How Molly White became a crypto critic

Crypto was wrapping up a go-go year when Molly White launched her blog, Web3 is going just great.

Things weren’t exactly going great for crypto in December 2021. There were signs then that an impressive upsurge had come to an end and was on the precipice of a stunning crash: a crypto winter.

White created the blog precisely to turn the spotlight on the even more serious havoc that she feared crypto was going to wreak — not just on the startups and investors rushing into the field, but also people betting their life savings on tokens they’d barely researched after hearing about them online.

“It felt like suddenly people were marketing crypto to the average person,” she told Protocol. “People were getting sucked into these schemes that they really did not know much about or understand properly.”

Web3 is going just great rapidly attracted an audience, and now gets 60,000 to 100,000 visitors a month, White said. Its Twitter account already has 114,000 followers. She only started the account in January.

White, 29, was a teenager when bitcoin launched in 2009. She is part of a generation of software engineers who entered the tech industry in the past decade when the crypto revolution was underway. Many of her peers ended up joining the crypto wave. White went the other way, emerging as one of crypto’s leading critics.

In an interview with Protocol, White, an affiliate of the Berkman Klein Center for Internet and Society at Harvard University, talked about her journey as a young technologist and why she became a crypto contrarian.

This conversation was edited for clarity and brevity.

Your blog is called “Web3 is going just great.” You clearly have a specific view of Web3 and crypto. Do you think it’s all a scam, as some critics have argued?

I wouldn’t say it’s all a scam. I feel that implies that every person running one of these projects is intentionally trying to take advantage of people, which I don’t think is true. I do think the technology as a whole and a lot of the promise of it has been really overblown. But I wouldn’t say that it’s all a scam, per se.

You told the Financial Stability Oversight Council that you are “cautiously optimistic about some digital asset use cases, specifically the introduction of non-crypto-based digital cash.” Can you elaborate a little bit on that?

There have been some ideas of introducing other forms of digital cash which don’t actually require a blockchain to implement. We use what some could argue is digital currency already today when we transfer money electronically.

I think it would be really valuable for there to be more of a cash equivalent to something like that where you actually get the same privacy and surveillance expectations of cash with a digital currency. It’s not being traced as closely as digital transactions are. You’re allowed to make small transactions very privately.

I think that would be really beneficial for society to have something like that. But I think as soon as you start looking at crypto and blockchains, you end up with a more speculative asset that has a lot of inherent flaws and tends to not work so well as currency. I remain hopeful that there might be some sort of digital cash in our future but I don’t necessarily expect that it will look like a cryptocurrency.

You were studying computer science in college when bitcoin and the crypto realm were getting started. How were you introduced to crypto and what was your reaction?

I was actually a little younger than that when bitcoin first emerged. I was aware of it pretty early. I have been involved with the Wikimedia communities for a long time, which has a really strong overlap with free software communities and people who are really interested in freedom from surveillance and online privacy. I ran into it in those circles first. I thought it was interesting as a concept, but not something I necessarily had a use for.

Back then, I mostly knew of bitcoin as a way to buy drugs online, which is kind of what it was for at first. Or at least that was the biggest use case for it. And I was not doing that. It was like, “OK, I guess people can go do that,” but it’s not really something I was interested in.

The other use case was the people who thought that it was going to become much more valuable in the future. So they were putting money into it for speculative purposes. Well, I was in either late high school or college, and I didn’t have a ton of money just kicking around that I was trying to speculate with. It was something that I knew about but wasn’t particularly interested in.

I thought some of the aspects of it around censorship-resistant financial transactions was really interesting and the potential for it to be used to fund people who are not necessarily in the good graces of an authoritarian state, I thought there was promise in that. But as time went on, I watched what it became, which was largely quite different from the original principles of it.

Was there an incident or a development or maybe a conversation you had that made you become concerned about the rise of crypto?

I grew increasingly concerned as the years went on. I was vaguely aware of what was happening in the 2017-ish era when ICOs were really big and a lot of people were using those to skirt regulations on securities offerings.

I really started to become concerned in the summer of 2021. It felt like suddenly people were marketing crypto to the average person. Anyone watching a sports game on TV or riding public transit in some places were getting bombarded with this idea that crypto was a good idea for someone to potentially make money off of, as though it was an investment or something that everyone should be trying out.

