Stories are powerful. In fact, they’re so powerful we’re collectively asking ourselves if story itself just might be the ultimate power. I was reminded, once again, of this profound question by the incomparable Bloomberg columnist Matt Levine.
Levine wrote an entire Bloomberg issue, cover to cover, on “The Crypto Story.”
It’s a fascinating, important, and long read that I highly recommend. On the whole, I’d characterize it as cautiously optimistic that crypto really does have something to offer our world, but there’s a single sentence that has been eating away at me ever since I read it:
You’d feel like a chump reading poetry, wouldn’t you?
What Levine is referring to is the problem that, “every web3 project is simultaneously a Ponzi.”
Imagine a bookstore where every book has a “readers are owners” NFT attached to it. If you buy the book, you get some skin in the game. If you’re an early buyer of a book that becomes very popular, it might be worth something. Imagine if you’d been an early owner of the first Harry Potter book. You’d be rich!
You’d feel like a chump reading poetry, wouldn’t you?
Levine mentions an unsettling blog post entitled In Praise of Ponzis by Dror Poleg where Poleg says things like, “the message is the message,” and predicts that pyramid/Ponzi schemes will be “the dominant marketing method of the next decade and beyond.” According to Poleg, in the new world we no longer sell things; it’s the content itself that is bought and sold.
But today, content is not used to sell anything beyond itself. Everything is content, including your actions and behaviors. Why give them away for free?
Poleg goes on to advise his readers to, “Join a pyramid. It’s not a bubble until it bursts.”
At one level, I can sympathize with Poleg. Frankly, I think that the abuse of narrative has been going on at an institutional level for a very long time now – all the way back to the beginnings of mass media and the propaganda “science” of Edward Bernays.
I touched on this topic last time as we explored themes of lying in the marketing of technology companies. It’s not unreasonable to understand the appeal of a web3 world where the little guy gets a slice of the all-American propaganda/pyramid pie. Power to the people!
Seth Godin wrote a popular book on marketing whose title speaks volumes:
In the description of the book, Godin cautions against the abuse of story selling. “If your stories are inauthentic, you cross the line from fib to fraud. Marketers fail when they are selfish.”
Was Sam Bankman-Fried fibbing this week when he posted this (now deleted) tweet or was it fraud?
On a smaller scale, I spent some time with my mom and her financial advisor this past week. My mom’s supposedly “low-risk diversified portfolio” has fallen 20% this year – about the exact same amount as the S&P 500. So much for diversification.
That’s about all the risk my mom can afford to take at this point in her financial life. Yet, when we spoke with her financial advisor, all we got was: “Markets typically go up a lot after they’ve come down this far. I really don’t think you want to miss out on what’s inevitably coming.”
Nothing was asked about what’s happening in my mom’s life and what risk she could afford to take. Nothing was said about the fact that markets could certainly fall farther than they have, even though they’re down a lot already.
Was it a fib? Was it fraud? Is a story-selling fib an acceptable standard of exchange? Do we want to create a world where we’re all just selling stories (aka memes)? How did story selling already reach such epidemic proportions? Is there an alternative?
These aren’t easy questions, and frankly, they’re not even new questions.
One of my favorite songs from days gone by is The Chamber of 32 Doors by Genesis in the Peter Gabriel and Phil Collins era. The song describes a person trying to decide, along with hundreds of other people, which door to go through that “doesn’t lead me back again.” Check out the lyrics here (and scroll down the page if you want to have a listen). I think it will sound familiar. It’s poetry!
While I don’t think we’re dealing with new questions, I do think that these very old questions have become more acute as we contemplate a meme-based digital economy versus our older things-based analog economy.
I’ve got some ideas about what I think will help mitigate some of the more existential risks of a digital economy. More on those next time.
In the meantime, I’d love to hear if you see similar risks as I do and if you have ideas about how we can reduce our risk and maximize our reward. If, on the other hand, you think that poetry is out and pyramids are the future, I’d love to hear about that too.
Fight the noise,
Dr. Richard Smith
P.S. For a limited time, you can sign up to use my new Finiac app for free! We just received our first round of seed funding. It won’t be free for much longer. Don’t miss this opportunity to be in the first group of beta testers.
When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
John Maynard Keynes, Pioneering Economist
The song you've mentioned kinda rhymes with the theme from
"Mirrors on the ceiling
The pink champagne on ice
And she said, 'We are all just prisoners here
Of our own device"
The mentioned song kinda rhymes with
"Mirrors on the ceiling
The pink champagne on ice
And she said, 'We are all just prisoners here
Of our own device"