Kathryn Haun was recently on The Ezra Klein Show. I don’t see much in terms of considered opinion coming out of the pro-crypto camp. It’s much more, “Gimme a B! Gimme an I!” What’s that spell? Propaganda!
So normally, I wouldn’t have even listened to the podcast. But Klein doesn’t bring loons on his show. And the truth is, I continue to look for people who can make a good case for crypto. I really do want there to be something with it. But I have begun to despair. It’s looking more or more like a simple scam. (Not that it started that way.)
Haun did approach the podcast with the seriousness that it deserves. But it was quickly revealed that she was not there for an honest discussion of the issues. It reminded me of a Christian apologist going on an atheist talk show. They know they are in a dangerous place so they don’t come on aggressively. But they are only there to push their canned talking points.
Haun trumpeted the glories of sending money with Bitcoin. You see, you can do it without a centralized authority! This is true. People make millions of dollars every year “mining” Bitcoin to allow just that. But who cares?
What bothers me about credit cards is not that there’s some authority involved in the transaction. I’ve been using Banks since I was about 5 years old. I’m fine with it. What bothers me is that it costs me money (indirectly). I think most people feel the same way.
And guess what? Cryptocurrencies cost money when you transfer them! In fact, they cost a lot more! But you’re not beholden to a centralized bank — oh, no! Instead, you are beholding to a distributed group of crypto miners. Hooray!
Ignorance Is Fueling It
The sad thing is that most people who are into crypto simply don’t understand it. That’s not true of Haun, of course. But the current market capitalization of a trillion dollars is built on ignorance. And people in the middle of a bull market tend not to notice that their brokers are siphoning off huge amounts of money.
But eventually, the bull market ends. Then everyone is left with what? A really expensive method of exchange that adds literally nothing new to the technologies we had before?
I’m really kind of sick of this happy talk especially coming from people who clearly do understand the system. Cryptography is really interesting. But in terms of transferring valuable objects from one person to another, the system just doesn’t seem that useful.
And every time I bring this up, crypto people say, “Look at how much money it is worth!” I do see that. We all see it. We also all saw that Theranos was valued at $9 billion dollars when it was worthless.
Blockchain Will Save Musicians!
Haun mentions that you can use the blockchain to transfer other things like songs. Well okay. An artist could release songs on the blockchain. And maybe that would be more efficient than using rights management software.
I don’t really know but I’m open to it because I hate rights management software. But again that’s a case where crypto is just a different way of doing the same old thing. And that’s great! Finding new and better ways to do things is good.
But this is clearly a post hoc rationalization. Bitcoin started as a currency. As time has gone on and it has failed as a currency, true believers continue to look for ways to justify the technology. Certainly, we are better off looking for a way to replace rights management software rather than trying to shoehorn that solution into a technology that has failed at being a currency. Right?
Of course, we aren’t looking for a way to replace rights management software. And as I will discuss below, there is a reason for that. Hint: it involves the interests of powerful people. You know, people like Kathryn Haun!
She also mentions interoperability. Oh, the irony! Over 6,000 different cryptocurrencies have been created. As I write this, there are over one hundred cryptocurrencies with a market cap above a billion dollars. Doctor, heal thyself!
Why is it that the blockchain is what is going to fix our interoperability problems? Consider this: why did we have cassette and 8-track tapes at the same time? Why did we have Beta and VHS at the same time? What about Sirius and XM? We had them because there was a difference of opinion about which was best. Ultimately, the issue was resolved. But how would this work with all these crypto blockchains that are, you know, not controlled by anyone?
Another thing Haun says is that when you buy digital music you don’t own it. Guess what? When you buy an LP you don’t own it either. The problem is not the technology. The problem is our broken IP system.
As with licensing, she’s desperately looking for ways to make crypto relevant. She doesn’t care about rights management. She doesn’t care about IP law. She just cares about use cases that make crypo seem like it isn’t a waste of everyone’s time.
It bothers me how much Spotify and other platforms charge. It bothers me even more that TextBroker takes 35% of what I pay writers. But in both cases, this money goes to connecting one person to another. How exactly is a new freelance writer going to find clients? Hell, how is an established one?
