Blockchain expert Molly White: "I was seeing example after example after example of these projects that were just going terribly wrong."

Blockchain expert Molly White: "I was seeing example after example after example of these projects that were just going terribly wrong."

Foto:

Webb Chappell

Interview with Crypto Critic Molly White "There's So Much Hype!"

In an interview, crypto critic Molly White discusses the crash of Bitcoin and other cryptocurrencies, the perils of betting on pension funds and her work in a toxic and misogynistic industry.
Interview Conducted By Patrick Beuth und Janne Knödler

DER SPIEGEL: Ms. White, do you know the German word schadenfreude?

Molly White: Yes, I do.

DER SPIEGEL: On your website Web3 is going just great , you list all the big scams, hacks and failures of in the world of cryptocurrencies, blockchains and NFTs, garnished with gloating emojis and a grift counter animated with flames that recently reached $10 billion. Do you feel schadenfreude when working on your website?

Molly White: In many of these cases, there are real people who are losing money that they can't afford to lose. It’s hard to feel anything but empathy for them and wishing they hadn't gotten roped into these things. But in some cases, especially if it's someone very wealthy and they lose money that they can afford to lose, then, yes, I will admit that I do feel a little bit of schadenfreude.

DER SPIEGEL: Are all these victims too greedy or just gullible? Why does the whole ecosystem seem to be so susceptible to scams?

White: There's so much hype! People start to see projects that look pretty scammy and they say, well, it doesn't actually look that much different from all of these other supposedly legitimate projects. In traditional financial markets, people would see promises of 40 percent annual percentage yields and they would say, oh, that's a Ponzi scheme. But with crypto, there are so many projects promising that through unclear mechanisms that it seems like people are willing to overlook that red flag.

DER SPIEGEL: Are people bedazzled by futuristic sounding buzzwords like blockchain, crypto and Web3?

White: It's a marketing term more than anything, it refers to projects that use blockchains in some way and are allegedly designed to be the future of the web. When I started paying more attention to these things, I was seeing this really big divergence between what proponents of the technology claimed it could do, and what was actually happening in reality. A lot of people were saying that this was the future. That it will change finance and society, everybody would be using it. But on the other hand, I was seeing example after example after example of these projects that were just going terribly wrong.

DER SPIEGEL 28/2022

The article you are reading originally appeared in German in issue 28/2022 (July 9th, 2022) of DER SPIEGEL.

SPIEGEL International

DER SPIEGEL: What about positive examples?

White: There are isolated examples. But most of the times, those are illustrations of flaws in existing systems. The fact that people can, for example, send remittances to family members who are under sanctioned regimes shows that sanctions are hurting individual people when they are intended to place pressure on governments.

DER SPIEGEL: A lot of tech industry veterans, a lot of programmers believe in cryptocurrencies. Do you ever wonder if they see something you just don’t grasp?

White: I've spent a lot of time looking for it and I still haven't found much. And I would say that there are a lot of really smart people who share a lot of my concerns.

DER SPIEGEL: Even professional investors are throwing a lot of money at crypto projects, including pension funds. Are they all crazy?

White: Of course, venture capitalists will claim that they see huge potential in the technology. It's unclear to me how much they actually believe that, but it's in their best interest to talk about it as though it is this next big thing. And there's no real denying that there is a lot of money to be extracted from crypto projects. Investors who do make a lot of money won’t wait for ten years to see how projects are doing, they are quickly going in and out.

DER SPIEGEL: But with the pension funds, it's money from people who kind of need that money back once they stop working.

White: I see it as very concerning. It's such a risky thing to do with your money. People call it an investment, but I don't even really see it as an investment. It's as if a pension fund decided that they wanted to buy a bunch of lottery tickets.

DER SPIEGEL: Is the current crypto crash a good, even healthy thing for the market?

