- The world of crypto relies on central entities and low-paid workers, one critic says.
- The market has a “colonialist mindset” focused on planting flags and making money.
- Crypto aims to be decentralized, but the market is already becoming “recentralized.”
Crypto may not be the decentralized, equal-investment opportunity people think it is, according to some critics.
The vast crypto world — which includes blockchain-backed technologies such as digital currencies, non-fungible tokens, internet organizations, play-to-earn video games, the metaverse, and Web3 — has what researcher Catherine Flick calls a “colonialist mindset” that she says relies on central entities and low-paid workers.
“These people are kind of sailing their ships across the sea to get there first and plant their flags and make the money,” said Flick, who is a researcher at the School of Computer Science and Informatics at De Montfort University. “But at the expense of the people who do the labor, who are less likely to make the same sorts of profits and who are more likely to be exploited or not understand what they’re getting into.”
The laborers, like some artists behind collections of digital tokens called NFTs, are paid less than their fair share of the profits, she said. A Wired article once noted that the artist behind the hit Bored Ape Yacht Club collection, which features 10,000 pieces of art, said her pay was “definitely not ideal.”
Flick, who has completed research on topics like ethics in video games and technological innovation, is among a number of critics who have emerged recently to warn investors against getting caught up in the hype. Crypto critic and YouTube personality Dan Olson, whose video on NFTs scored 6 million views, called crypto a “bigger fool scam” whose ideals are “deeply destructive to the fabric of our society.”
Flick points to a glaring disconnect. One of the key tenets of crypto is that it’s “decentralized,” as in no single person, company, or government is in control. But that may just be a ruse, as “we’ve seen the recentralization of so much of the theoretically decentralized stuff,” she said.
For example, Yuga Labs, the team behind Bored Ape Yacht Club, acquired the wildly popular NFT collection CryptoPunks as well as Meebits from Larva Labs. That means the group now owns two of the most valuable NFT projects on the market.
In response to the news, Molly White, a crypto critic who runs the satirical Twitter account called “web3 is going just great,” said, “Nothing really says ‘decentralized’ like one company controlling the priciest and most popular NFT collections!”
Flick also pointed to NFT exchanges, where buyers and sellers can trade digital collectibles, as another example of centralization. If the market were truly decentralized, it should be easy for people to sell NFTs on their own, she said. The thing is, Flick added, “society doesn’t work that way.”
“We see centralization because people need it to be easy to use, and they need to be able to see what’s for sale, and they need to be able to have nice user interfaces because they don’t understand it. They don’t want to understand it. They don’t care for the most part, probably,” she said. “Like the classic thing: You don’t need to know how your car works in order to drive it.”
In recent years, crypto has gone mainstream. The market cap of bitcoin and other tokens topped $3 trillion in 2021 before pulling back, while sales of NFTs surged past $40 billion.
But Flick has a bleak outlook on the wild gains: Be wary of investing; it will inevitably crumble.
“The people who win are the people who got in early, which is probably not going to be you. And the people who lose are going to be the people who are left holding the bag.”