Then we started to see the narrative that crypto was going to be the future of the web with Web3. Every new project online was going to be using blockchains in some way. That’s when I really started to get concerned and to pay attention. I was really worried that people were getting sucked into these schemes that they really did not know much about or understand properly. There was this magical, “Well, it’s computers, so it will work” feeling around it, which is obviously never true on its own. And I was also really concerned about the idea that this is how the web should be going forward.

I’ve always been someone who cares a lot about the web. I think it is quite amazing. I really like to see projects on the web that are benefiting humanity and moving in a good direction. The idea that everything should start incorporating blockchain, I was like, “Should it?” So I started doing some more research around that.

You’re part of the generation of software engineers who joined the tech industry in the early 2010s, many of whom became excited about and even became part of the crypto industry. But you went the other way.

It’s interesting because I actually don’t feel like software engineers in general have been overwhelmingly positive about it. A lot of the software engineers I know actually were very skeptical of it, especially when we started seeing things like NFTs and some of these schemes that were more plainly get-rich-quick schemes.

I remain hopeful that there might be some sort of digital cash in our future but I don’t necessarily expect that it will look like a cryptocurrency.

I think a lot of people actually took a look at the technology behind it [and said]: “Why is this the future of the web? I don’t understand how this is such an improvement.” I’ve actually spoken to quite a lot of software engineers in my generation and other generations who were actually very skeptical of it.

But there are definitely software engineers and other people who are very positive about it as well. Some people are actually very open about the fact that they don’t see much promise in the technology, but they realize they can make a lot of money. That’s been a fairly common thing I’ve run into.

So it’s like saying, “We’ll stick with this because there’s VC money flowing into this, and when it’s clearly not working we’ll get out?”

Yeah, that’s sort of the idea. Sometimes it’s not necessarily people who are starting companies. It’s like, “I’m going to go work for a crypto company because the salaries are incredible,” even though they don’t necessarily believe in the product that they’re working on. It’s just a great paycheck.

Tell me about the idea to start the blog. How did you come up with the name?

I launched it in mid-December [2021]. I was seeing two really different stories. I was seeing in both mainstream media and in tech media this narrative that crypto is making all these people rich. You can get such good returns if you start putting money into crypto. Look at all these people who have brought themselves out of poverty because they started a crypto project or they started selling NFTs.

Then on the other hand, I was seeing this stream of news stories that was like, “Oh, another project got hacked” or “Oh no, someone lost all their NFTs because someone got their wallet address or their wallet keys.”

It felt like I was seeing a lot of the first story in mainstream media. But the second one was going unreported.

So I started, on my own, keeping a list of examples of how often this was happening, scams were being run, hacks were happening. It began to become clear to me that it might be useful to illustrate this in one place instead of people just having to see a tweet or a news story or a one-off post or whatever.

That was the idea behind the project. As for the name, I just have a sarcastic, dry sense of humor. It felt like every time I was like, “How’s this whole Web3 going?” I would just find myself thinking, “Wow, it seems like it’s going just great.”

What have been the most troubling reactions?

Sometimes people get really mad at me personally for writing these things, especially if they have some stake in a project or they are personally involved with a project in some way. They see what I am doing as basically drawing attention to the negatives of their project, and that threatens their bottom line.

Sometimes people get pretty aggressive with me. In general, there’s people in the crypto community who are just hostile to any negative reaction or negative coverage of the space because they see it as threatening to crypto as a whole.

You told the FSOC that concerns about crypto regulations stifling innovation are “overblown” and that “the most impressive innovation we have seen with crypto has been in separating average people from their money.” That’s a pretty sweeping statement. What reactions have you gotten when you raise that argument?

People will just deny it. They’ll say, “Oh, crypto has been so revolutionary. It’s changed people’s lives.” And you press on that question and people tend to say, “Well, it’s made some people very wealthy,” which is true. But you could say the same thing about a Ponzi scheme or pyramid scheme.

It makes some people really wealthy and isn’t necessarily a revolutionary idea. Most people are really excited about what they think crypto might be able to do in the future rather than what it is doing today. And I think that’s a problem. I don’t think it’s reasonable to regulate or legislate around what something might possibly do in the future, especially when there isn’t that much evidence that we can really get from where we are today with crypto to this utopian future where crypto is perfect and there aren’t all of these issues with it that are actually very fundamental to the technology.

