Blain’s Morning Porridge Feb 14th 2024: Blockchain and Tokens? Will Web3 be a new way for internet tyrants to milk us dry? 

“The slave system is one of constant danger, distrust, suspicion, and watchfulness. It debases those who toil… and thus wastes energies which otherwise might be deployed in development.”

Not satisfied with the gains apparently offered by AI, Tech Tyrants are planning how to deeper enslave us through Web3 – the Internet of Value. Be careful what we wish for – we might just get it. 

But first… Happy Valentines! She-who-is-Mrs-Blain did it slightly different this morning. Who wants crap service, bad food in a busy restaurant this evening? So we caught early train to London for a lovely romantic breakfast together with a big smooch as we left. Not a bad start to the day – although it means the Porridge is late. 

And in the real world….

I don’t understand enough about digital and the internet to even guess at how much I don’t know – it will be plenty, but that doesn’t mean I should not be asking questions….

Most folk understand how the emergence of the internet and Web2 created massive wealth. They enabled the emergence of new commerce in streaming, smartphones apps, social media, and the internet as a sales vector. In a very short time monetisation strategies became increasingly sophisticated, spawned their own ecosystems, and have continued to evolve as new themes from digitisation, the Internet of Things, and now AI have seized the imagination of entrepreneurs, the markets and clever shysters.

It has not all been good. In a fantastic article in the Weekend FT by Cory Doctorow: “Enshittification” is coming for absolutely everything”, he describes how Facebook, Google and every other once hopeful, do-good internet platform quickly morphed onto the dark side of monetising the raw product – ourselves. We can now clearly see how big tech has created a whole new aspect of pernicious wealth inequality between tech overlords and we, the peons they farm.

For those who spotted the opportunity – it’s been a massive success. The internet enabled the biggest businesses on the planet to thrive and become today’s Mega Caps: Apple’s bright-shinny-tech, app market, and Steve Jobs vibe may be decades old, but it still works and sells. Nvidia may be a one-trick pony in terms of AI chip enabling, but its overtaken Amazon in market cap. Microsoft enabled the tech and computer revolution. Amazon is the leader of internet selling. Facebook and Google discovered they could sell us to advertisers and their founders become definitional evil tech billionaire villains.

And Telsa? Well, without the Internet to spread the word and build the hype, then electric vehicles would probably be a cottage industry in a quaint backwater somewhere, and we’d all be driving much better hydrogen cars by now.

These Mega7 companies now account for 30% of the value of the US Stock market, (Danger, Danger, Will Robinson, Danger), and they only touch the multiple other businesses spawned by the internet across new and disruptive tech from Fin-tec to taxis. Yada, yada… some of it even works. Some of it doesn’t. It will likely become even more unbalanced as AI, the tech markets current wet-dream of unlimited future power, influence and wealth plays out.

It’s all a bit bacchanal..

The man who created the Internet, Sir Tim Berners-Lee reckons it needs a reboot. A few years ago he said too much power is held in “silos” like Facebook and Google over our personal data – which they farm relentlessly. The regulatory backlash through new privacy laws has only spurred big data to find new ways of surveiling us, in order to continue selling us and data about us.

It’s become an arms race – the Enshittification of the what the internet might have been. AI is not set to improve that. If anything, AI will make the process even more efficient at pumping cash from consumers into the pockets of Big Tech owners.

Now we are headed into Web3.

Some tech gurus, their eyes aglaze with dreams of fantabulous wealth, are openly calling it The Internet of Value – which fills me with dread. Other tech-dreamers are hopeful it will put power back into the hands of consumers, which anyone with half-a-brain would bet against. Never in the history of business and commerce has monopoly like-power ever been surrendered by big business back to consumers.

Funnily enough, we might have the technology to do it.

In the early days of Bitcoin, well over a decade ago, I quickly decided crypto-currencies were pointless, borderline money laundering (since proved to be) and likely a scam. But I was entranced by the blockchain promise. It was perfect for… oh so many things, if I could only figure out what. I started to wonder if blockchain was just “a solution in search of a problem”. A few years ago I tried to put together a carbon-credit Blockchain concept giving surety at to exactly what the credit represented, but was told by banking tech-mega-brains to stop being so childishly naïve. They told me Blockchain is just a glorified database… wait till I saw what comes next. I still think verifiable carbon credits on a blockchain is a valid concept – feel free to disabuse me of the notion.

The thing about Blockchain is it can create a perfect record with security wrapped around it – so theoretically if an advertiser reaches you, you could trace that back and demand payment for their knowledge of you and your data. Ultimately, you could decide who can and can’t use your data and, on the basis data is only valuable if it can be withheld, you could demand paid for your data. You can take that a step further by paying participants in a physical sense to participate – for instance a US mobile company is paying users in tokens if they buy and instal 5G nodes in their homes – creating an instant network. (Thank to Will Nutting for explaining that one.)

Yet… what will that really solve?

Ask yourself a simple question: Who will garner more power: a single individual holding their own data, or a mega cap company that has bought everyone’s data? The owners of big data will exploit that data and the power it confers. There is no equilibrium between the rights of individuals and the greed of big business.

The Crypto/blockchain fraternity have long understood the way to “own” and reinforce their “expert” status in “the space” is to make it obscure with language and jargon of their own devising – using terms like verification, tokenisation, hash-rates and DePins – decentralised physical networks since you were wondering. The problem remains – understanding the opportunity.

