So the Kickstarter site has made An Announcement, and the reaction from the creative community has been, uh…bad.
Just look at that ratio. Whoo boy.
Listen, I fully expect their plans to get some revision. But it brings home a broader point that Blockchain Stuff In General is getting more interest outside the crypto-insider community.
Which means Comics Fans In General should try to have some informed opinions about them, you know?
As a casual rubbernecker of crypto-community scandals, I’ve been picking up that information for a while now. Mostly in random chunks, based on what’s relevant to the latest scam.
For those of you who are not thirsty benches that live for drama, I’m going to try to organize the useful parts into a single post, which you can read and digest in one sitting.
(There will be lots of links. Reading all of those might take longer.)
“WTF is this blockchain stuff? I know Bitcoin is a thing that exists, but that’s about it.”
Full disclosure, I had the Wikipedia article on blockchain open as I typed this, just to make sure I kept all the terms straight:
Blockchain is the technology that Bitcoin and other cryptocurrencies run on. Also other stuff, but the crypto market is the most famous thing it’s used for.
At heart, it’s just a list of records (“blocks”). In cryptocurrency, these are mostly records of “Person A transferred X amount of Currency Y to Person B.”
The records are linked into a “chain” because each individual record includes information about the record before it.
So you can’t sneak in a new/altered block somewhere in the middle, because it won’t fit the information in the block that’s supposed to come after it. The system can tell it’s not a valid part of the chain.
Before all this, the problem with “digital currencies” was, what stops you from getting infinite amounts of it? If I have a JPG, I can email it to you (or as many other people as I want) and it’s still on my hard drive. If my account has 1 e-dollar, what’s to stop me from e-depositing it to your account, while still having 1 e-dollar in my own?
With a cryptocurrency, you can’t have a “this token stays in my account” block and a “this token goes to your account” block on the same chain. The next block will only accept one of them.
“I keep hearing that all this uses, like, apocalyptic amounts of energy. How is that supposed to work?”
Short answer: very badly.
Long answer: For a currency to have any useful value, the amount and production has to be limited somehow.
(Which makes sense, right? If we tried to pay people in leaves, nobody would go to work for 15 leaves an hour, not when they could go for a hike and pick 15 leaves off the trees in 15 seconds.)
(Either that, or we would do what Douglas Adams saw coming 40+ years ago and embark on a massive campaign to effectively re-value the leaf, by…burning down all the forests. Just a fun bit of satire from a comedy series that has no prescient relevance to the real world, I’m sure.)
For most of human history, the favorite way to handle currency was by using precious metals – gold, silver, copper – because the limiting factor is “this material is physically difficult to dig out of the ground.”
With US dollars, the limit is part “bills are printed with complicated techniques that you need special equipment to pull off” and part “it’s illegal to for anyone except the government to print new dollars, and we will take you to jail if we catch you at it.”
With cryptocurrency, it’s all digital, so there’s no naturally-rare mineral involved. And there’s no Bitcoin Police to control how people create it. That control, an artificial limit, has to be built directly into the base code.
I’m not any kind of expert in the technical details here, so please nobody get too picky about it…but the general idea is, the blockchain will only spit out a new Bitcoin in response to a computer running calculations (“mining”). And it spits them out at a fixed rate.
If I have the only computer mining today: I get 100% of today’s coins.
If there are 5 computers mining today, and I have one: I get 20% of the coins.
If I buy more computers, so now I have 5 computers all for myself, but there are 5 other computers mining today: I get 50% of the coins.
This is way more expensive — 5x the hardware for only half the output — but if other people are willing to pay real money for the coins once they’re mined? It makes sense for me to buy more. And for every miner, it makes sense to buy more to keep up.
More computers. More high-quality graphics cards and computer chips, so they can process faster. More energy on your electric bill. Enough computers that you buy a whole warehouse just to hold them. Storage rental costs of the warehouse. Internet hookup to keep the warehouse in touch with the blockchain. Electric bill just for the warehouse. Air-conditioning to keep this poor warehouse from melting.