Yes: the amount that TextBroker charges strikes me as exploitative. We ought to do something about that. But the blockchain doesn’t seem a particularly fruitful avenue to pursue.
Think about what she’s suggesting: musicians put their songs on the blockchain and you buy it and then own that particular copy! (Again: IP law makes it so you do not own it.) Is that going to happen? No! Spotify or some other powerful interest will find a way to offer the songs for sale even as they are “sold” on a blockchain. So we’ll have a new technology with the exact same system.
This is where we get to the issue of power. And to his credit, Ezra Klein pushed back. Musicians and listeners are getting ripped off not because of the technology but because of the power. But Haun counters that the technology simply isn’t here yet. That just goes to show she doesn’t understand the issue.
Powerful interests are always able to use technology to their own benefit. Yes, there are minor cases here and there where that doesn’t happen. But those in power learn quickly and errors are not repeated. Technological fixes do not stand in their way.
Vertical Marketing to the Rescue
Many times, Haun brought up some form of the idea that early fans might be able to make an investment in an artist. It’s just multi-level marketing. What’s more, there are much better ways to do this.
Dean Baker’s idea of The Artistic Freedom Voucher is great. But it requires a change in the system that harnesses the fact that people want to help out struggling artists that they admire. They wouldn’t do it because they think they’re going to make money off it later.
Haun also notes that Gucci handbags cost more in the Roblox virtual world than they do in reality. But of course that Gucci handbag can only be used in that game. Imagine what it would be like if you could take that handbag to any virtual world?
She isn’t making a joke. She’s deadly serious. Here you have people paying a lot of money for something useless. And she thinks it’s a game-changer that they might be able to have that useless thing in more areas. This is all so absurd!
Of course, I should be clear that most of this is all about fashion. I don’t care about fashion in the real world and so I don’t care about it in the virtual world. So I’m probably a particularly bad person to discuss this kind of thing.
Bitcoin Energy Consumption
She pushed back on the idea that Bitcoin uses a huge amount of energy. She knows quite rightly that newer cryptocurrencies are using Proof of Stake. But as I’ve been ranting about for well over a year now, Bitcoin is by far the biggest and has no plans to change from Proof of Work.
And her solution for the fact that you can’t just change Bitcoin is that most miners are trying to use more renewable energy. Well, no shit! The cost of energy is the main thing limiting profits.
But imagine that Bitcoin was powered by solar energy. It isn’t causing global warming. Hooray! There’s still a huge opportunity cost here. That energy could be going to do something useful. Bitcoin needs all of this energy just to maintain itself. Meanwhile, I have cash in my wallet that works just as well and doesn’t take any energy!
I’m not saying that energy use by Bitcoin isn’t a huge problem. But the moment the issue came up in the conversation, her first reaction was to come out with two or three talking points to minimize it. She’s nothing but a propagandist.
Horror Film Crowdfunding
She said there was a recent movie that was crowdfunded with crypto — apparently Braid (2018). Despite what people argue, there is nothing new about the way that the film was crowdsourced. You can crowdsource dollars and give people a cut of the profits.
The solution is not technology. The solution is collective action. The solution is changing the system.
For most of the podcast, I assumed Kathryn Haun was a true believer with utopian dreams like I shared with many on the late 1980s internet. But then I learned she was a general partner at the venture capital company Andreessen Horowitz, which manages almost $20 billion.
She’s also on the board of Open Sea! For those who don’t know, Open Sea is “the world’s first & largest NFT marketplace.” And for those who don’t know, NFTs are a scam.
But what really bugs me about Haun (and others like her) is that she probably got into this because it really appealed to her and she was a true believer. But she saw that there was a huge amount of money to be made.
She’s not putting money into a non-profit. No Aaron Swartz she!
The takeaway here is that Bitcoin was sold to us as this great technological innovation for currency. And it has failed absolutely. It continues to go up in value but it doesn’t work as a currency. So just as this realization finally seems to be seeping through, we get these new justifications for the cryptocurrency industry.
It’s hard to see the whole crypto world as anything but a giant con for a group of elite people. And sadly it is sustained to a large extent by a lot of utopian idealism pushed by rich elites like Kathryn Haun.
Image of Kathryn Haun taken from her Twitter profile under Fair Use.