the iterations of the Internet, Web 1.0 is considered to encapsulate the early stages of the Internet as it developed out of the Department of Defense’s Defense Advanced Research Projects Agency (DARPA). Web 1.0 was defined by web pages as well as hyperlinks, and it is described by technopedia as “the ‘read only’ web.” In Web 1.0, there is hardly any interactivity between users and the content displayed.
Web 2.0, the current iteration of the Internet, is defined by content that online users themselves create and share via blogs, social media sites, wikis, and much more. While users create the content and data, the ownership of this content is centralized in the hands of tech giants like Alphabet (Google), Meta (formerly Facebook), Amazon, and Apple. Web3, as it is envisioned by Ethereum cryptocurrency co-founder Gavin Wood, who coined the term, is based entirely on the infrastructure of the blockchain, which allows for a supposed decentralization of data control and the removal of intermediaries in order to create and share content.
The blockchain is a digital, decentralized ledger which records transactions that maintains the privacy of the users involved. These transactions can be recorded on a peer-to-peer decentralized network that supposedly increases the riskiness of whether or not to engage in fraudulent transactions. The technology was originally created for the foundational cryptocurrency, Bitcoin.
While Web 1.0 and 2.0 are concepts that are easy to explain and understand because we’ve lived through their uses, Web3 is much harder to conceive. For one thing, basing Web3’s liberatory narrative on a technology that was originally intended to create cryptocurrency is hard to imagine beyond its original use. While there are companies currently using the blockchain of various cryptocurrencies to create what’s known as “smart contracts,” it’s hard to imagine how any of this has a clear use beyond the world of business.
Yet none of this has stopped a growing segment of the population that has taken the ideas promulgated by people like Gavin Wood and Elon Musk about the potential use of blockchain and used them to reframe issues of finance and how we are held down not by some of the individuals who are popularizing these vague concepts in the mainstream, but by large financial institutions.
As I noted last year, Wall Street is a fixation for many within the United States because it is the most visible site of capitalist pursuit due to it being the scene of intense speculation and ostentatious wealth. But, as I wrote, it is only one sector of the US political economy known as Finance Capital. Finance Capital has increasingly grown as a dominating force within American life since the financial crises of the 1970s, but it is not the sole sector driving national, regional, and local economic decisions.
Many of the titans of Silicon Valley have successfully further mystified the role of Finance Capital by building on a long, and often ugly, history in America of fixating on banking and the money supply. To them, it is not the collusion of capitalists in different sectors who are causing immense suffering through surveillance, unsafe working conditions, debt, and eviction; it is solely the intermediary of financial institutions which are creating an unequal society by alienating everyday people from investment. This attitude has led to the idea of decentralized finance, or DeFi, which trades cryptocurrency and other digital assets on the blockchain without the use of an intermediary to mediate these transactions. The emerging DeFi philosophy was reified by the GameStop phenomenon last year (if you looked at the story on its face and didn’t attempt to poke further into who else was making vast sums of money besides short order cooks in the Bronx and preachers in California).
As inflation woes started to take hold in 2021, many of the crypto evangelists pointed to this as reason to trust the astronomical value of Bitcoin, Ethereum, and all of the lesser-known coins popping up seemingly every week. This fear of inflation brought a rise in the market capitalization of cryptocurrencies, with the result being a staggering valuation of approximately $2 trillion in the cryptocurrency market for the first time in April 2021. The thought was that the prime global fiat currency, the US Dollar, was showing signs of weakness and volatility in a world where Bitcoin was ascendant, profitable, and gaining expanded use as a currency (despite the insane price point for even a single Bitcoin). This, many in DeFi figured, was a sign that the alternative to the traditional institutions was being legitimized.
However, like the GameStop phenomenon, if we peer closer into this realm of supposed magic and wonder, we start to notice that cryptocurrency, and its high valuation, wasn’t the result of millions of regular people pumping their savings into their cryptocurrency of choice. We begin to notice that much of it is a vehicle for speculation driven by the same titans of capitalism and Wall Street institutions for which the blockchain is offered as an escape.
While executives working at banking institutions may have invested individually in cryptocurrency prior to 2021, it wasn’t until February of 2021 when one of the largest US banking institutions, BNY Mellon, formally announced the creation of a digital assets unit. Since that period, financial institutions like Citigroup, Bank of America, JP Morgan Chase, Standard Chartered, Credit Suisse, Deutsche Bank, and Goldman Sachs have poured millions of dollars into cryptocurrency, investments in blockchain development, and their own custodial services for cryptocurrency, all of this activity happening while they grumbled in public about the reliability of cryptocurrency and the questionable future uses of the blockchain.