I guarantee the warehouse you’re currently picturing is not big enough.
When the exchange rate for Bitcoin is at $10,000, that implies “the cost of the equipment, maintenance, and power bills to mint 1 Bitcoin is now so high that people would rather pay $10,000 cash than deal with it.”
This is a little oversimplified — there’s a lot of gambling and speculation involved — but you can see the general connection. Nobody would pay anywhere near $10,000 for a coin when the production cost was around $10.
There’s literally a global computer-chip shortage right now, driven by cryptocurrency mining. Defunct power plants are being reactivated just to meet the demand — not renewable power plants, either. This Arctic lake is being turned into a bathtub by the mining operation on its shore.
“Okay, that’s clearly monstrous — but I heard the environmental issues were getting solved? Or going to be solved soon?”
My days of regularly sharing this link are coming to a middle:
That focuses on NFTs specifically (more on those later), but the problems are baked in to the general How Blockchains Work.
Sometimes you’ll hear that a currency is running on a “proof of work” system (the one described above), but is going to switch to a “proof of stake” system, which is much less energy-intensive. Don’t believe it until you see it.
Consider the case of Ethereum:
- How bad is the Proof of Work energy usage? “A single Ethereum transaction used as much energy as the average American household uses over 2.78 days. The carbon footprint of each Ethereum transaction is equivalent to watching 6,505 hours of YouTube or conducting 86,504 VISA transactions.”
- May 2021 article claiming a switch to Proof of Stake would happen “in the upcoming months”
- February 2020 article claiming it would happen by December 2020
- January 2019 article saying it was planned by the end of 2019
- Article saying it’s “finally starting to come to fruition” from November 2015
- That’s 6 years and counting of “but don’t worry about the energy costs, we’re right on the verge of switching to PoS, totally prepared to do it, any day now”
Sometimes you’ll hear that a currency is already on PoS, so, wonderful, it’s better for the environment than PoW! Still worse than…uh, basically anything else.
Sometimes you’ll hear that a blockchain is “carbon-neutral”, or even “carbon-negative”, because they burn lots of fuel but they also plant trees. Don’t get too excited about that, either:
“[Carbon offsets] – some sold through respected environmental organizations – come with almost no rules: There is little regulatory oversight of them in the US, no enforcement of requirements to prove their environmental claims, no certain way of measuring the carbon savings being sold, and no guarantees that planted trees or other projects will be finished or continued long enough to work.”
“If it’s all so expensive and terrible, why does anyone do it? What’s the advantage?”
…a lot of it is hype.
Some winner makes the news by raking in millions in something crypto-related. (It doesn’t even matter what.) Scores of outside observers get convinced they’re gonna be the next winner. And instead, they end up joining the previous million people who lost their shirts betting money they couldn’t afford to lose.
The one real, valuable feature at the core of it is “you can’t spend the same Bitcoin twice.”
This isn’t usually a problem with traditional currency…but not because it’s technically impossible!
Sure, your bank has a bunch of hard-to-counterfeit physical dollars in a vault — but it doesn’t cover the balance of every account, and they don’t move around physical bills when you make a transfer. Those numbers are just a database on the bank’s servers. They could go in and edit the amount in your account to be higher, without transferring it from anywhere at all.
Same with your stock portfolio, your PayPal account, your credit-card balance, and so on.
The reason they don’t — at least, not on purpose — is part “we need to prove we’re trustworthy, or consumers will go to our competitors instead” and part “it’s super illegal and the government would come after us for trying.”
(Sometimes it happens by accident! Milky Moore racked up over a million dollars from a bank-transfer glitch. Dan Saunders did the same with an ATM database glitch.)
Because Bitcoin consists entirely of interlinked blockchain records, this isn’t a problem in the first place. You can’t add more Bitcoin to your account without a valid record of it being transferred from somewhere. Not on purpose. Not by accident. Not at all.
If your choices are “blockchain wallet” vs. “PayPal wallet” or “US bank”…to be honest, it’s not much of a difference. PayPal has earned enough trust that you’re not actually worried about this. FDIC insurance, even more so.
