Crypto: A Predatory Community

By Molly White

Ms. White is a nationally recognized expert on crypto frequently interviewed by national news outlets.

There is nothing crypto needs more right now than more people.

Crypto, when it comes down to it, relies on greater fools. As assets without any intrinsic value, the way to make money from crypto is to find a greater fool who will buy your assets from you at a higher price. Some crypto projects are very open about the fact that they rely on new people constantly coming in to their ecosystem: game developer Sky Mavis admitted that the in-game economy of their once-popular blockchain game Axie Infinity was “dependent on growth and new entrants”.17 Other crypto projects have been exposed as literal Ponzi or pyramid schemes, only able to pay out those who bought in early from the income gained through a steady stream of newcomers.

As crypto has begun to exhaust its existing sources of greater fools, we’ve seen new strategies to reach broader audiences. Advertisements for cryptocurrencies began appearing in the London Tube system and on the sides of buses. NFTs were plastered on billboards in Times Square. Crypto companies began renaming sports stadiums after themselves, or entering into sponsorship deals with NASCAR drivers and baseball teams. Matt Damon told viewers of Saturday Night Football that “fortune favors the brave”, and prime ad real estate at the Super Bowl showed celebrities including LeBron James, Larry David, and Kyle Lowry urging people to buy crypto.

But there’s limited value in someone downloading Coinbase from the bouncing QR code at the Super Bowl, getting their free $15 in Bitcoin, and not touching it again. The holy grail for a crypto project is when they can get someone to join in their community.

This exalted sense of “community” is often trotted out as an example of all the good that crypto is apparently doing. Some starry-eyed individuals talk about how the lifelong friends they’ve made along the way have made everything worthwhile, regardless of whether they’ve gained or lost money. But “community” serves darker goals, whether by design or not.

As Bennett Tomlin put it, “The sense of community and the sense of belonging becomes an important part of the narrative because once you are a Bitcoin maxi, once you’re a LUNAtic, once you’re a LINK Marine, once you’re part of the XRP Army, once you’ve tied your identity in some way to one of these groups, coins, or whatever, it becomes that much harder for you to part and to remove that part of your identity.”18

Communities encourage each other to have “diamond hands” and “HODL” (a term that has since been backronymed into “hold on for dear life”) whenever prices drop, even at huge financial risk. Some lionize the “Dogecoin Millionaire”, who “diamond handed” beyond all reason, keeping his massive holdings of Dogecoin far beyond their peak value of over $2 million and still holding now that they’re worth around $325,000.19 Crypto communities ostracize people who sell off their crypto as “paper hands” and “ngmi” (“not gonna make it”). True believers in various NFT projects encourage one another to “sweep the floor” if interest wanes (buy more NFTs—specifically those listed for the lowest prices), and coiners tell one another to “buy the dip!”

All of this behavior is enormously advantageous for those behind the projects, who benefit when holders keep on holding and when people buy more. Crypto projects in general depend on people believing their tokens have value, and community behaviors that reinforce this are essential.

So, crypto has a problem. “Community” is a huge part of what keeps the faith alive, and crypto more than anything relies on faith.

This is part of a blog that originally appeared at: https://blog.mollywhite.net/predatory-community/