It’s almost as if someone said, “You shouldn’t ban fossil fuels because when we figure out how to burn coal without creating any emissions, you’re gonna be stifling the electricity industry.” You have to look at these things and say, “Well, is that actually possible? Should we be making decisions based on what might possibly happen at some point?”

Crypto has also been compared to the dot-com era when people were also skeptical about a new technology called the web, which eventually grew and thrived. Some argue the same could happen with crypto.

There’s two things there. The first thing is I think people actually overstate to some extent how skeptical people were of the early web. I think people had some questions around: Can the internet ever support something like streaming video? Or how it might actually be able to evolve. But I think people got the idea why the internet might be useful, why email might be useful, why these websites are useful in ways that I think don’t quite correlate to crypto.

I also think that it’s a bold statement to compare something like crypto or Web3 to the internet. The internet was a revolutionary technology, and by all real accounts, enormously successful. It’s become enormously popular. Pretty much everyone uses it to some extent.

I feel that you need to make the argument for why your technology is like the internet versus something more akin to, say, 3D TV. People were really excited about it at one point, but it never really took off the way that some people imagined. You can say that any technology is like the internet and you should just stop being skeptical of it, and everyone should get on board and you don’t want to be laughed at in the future for saying it has no promise. But you have to make the argument that the technology is actually more akin to the internet than some other examples of technologies that people had been excited about but have not actually lived up to their promises.

Crypto proponents also argue that blockchain could address the problem related to the concentration and abuse of data, which has become a serious issue, especially with social media and other platforms. How do you respond to those arguments?

It’s one of those things where people will make these bold statements like that. And other people will see that and be like, “Wow, that sounds great.” And suddenly it becomes a part of the narrative that blockchains are more secure, your data belongs to you, these companies aren’t going to be monetizing your data in the way that they are today.

But if you actually push back on those claims a little bit and say, “Wait a second, how is it any different if Facebook has your data stored on a blockchain? Or how is it actually better that all of this data is stored on a public ledger rather than a private database?”

The claims start to fall apart a little bit. I think we really just in general need to stop taking claims like that at face value, and try to understand how your project is actually going to try to be more secure than, name your big tech company …

AWS …

Yeah, exactly. How is that actually going to happen? We’ve looked at examples of crypto projects that have been running today and we’ve seen projects that absolutely are not more secure. And they are not more decentralized.

A lot of crypto is actually very centralized in very similar ways as today’s web. In fact, there are actually a lot of the same venture capitalists trying to get a stranglehold on Web3, the same people who have had a stranglehold on the current web. It really is important to question those base claims because they don’t really stand up to scrutiny.

What do you think of the current push to regulate crypto?

It is important that regulators get involved to some extent, because to date, they’ve been very slow to act, and I think the industry has really developed into this world of scams and grifts thanks to the lack of action from regulators. I’m glad to see that some regulators are beginning to pay a little more attention to it. But I’m also very worried about the regulatory capture that’s been happening and the amount of lobbying that has been coming from crypto groups.

I don’t think it’s reasonable to regulate or legislate around what something might possibly do in the future.

I’ve spoken to a fair number of legislators and regulators who are saying that basically they’re having a really hard time separating the truth from the marketing because they’re basically talking to mostly pro-crypto lobbyists. There aren’t that many people out there who can give a more neutral stance on it because no one’s paying lobbyists to lobby against crypto. That doesn’t really exist, right? There isn’t that much of a financial incentive to do that.

I really worry about how well-informed legislators and regulators are. There are certainly some who are quite knowledgeable about the industry, [SEC chair] Gary Gensler being one of them. But I think in general the level of understanding is actually quite low. I think the legislators are prone to accepting those statements that I referenced before that have become repeated as though they are inherently true. I’m worried that regulators are going to begin accepting those as truth and believe this whole idea that you can’t stifle innovation and you can’t put regulations in place or else all of this wonderful innovation won’t be able to happen.

I think that’s pretty absurd. There are a lot of regulated industries out there that innovate constantly. I don’t think having a complete free-for-all where people are able to run total scams is actually going to be good either for the crypto industry or for the general public. So it really worries me when I start hearing policymakers actually repeating those claims as well.

There was an uproar from the industry over a tax-reporting provision in the infrastructure bill that could impact developers and node operators, and regulators who argue that many crypto tokens are securities because there is a group of people in the middle who determine the way they develop. How do you react to these?