But if your only options are non-trustworthy services? Say, if the good ones don’t operate in your country. Or they banned you because you’re dealing in narcotics/steroids/stolen goods/sexual services/firearms/ponzi schemes?
Then yeah, it’s nice to have a service available that you don’t need to trust.
“So are we saying ‘we don’t need to trust the service’ because anything hosted on a blockchain is totally secure and unhackable?”
…okay, quick sidebar here: you don’t need to have a blockchain in order to say you have a blockchain. OneCoin raked in billions of dollars from people who thought they were buying a hot new cryptocurrency. They were…not. (Have a charming podcast episode about it.)
But for now, let’s go with the premise that you’ve gotten involved with a real blockchain.
Here are the security problems you haven’t escaped:
First: blockchains still have the one huge, unfixable vulnerability of every single system:
I don’t need to be a high-tech hacker to steal your Bitcoin. I don’t need accomplish the physically-impossible feat of “corrupting the chain with invalid blocks.” All I need to do is talk you into giving up your password.
(Podcast interview with a professional no-tech people-hacker, if you want some entertaining case studies. Transcript included.)
Then I log onto your account, change the password, and do whatever the heck I want with your Bitcoin directly! Creating totally-valid blocks the whole time.
A few of the greatest hits:
- The accounts of a Taiwan antiques dealer were hacked in September 2021, and the hacker made off with the cryptocurrency equivalent of US$3.1 million
- The main account of the Tether stablecoin was hacked in November 2017, and the hacker walked off with more than US$30 million
- Cryptocurrency exchange BitMart admitted to being hacked on December 4, 2021. From the users’ collective accounts, somebody grabbed the crypto equivalent of almost US$200 million
Look, hacking happens. My credit card details got stolen a few years ago. The thieves spent a few weeks using it to order takeout and buy Uber rides — not because they didn’t want to clean me out completely, but because Visa would’ve flagged it as suspicious if they tried.
Eventually they got flagged anyway (for a too-large takeout order). Visa called me to go over my recent charges, I ID’d all the fraudulent transactions, and got all my money back.
This works because Visa is a centralized company. They’re accountable for protecting users from theft like this. It’s in the TOS of their products.
If your Bitcoin gets stolen…nobody is accountable. There’s no central authority. Nobody has the power to reverse the charges and force the Bitcoin back into your account.
Not all cryptocurrencies are actually that decentralized. Tether, from that link above, is administrated by a single company. Back in 2017, the company was able to push an update to their code that threw a wrench in the $30-million hack.
But the $200-million theft from last week? (Across a whole bunch of currencies — as far as I can tell, about half was in Ethereum, about half was across this spread of lesser-known tokens.)
Second: anti-scam regulations have not caught up with cryptocurrencies.
Look, I’m not going to sit here and tell you that every government is fiscally responsible, or every regulation is fair, or every law is made with the public good in mind.
But there are some actions that are definitely fraud. Points where the government should be stepping in, to protect the little guy from getting screwed over. And when you’re talking about traditional financial instruments — stocks, bonds, loans, mortgages, bank accounts — the law covers a lot of them.
With crypto? People can do things that would be 100% illegal with any other currency, and then skate away with millions, never getting arrested for fraud.
- Save The Kids Token: promoted as having special code that would prevent huge sell-offs from tanking the price, changed the code at the last minute, huge sell-offs immediately tanked the price
- Squid Token: hyped as skyrocketing in value, but the code didn’t let anyone sell it at all, meaning nobody could withdraw any of that “value” to actually use it anywhere
- OpenSea: promoted as a reputable NFT exchange, one of the staff was happily arranging it so the promoted “hottest NFTs worth spending the most money on” were the ones he owned
- Quadriga: promoted as a reputable Bitcoin exchange, the founder had a long history of scams, a ton of money was left inaccessible when he died under mysterious circumstances
- The “$500 million NFT sale”: shows up on look-how-much-people-pay-for-these lists, turned out to be between two wallets owned by the same guy
- Bitconnect: promoted as a cryptocurrency investment that gave great returns, was a regular old-fashioned Ponzi scheme the whole time
- Defi100: promoted as a crypto investment something something, anonymous developer walked away with $32 million leaving nothing but the all-caps announcement “WE SCAMMED YOU”
…have I mentioned I like rubbernecking crypto drama?