Meanwhile, the price of Bitcoin soared from $33,114.36/Bitcoin in January 2021 to a high of $65,992.84 in October 2021. This suggests that the sudden flood of cash from the traditional institutions that the ethos of Web 3.0 eschews was actually fueling the meteoric rise in cryptocurrency and its increasing encroachment from the fringe of Finance Capital towards the center.
Big banks and large investment houses have ultimately driven the profitability and the speculative bubble of cryptocurrencies and the blockchain technology they utilize. This has led to a gold rush effect: whereas stories of other cryptocurrencies not named Bitcoin began to increase in valuation, many have come with their sifts, pots, and pans to try and strike it rich in the digital realm in order to escape the brutality of life in pandemic America.
Of course, like the mineral crazes of the nineteenth century, there is a degree of risk associated with trying to stake a claim in the digital frontier. That risk has been amplified by Silicon Valley’s ethos of “move fast and break things,” which oversells the capability of technology and its applications in real life without consideration as to whether or not 1) the technology is real and 2) should we adopt these technologies. This has been the animating force behind Alphabet, Amazon, and Meta to the point where they have an almost Standard Oil-like dominance over the technology sector of our political economy. But, it’s also been the force that has driven Elizabeth Holmes (and some of her, let’s say, interesting connections) to commit outright fraud to the tune of millions of dollars.
With this pervasive culture dominating the tech sector, it’s absolutely no wonder that the universe of Web 3.0, which is even more concerned with not only breaking the still-existing dinosaurs of the twentieth century but also the behemoths of this one, has been completely dominated by fraud and theft.
Software engineer Molly White started a blog called web3isgoinggreat.com, which is a Herculean effort to track almost every single bad idea, scam, or hack related to cryptocurrency and other assets developed on the blockchain such as NFTs. On her blog, she includes an 8-bit presentation of a money counter on fire which adds up as you scroll down the blog. As of this writing, Ms. White has tracked almost $7 billion in cash since her reporting began in February of 2021 that has either been stolen from a hack, defrauded by software developers through a rug pull, or is simply money that has been invested in a terrible piece of blockchain technology. Her ultimate takeaway is that not only are these assets not liberating, but they are actually intensely risky and are obscuring a new centralization of wealth and power.
Staring at Ms. White’s blazing money counter, I couldn’t help but be taken aback by how this much money has essentially been ripped out of the economy and launched into a black hole. For context on the amount, Guyana’s 2020 GDP is estimated to be almost $7 billion by the International Monetary Fund (IMF). An amount of money the size of Guyana’s yearly economic output has basically been set on fire in less than a year’s time.
Despite all of this outright graft, celebrities and influencers have basically sold cryptocurrencies and NFTs to millions of Americans as a new step in the project for the American Dream. A way to earn your keep in an uncertain world ruled by the institutions who dragged us into financial panics, depressions, and recessions. There’s no way out other than through the digital spectacle. You just have to believe.
As it turns out, this decentralized future of Web 3.0 is still subject to the whims of the Old Gods of Capital. This is due, as mentioned earlier, to their massive investment in cryptocurrency which has caused money to flood into a giant speculative bubble. A recent announcement by the Federal Reserve to hike interest rates in reaction to inflation (and the Great Resignation) has provoked trading on Wall Street to a massive market movement in the sell column. For cryptocurrency, almost a trillion dollars in value has been lost due to a massive selloff in Bitcoin and other cryptocurrencies.
With a looming credit crunch seemingly on the horizon, banks are still communicating their interest in cryptocurrency, but money is being shifted around as Fed Chairman Jerome Powell angles to boost the dollar. In the distant past, previous Fed Chairman Paul Volcker used similar rate hikes in the 1970s and 1980s to control the phenomenon of stagflation. These moves essentially induced recessions, which came on the backs of workers as manufacturing jobs fled the United States en masse. As we see before the Fed has even hiked the rates, there is a shift to “safe” investments as Finance Capital prepares to re-evaluate their investments and holdings. Finance Capital and their heavyweight counterparts in tech and other industries, once again, will have the upper hand, as the mass sell-off has already started wiping out the nest eggs of individual investors. This is the second time within the span of a year that those who have wished to escape the cruel realities of our world by attempting to outwit capitalism through one weird trick have crashed into the reality of how our economic system ultimately functions.