White: There are a lot of people who talk about the downturn, as if it's going to weed out the people who are just there to make a quick buck and who aren't passionate about the technology. That may be true, but it doesn't change the fact that I just don't see a lot of potential there. I had hoped that maybe I would see fewer scams, as people weren't able to make as big returns off of defrauding people. But so far, I haven't seen much of a change there. And then as far as the collapse of various different projects and the downturn in price, I think that has had some really devastating effects on people who were sold this promise that crypto was an investment and they could make these huge returns, that they might have a ticket to financial freedom.

DER SPIEGEL: Would you dare to predict Bitcoin's future price trend?

White: The future always turns out to be way weirder than anything I could predict. In general, crypto tends to go through these cycles of boom and bust again and again. I feel like that is doomed to continue unless there is some major change, like more regulation.

DER SPIEGEL: How important is the aspect of environmental damage to you?

White: It is a very serious issue that Bitcoin and Ethereum and some of these larger cryptocurrencies are using just unconscionable amounts of electricity for something that is not providing much in terms of real value. But I also try not to overstate it too much in my own criticisms. When I focus too much on the environmental things, people would just say, "Well, OK, how can we fix the environmental side of it?" And then keep all the rest.

"I found the technology to be overstated."

Molly White

DER SPIEGEL: How did the crypto discourse become so fierce? It almost feels like a battlefield, and you have to position yourself.

White: Crypto started very politically. If you look at the origins of Bitcoin, it's very libertarian, basically individual freedom over all else. Not everyone who's involved with crypto is a libertarian or on the right wing, but that's where the technology came from.

DER SPIEGEL: Is it equally easy to put all the opponents of crypto into a certain corner to describe them?

White: A lot of cryptoskeptics do tend to be somewhat leftist.

DER SPIEGEL: Do you remember when you first heard about Bitcoin?

White: I think I was in college, maybe in 2013. I became aware of it through my exposure to Wikipedians, the free software movement and anti-surveillance advocates. And I thought the idea that people could send money without any surveillance to support dissidents or activists was interesting. But I wasn't looking to speculate with the little money I had back then.

DER SPIEGEL: So, you didn't see it as something that could potentially change the world?

White: No, I found the technology to be overstated. In reality, blockchains don't work very well for a lot of the purposes that people are trying to use them for. They are more like solutions looking for a problem.

DER SPIEGEL: You’re a very active Wikipedia editor, with more than 100,000 edits.

White: Yeah, I started editing Wikipedia when I was 13.

DER SPIEGEL: That's pretty young. Were you a super nerd in school?

White: Definitely a bit nerdy.

DER SPIEGEL: The crypto ecosystem is mostly populated by men. Why?

White: There tends to be a fairly strong gender divide in the whole tech industry. So, it's not super surprising to me that a lot of the people who initially went for crypto were male. But the ecosystem has developed this culture, especially in more recent years, of very strong toxicity, and there's a lot of misogyny. So, women wonder why they should get involved with that.

DER SPIEGEL: As a young woman, criticizing the space, do you find yourself getting a lot of hate mail?

White: I definitely get a fair bit of hate mail as a result of it. But it mostly tends to come from my longer form criticism. I don't get a ton of heat specifically for the Web3 is going just great project. It's usually just unpleasant Twitter comments or messages, nothing super extreme, as far as death threats or anything like that.

"I definitely get a fair bit of hate mail."

Molly White

DER SPIEGEL: How do you protect yourself?

White: I usually just block the person and move on. But I take a lot of precautions around my own privacy as far as where I live. But I've been doing that for a very long time because I get some harassment as a result of my work with Wikipedia as well. So, I've been used to it.

DER SPIEGEL: Do you think the way people interact with you would be different if you were a man?

White: Probably. I get a lot of people who assume that I'm not very technical, that I don't have a computer science degree. They say things like, "Oh, she's just the diversity hire, she can't actually write code," which is irritating, but unsurprising from communities that have a lot of misogynists to begin with.

DER SPIEGEL: Would you consider yourself to be more of an optimist or a pessimist?

White: Probably an optimist.

DER SPIEGEL: So, let’s try some optimism: Are we possibly simply witnessing something like growing pains with web3?

White: I don't necessarily see that. The technology has had a while to incubate and to work out its growing pains and by and large has not been successful in doing so.

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