Third: a blockchain only guarantees the validity of the data on the blockchain.
Imagine for a moment that you own a restaurant. A nice one — clean, fresh, good food, no pests. You even keep a framed certificate from the Department of Health on the wall, testifying that you have no health code violations.
You go to the restaurant across the street and say “how much would you give me for this certificate?”
And you agree on a price, and you give the owner the piece of paper (they can even keep the frame), and they hang it up in their restaurant. Which is grubby and dusty and half the food is expired and there are critters living in the cupboards.
They have the certificate! They made a valid purchase, real money was exchanged, they are the legitimate owners of the certificate!
But the value is not in the certificate. The value is in things like “your chefs all wear gloves” and “you don’t put expired milk in your pizza dough.”
…which means, since you’re not selling the valuable thing in the first place, you might as well skip the Department of Health certification completely. Just print some certificates at home, based on no authentication whatsoever, and try to convince restaurant owners to buy those.
A guy in the late 19th century famously did this — hundreds of times! — with “deeds of ownership to the Brooklyn Bridge.” Which is where we get the phrase “if you believe that, I’ve got a bridge to sell you.”
When people talk about Great Potential Uses For Blockchains, a lot of them are like this.
They’ll say “what if this warehouse turned their inventory into blockchain records? Then, to confirm you shipped a couch from one warehouse to the next, you can transfer the Couch Token on the blockchain from Warehouse 1 to Warehouse 2!”
Yep. Good job. The blockchain can prove that you definitely, legitimately, with immutable security, transferred the Couch Token.
This does not prove a single thing about where the couch is.
Maybe you really did ship it to Warehouse 2. Maybe you left it in Warehouse 1. Maybe you put it on a truck bound for Warehouse 86! Maybe you dragged it home and set it up in your living room.
The blockchain has no idea what you did with the the Actual Source Of Value in this scenario. All it knows is what you did with the token.
“Okay, so…what if there’s nothing physical involved? What if you’re just trading digital goods? Wouldn’t a blockchain be secure for that?”
If the digital goods are tokens: yes.
If the digital goods are literally anything else and they’re only represented by the tokens: no.
“Is this where we get to talk about NFTs?”
“NFT” stands for “non-fungible token.” People have posted all kinds of wild metaphors and analogies trying to explain them, which tend to accurately convey how absurd they are…but don’t clear up much about what they are.
So it’s a cryptocurrency token, where the ID of the token contains a link to a URL, where some file or data is uploaded. This token isn’t “fungible” (interchangeable with other tokens of the same currency) because no other token in that currency will have the ID with the link to that specific URL.
The token is, therefore, supposed to represent whatever file is uploaded at the matching URL.
So it’s Couch Token all over again, but with a JPG of a couch.
The file isn’t on the blockchain. The file, the JPG or whatever else, is uploaded to a good old-fashioned Web 1.0 URL.
You don’t own the only copy of the file. You don’t have any special legal rights to the file. The site doesn’t have any security that queries the blockchain and blocks you from accessing the file unless you have the token. It doesn’t have any confirmation that the person who created the token had any rights to the file when they uploaded it.
There’s no limit to how many times the same file can be uploaded to different URLs, which can each be attached to a different token. No limit to how many times the same URL can be attached to new tokens in different cryptocurrencies.
You don’t own the server where the file is hosted. You have no guarantee the URL will keep linking to the same file! Maybe the creator will replace it with a different file (this artist, in a stroke of genius, replaced all their artwork — after the tokens had been sold! — with photos of rugs). Maybe the whole site will go down, and the URL will be a 404 error from then on.