I am often told I have no right to comment or question crypto or blockchain because I haven’t spent the 10,000 hours required to understand Solana, Ethereum, stable coins, or DeFi… really? It’s all Greek to me.. and since these guys apparently have squandered the 14 months of 24-hour constant study it would take to understand the opportunity – why can no one succinctly explain the Blockchain opportunity in terms a normal person can grasp? I suspect because everyone is basically a bull-sh*tter.

I am told the Blockchain is uncorruptible. Really? Just like the Titanic was unsinkable? Yet, the idea of being able to own your own data and be paid in tokens from participating in internet commerce is intriguing. It is going to be a massive value creator – say the Tech investment geniuses.

Unfortunately, these include the likes of ARK’s Cathie Wood (whom I increasingly suspect is as much a chancer as myself when it comes to Tech.) ARK’s Big Ideas 2024 report, (No, I did not read it all because it is just not possible to read anything so misguided, improbable and full of marketing bollchocks about so many things.. without resorting to strong drink), suggests “all money and contracts will migrate onto public blockchains that enable and verify digital scarcity and proof of ownership.” Naturally, for a woman all-in on Bitcoin, she says everyone will need a digital wallet and `Bitcoin” (which is going to $500k) to be “part of the new financial infrastructure.”

Oh dear…

Bearing in the mind the stunning successes of Binance, FTX (Sam BF will likely to be sentenced to a lifetime of mail-bag sewing later this week), and a host of others.. the prospect of some tax-haven based digital financial “institution”, holding your digital wallet largely free of regulation (which Wood cites as a positive feature of her new world) will not worry anyone at all. I’ll take the real gold option please.

Wood and other Tech mega-brains now point to The Blockchain and tokenisation as the next, new new thing in mega-tech. I have my doubts. The success of the Mega7, and the narrative that is now propelling ARM to double in value despite a modest increase in its future output, is a great illustration of how the market loves clear, simple to understand businesses.

The problem with much of the Blockchain opportunities is – as yet – nobody seems able to clearly iterate them…. and if you cant explain what something actually is.. then how are you going to sell it? More to the point – why would you buy it? Oh, because it might, just might be worth gazillions.

Web 3 – I’m already a victim and target 

I am already suffering the consequences of the Internet of Value first hand. I have become a product to be hunted by the new breed of AI companies prowling the web seeking easy wins by scaring the peons who inhabit it.

Each morning in the Porridge I use a photo or illustration to accompany the blog. In recent months I have been threatened with legal action by no less than 3 “digital-media-rights” companies for my temerity in using their clients digital images to illustrate the Porridge without a license. They are demanding penalty fees considerably higher than the Porridge makes, and unless I pay up they will seek to recover “substantial additional legal costs” in court. It’s a scare tactic not dissimilar to a SLAPP.

These firms are great example of how cruel the Internet of Value may become. We once blithely assumed the trillions upon trillions of images without attribution on the internet were free. Some images were clearly copyrighted, but most appeared on Google with no indication of ownership. It is almost impossible to determine if copyright exits. I now assume it does – hence the Porridge no longer uses non Blain photos and is trying to negotiate a licence with a photo-library.

These Digital Media Rights companies spotted a lucrative niche for themselves. Using AI they scan the trillions of images across the web to compare and match them to the catalogues of picture libraries. They then offer to pay these libraries in return for the right to collect copyright payments on their behalf. I currently have firms representing Rueters, Agence France Press and others chasing me. They are akin to mediaeval tax-farmers,

I have politely informed them I have removed any images they claim to represent, from the site. I apologise for unintentional use of the images, have noted these photos were used to illustrate timely financial news stories, and that the sums demanded will bankrupt the porridge. They have demanded my accounts and banking details. As the Porridge is not a limited company, they intend to bankrupt me instead. I have asked them to demonstrate the economic loss I have inflicted upon their clients.

I have offered them £20 per photo – a figure arrived at by assuming the photos are broadly equivalent to streamed music. (I have asked for information on what these images actually earn – I am not entitled to it apparently.) If every porridge subscriber views the photo (and they were songs), then 10k views would receive about $10. So,I am being fairly generous offering £20 for a generic picture of a grouse moor for a story about country estate values.

In one case I am being charged for a photograph of the Jarrow March by a French agency. In another, a “picture library” claims ownership of a photo of the Chernobyl nuclear power plant – which appears in multiple other site – and wants £800 for it. It turns out the “photo-library” is actually a small package-tour holiday company with nary a mention of “photo-library” on their website, nor any income derived from such business on their accounts – presumably not on their tax returns either.

When I began to question their business methods and validity, one of these Digital-Rights companies got quite abusive and threatening. I now refuse to respond to them, and will be citing their threats in court.

The dream of us all enjoying our personal data rights and sharing the wealth created through that data is most likely a pipedream. I suspect the Internet of Value will simply lead to yet more financial oppression through the medium of the internet. It’s not a war on robotic AI we should be planning – it’s a revolution and death to the Tech Tyrants we need.

Bandiera Rosa… Eat the Rich…

Out of time, up in London for the day!

Bill Blain

Strategist – Author of the Morning Porridge