But hey, you still own the token.
These convey exactly as much ownership, rights, and control over the image as the blockchain tokens do. That is, none. All you get is a unique spot on a Google spreadsheet. But it’s a unique spot on a spreadsheet. What more could you want?
There’s no cryptocurrency involved, so there’s no cryptographic guarantee that Gumroad will take real dollars from you and send real dollars to me. But I’m willing to take the risk.
(Apparently the original concept for NFTs was “let’s try to encode the actual data of a file directly into a blockchain record.” But, well, records are short and files are large. The creators hacked together a substitute with nice short URLs just to see if something worked, and they’re baffled that anyone takes it so seriously.)
…In all seriousness, it’s not exactly a surprise that most “art” found in the NFT space has turned out to be hacky, ugly, mass-produced dollmaker sprites.
Artists, and/or people who buy art because they care about it, realize the value is in the creative talent and work that went into the image. In the interest and joy you get out of looking at the image. None of that is increased by “also, I have a token whose ID has a link to a URL where the image was at one point uploaded.”
The people left to trade in NFTs are the people who can be convinced “the value is in the token itself, none of that other stuff matters.”
Got to buy that collectible Couch Token! Is the couch any good for actually, you know, sitting on? Who cares. It’s not about the couch.
Got to buy that Brooklyn Bridge Token. Not even because anyone said “this gives you the power to set up a toll booth at the real Brooklyn Bridge and make lots of money off drivers.” No, they just said “this gives you the power to re-sell the token.”
“Okay, so NFTs don’t query the blockchain to give you access. But what if you had a site that did? Or, ooh, multiple sites that queried the blockchain — and you used that to securely transfer data/permissions between them! That would make websites more interoperable, right?”
The last person who asked me this, their suggested use case was:
“What if one of your Kickstarter reward tiers included a token, and then Discord queried the blockchain to confirm who had that token, and those users got exclusive Discord access?”
What if I told you…you don’t need a blockchain to do that?
Right now, here, on regular old Web 2.0, your Patreon account will connect directly with your Discord account. If you’re in a Patreon support tier that includes Discord access, Patreon will send that information to Discord, and Discord will give you the access. Simple. Easy. Done.
If Kickstarter wanted to let your backers’ accounts link to Discord — they could already do it.
If they wanted to link to Gumroad and Redbubble and itch.io so you could give your backers direct access to tier-specific coupons, they could. If they wanted to launch a Wordpress integration that let me post Kickstarter-backer-exclusive content on my own independent website, they could!
It doesn’t get easier if you put a blockchain in the middle. It doesn’t suddenly require less coding, or less negotiation, or less discussion and agreement between the various sites involved.
It also doesn’t get faster. Or more secure! There’s not actually a problem with fraudulent data getting passed between Patreon and Discord, here.
(And think about it. What kind of problem would they have that a blockchain could solve? If Patreon is sending couch invoices to Discord without shipping a couch, adding a blockchain just means now they’re sending CouchTokens to Discord. It still doesn’t force them to ship the couch.)
Decentralized, interoperable, open-source, multi-website standards already exist. OpenID, which gives you a single account sign-in that works across every participating website, has been around for more than 15 years.
The tech is already here.
The limiting factor is people.
The reason this isn’t already on every website is that the people who run these websites, as a group, cannot get together and say “yes, here’s a universal standard that all of us like and will agree to use.”
People, do you realize — there isn’t even one standardized version of Bitcoin that’s interoperable with all the other forks of Bitcoin.
If one single solitary blockchain currency can’t agree on its own standard — how do you think blockchain will miraculously produce a perfect universal standard for every website/app/game/platform in the world?
“…is this a bad time to ask what the Metaverse is?”
Nah, this is the perfect time.
“The metaverse” is a term from the 1992 cyberpunk novel Snow Crash, by Neal Stephenson. In the book, it was an immersive VR setting that you explored by wearing a VR headset. Also, it was accessed through your television network, because in the early ’90s even sci-fi writers hadn’t guessed what the internet would really be like.
It was the direct inspiration for Active Worlds, an online virtual world launched in 1995 and still accessible today. (Creepily abandoned, but you can log in and walk around.) In the decades since then, countless other video games and/or sci-fi series have used the same idea. You can probably think of a dozen just off the top of your head.
The way “the metaverse” is being used in gaming spaces in the 2020s, it seems to mean something like this:
Phase 1: ALL the video games — and website and apps and so on, but it seems like it’s mostly video games — link together with a perfect universal standard, involving blockchains and NFTs somehow probably
Phase 2: ????
Phase 3: we all live in Ready Player One now
(Substitute the Matrix, or the Futurama internet, or Sword Art Online, or…)
Last place I encountered the phrase was this deep-dive series into “Earth 2” (video playlist, unfortunately it’s in reverse chrono order, so it won’t make sense if you just let it autoplay).
Some sellers created an Earth-shaped digital setting, and convinced their customers it was destined to be the foundation of The Metaverse. So if you signed up and bought, let’s say, the Earth 2 Brooklyn Bridge, you’d be able to set up cryptocurrency tollbooths for everyone who wanted to cross the metaverse Brooklyn Bridge.
Note that, as of right now, you can’t build tollbooths on your Earth 2 property. Other people can’t drop in their avatars to walk around, either. It’s not an environment with actual gameplay, where you can build stuff or fight stuff or interact with the environment — it’s not Minecraft or Warcraft or Animal Crossing — it hasn’t even reached the level that Active Worlds was offering 30 years ago.
So….when are those features going to be added? When is Earth 2 going to be integrated with other sites and games and settings? Frankly, why should we believe these developers have the skill or interest to code any of that in the first place?
And if they did ever pull it off — why would users want to pay to interact with your Brooklyn Bridge, instead of making a proprietary VR setting they control, complete with their very own Brooklyn Bridge?
…I’m pretty sure anyone saying “the metaverse!”, for any project, doesn’t want you asking those questions. They want you to be dazzled by how shiny and cool the idea of The Metaverse is, not looking at the boring nitty-gritty details of whether any given shiny thing is, you know…possible.
The medium isn’t one I work in, but the principle of “this creative work took a lot of talent and effort to put together, and you’ve got to stop taking that for granted, you need to appreciate or understand what’s actually functional and/or joyful about this” is universal.
“Okay, let’s bring this back to Kickstarter. Are blockchains being used in crowdfunding at all? Are they any good for it?”
Ohhhh, have I got a story to tell you.
In November 2021, a group called ConstitutionDAO did a blockchain-based crowdfunding project, raising cryptocurrency (specifically, Ethereum) to buy a copy of the US Constitution. Not a token or a link, this time — a real, physical object! The crypto was just the currency they would buy it with.
Not sure where was it going to go, once the crowd collectively owned it. On the wall of the organizer’s restaurant? In a museum, with a plaque saying “generously loaned for display by the blockchain”? Passed around to each person’s house for a week like the Stanley Cup?
Well, the question didn’t come up, because they didn’t make their goal.
Unlike with Kickstarter, the setup wasn’t “first we collect pledges, and if we have enough pledged money by our stated deadline, then we start charging everyone’s accounts.” You just sent the Ethereum directly to the central wallet, and hoped the organizers didn’t just cash out and run off to Bermuda.
Fortunately, it looks like they did not cash out and run to Bermuda! They are sending refunds. Or doing their best to. This was a legitimate crowdfunding operation.
“All the contributions were made over Ethereum, and Ethereum requires fees — often steep ones — to transmit currency (along with performing many other tasks). That was already a hurdle when it came to raising funds to buy the Constitution. These fees, known as gas, don’t meaningfully shrink when someone is sending a small amount of Ether, so small-dollar donors often had to pay large sums just to send their contribution in the first place, according to Alex Kroeger, an engineer in the crypto space. To send around $170 worth of Ether to the project, he had to spend around $50 in fees.”
Read those numbers again.
That’s non-scam blockchain crowdfunding.
Payment processing fees are a thing everywhere, but in most cases, they’re proportional. On Kickstarter, between “Kickstarter itself taking a cut to host the project” and “Paypal/Stripe/etc taking a cut to transfer the money,” the easy rule is to expect 10% of your funding to get eaten by initial fees.
On my last Kickstarter (for Leif & Thorn Volume 4), I raised $4598, and the amount transferred to my bank was $4211. That means about $387 went to fees. Not bad.
Now imagine if every pledge cost $50 in gas fees to transfer.
I had 100 backers. That’s $5,000. If the gas fees are coming out of the funding, now I have no funding.
If the gas fees are added to the pledges, that means someone who pledged $5 to get a PDF, now they’re charged $55.
This is horrible for the backer. It’s horrible for the planet. It’s horrible for me, because I still get less than $5 in the end, and now I get fewer people who are willing to back in the first place.
I mean, come on, I have plenty of readers outside the US who don’t back on Kickstarter because they can’t afford extra $50 for international shipping. And that “gas fee” powers a real airplane, to carry a physical box, over the real ocean! Even the ones who can afford an extra $50, if it’s all going to Digital Currency Transfer fees — who’s going to think that’s a fair deal?
The dollars Kickstarter transfers to your bank are real, valid dollars. There are plenty of risk factors and untrustworthy parties involved in crowdfunding, but blockchains will not solve any of that, because “what if the digital balance that ends up in your bank is fake?” is not the problem.
Here’s another case that someone tried to tell me would be a great use of blockchain:
Right now, if your Kickstarter backers like your project, they can give you a smiley-face rating. I have a “Backer Favorite” badge on my Kickstarter profile from collecting a bunch of those. (Not to brag, or anything.)
What if you turned those into Smiley Tokens?
Now, instead of clicking a free smiley-face button, the backer has to mine or purchase a Smiley Token for their blockchain wallet. And then pay the gas fees to transfer it into my blockchain wallet. And then I can convert my Smiley Tokens into value somewhere else — say, I cash out, sell them for USD — and now some other Kickstarter creator, who maybe hasn’t done anything to earn smiley-face ratings from their backers, gets to hang my Health Code certificate on the wall of their dirty restaurant.
…I mean, uh, put a Backer Favorite badge on their Kickstarter account, with all my Smiley Tokens they just bought.
“Okay, uh. Is Kickstarter actually proposing to do that? Or…to deal in NFTs? Or accept cryptocurrency? Or make their own cryptocurrency? What exactly is this blockchain-related thing Kickstarter says they’re getting into?”
It’s not totally clear.
Their announcement post is a lot of buzzwords.
Creators should “have more robust tools to assess the trustworthiness and viability of a project,” they declare, even though blockchains do nothing to guarantee whether a project is trustworthy or viable. (Evolved Apes, Meerkat Finance, Zeonis, NiftyMoji, Wall Street Market, Compounder Finance, Iconics, etc etc etc…)
It should be “possible for people to launch and fund creative projects anywhere, whether it’s on Kickstarter.com or someplace else on the web,” they say, even though it already is! Before Kickstarter, every crowdfunding project was decentralized. Webcomic creators would take their own independent website, put up a Paypal donation button, make a little thermometer graphic that they manually updated as it got closer to the goal, and shill like crazy.
This wasn’t great. Creators who used to do that have switched over to Kickstarter. I’ve never heard of a single person who went back.
Kickstarter works because it’s a centralized authority. It reviews projects before they go live. Can charge a creator’s card for refunds. It’s far from perfect or scam-proof, but it’s put in the time and effort to build up a base level of trustworthiness, and that’s a huge part of why backers are willing to use it.
They’re talking about the Internet protocol set (TCP/IP). The other one I’ve used the most is FTP. If your website URL starts with https://, you’re using a combination of HTTP (the communication protocol for websites) over TLS (the protocol that encrypts it for extra security).
Kickstarter runs on HTTPS. Every crowdfunding site from Patreon to IndieGoGo to Unbound to DonorsChoose runs on HTTPS. (Every website you visit today, have a look and count how many aren’t using HTTPS.)
All of them are, as far as I know, doing just fine. And no wonder. HTTPS has been built up over more than 3 decades, through the time, effort, experience, and knowledge of the brightest luminaries in Internet development.
And one single company thinks in a year they’re going to whip up a personal homebrew protocol that does better?
Not only that, so much better that it’s worth ripping up their entire site and moving it? (Keep in mind, sites can easily crash and need major support just from upgrading their software to a newer version of the same software.)
None of the vague positive things brought up in the post are things that “having a blockchain” would improve.
They say they’re making it “available for collaborators, competitors, and independent contributors from all over the world to build upon, connect to, or use.” Why wait for a blockchain to do that? Kickstarter could, today, release their current code as a free/open-source web application, so anyone could install their own version.
This isn’t new. This is a staple of Web 2.0. My webcomic runs on a local installation of Wordpress. I use my own installation of Piwigo for image galleries, and my own installation of DokuWiki for a wiki. You could do your own installation of Livejournal, ffs.
Would I run my own installation of the Kickstarter code for crowdfunding?…Probably not. Again, a big part of their success isn’t the code at all, it’s the central authority and accountability of Kickstarter-the-company.
But if the company really has this principle, and it’s not just some pretty words they’re throwing around as a smokescreen for what they’re really doing with blockchain?
They can prove it. Live up to their principles. Throw the Kickstarter code on GitHub. Right now.
There’s a theory going around Twitter that maybe Kickstarter’s real goal is to circumvent some new EU regulation, by having a blockchain anonymizing where their traffic comes from, in a way HTTPS doesn’t?
Not sure if that’s true. For one thing, the regulation is supposed to apply to “crowdfunding services entailing a financial return for the investors,” such as stocks, bonds, and loans. You can’t do that on Kickstarter at all — their TOS ban you from offering financial instruments in your rewards. Backers can pledge to get a board game, they can’t pledge to get a share of your board-game company.
All I feel sure of at this point is: there’s something shady going on here that they’re not being upfront about.
And I don’t like it.
A constant refrain from crypto fans is “why don’t you actually do your research, before getting mad and dismissing this?”
The trick is — they say that no matter how much research you’ve done already. No matter how many specific, concrete, serious problems you can describe as the reason for your dismissal. No matter if you’re a technical expert who’s been working in this field for years.
They start with the conclusion “there is definitely something worthwhile here” and work backwards to “therefore, if you don’t see it, you haven’t looked enough.”
It also doesn’t require them to have any counter-evidence to say “but what if we did, tho?” ad infinitum. Any snake-oil salesman can do the same thing.
(How do you know this won’t work? Sure, the last thirty bottles I sold didn’t cure anyone, but maybe there’s a condition out there it will cure. Don’t be the sheep who takes marching orders from a “doctor” with a “pre-existing treatment” that’s “more effective” based on “multiple clinical trials”! Be the open-minded person who’s willing to keep exploring the alternatives that just happen to turn a massive profit for me. Also, stop worrying about the environmental cost, I only kill a few endangered snakes per bottle…)
A bunch of publishers — both independent creators, and heavy-hitter collectives like Hiveworks — have already announced they won’t work with Kickstarter any more, if this mysterious blockchain-protocol-integration goes through.
Are they justified? Yes. Absolutely. They’re familiar with all the same problems I’ve spent the past 6,000+ words writing about. That’s more than enough to legitimately drive anyone off. Backers and publishers alike.
For me — I don’t know. I’m not committing yet. Not out of any real expectation Kickstarter will reveal some miraculous new information that redeems everything…I’m just still willing to hold out hope, I guess.
But it sure isn’t looking good.
(Unless you’re a well-programmed but currently-low-traffic Kickstarter competitor, in which case, your prospects are looking great.)
Maybe, as the situation changes, I’ll come back and update this post with new details and reactions? Maybe I’ll just make new posts.
Guess we’ll find out.