I think it’s complicated. I think that there are a lot of cryptocurrencies out there that are very clearly securities and that are very tightly controlled by the developing team or the group that has created it. I think a lot of those projects are hoping that they can claim to be decentralized or not controlled by a small entity in order to skirt securities regulations. I hope that the SEC actually starts taking a little more action against those groups because there are some where it is very clear that it is a security.

But I think it’s a complicated question. There are definitely arguments to be made that some of the cryptocurrencies that are popular today, like bitcoin and ether, are commodities or something more like a commodity than a security.

I don’t have a super strong opinion on that just because that is not my background. I’m not a securities lawyer by any stretch.

But I think a lot of it really does come down to the fact that the crypto industry would really like to be regulated by someone like the CFTC, which has a lot less resources and has generally been a lot more light-handed on the crypto industry than the SEC. I think a lot of the arguments have basically been made solely in pursuit of that goal.

What are your thoughts on the debate over Tornado Cash?

Boy, what a mess that was. I think it’s pretty clear that Tornado Cash was really enabling quite a lot of crime, including state-backed hacking groups out of North Korea and various other entities. That’s pretty hard to deny.

But the way that the government has gone about cracking down on that particular issue is a little bit concerning to me, partly in the sense that the individuals who have interacted with Tornado Cash since the sanctions were placed are now facing a pretty labor-intensive process of having to report their sanctions transaction with a sanction entity, potentially in perpetuity, like, forever.

In some cases, it is people who are sent money from Tornado Cash not necessarily out of their own choice. You know, people were “dusted” with funds from Tornado Cash to prove a point.

I do think it does prove the point that the way that this enforcement is being handled is very broad-strokes and threatens to catch a lot of really innocent people in the net.

I also think that for people who want to use cryptocurrency and who want to maintain some semblance of privacy on the chain, they don’t have a ton of options aside from using something like Tornado Cash, because in order to have any privacy in cryptocurrency you basically have to learn how to launder your own money. And Tornado Cash is a way of doing that. It’s forcing some people to choose between privacy and not risking interacting with a sanctioned entity.

Then there’s the question of the Tornado Cash developer who was arrested in the Netherlands. I think there’s a lot of questions there. It’s not clear exactly what he did, if it was that he just wrote the code or if it was because he was running a relay or what. I think the whole thing has been a bit of a disaster.

You mentioned in your blog letters sent by consumers to the judge handling the Voyager and Celsius bankruptcy cases. I wonder if there are specific letters or stories that really stand out for you and had an impact on you personally?

Those letters were really helpful in exposing the fact that not all of the people who are losing money in crypto are the stereotypical crypto investor. I think a lot of people picture a young male investor who has extra money kicking around and wants to gamble it on cryptocurrency. And if they lose it, it’s really not the end of the world. Maybe they shouldn’t have made that decision, but they’re still going to be able to pay their rent.

I think the Voyager and Celsius letters really show that it can be a very different type of person. A lot of those letters came from people who are elderly, or who had families relying on them. There were single moms, single dads. There were pensioners. It was a mix of people. They were not necessarily people who were making what they thought was a risky investment. A lot of them thought they were putting their money someplace that was similarly reliable or trustworthy as a bank.

That’s what really struck me about those letters. In some of these projects that were really marketing themselves as a safe option, there were a lot of really average people losing a ton of money and getting swept up into these schemes that they don’t fully understand.

One person was begging the judge to just release some of the money that he had in a Celsius account because he couldn’t afford to pay his mom’s medical bills. That one really stuck out to me. One woman attached an ultrasound photo of her baby and said, “I really need this money because I can’t pay for the things that my baby is going to need when it’s born in a couple of months.” Those really stuck out to me because that’s not the 22-year-old crypto bro who’s just wildly speculating. Those are real people with money they really couldn’t afford to lose on this kind of a bankruptcy.

You clearly have a following and are known as one of the prominent critics of the crypto industry. What’s your plan, and how do you see your role going forward?

I’m hoping to keep doing what I’m doing. I feel like the site has been pretty successful in tempering some people’s expectations. The goal of the site is not really to change the minds of the bitcoin maximalists and crypto evangelists who are pretty sold on crypto, but to encourage average people who are seeing the advertisements and seeing the stories about people becoming millionaires overnight to just take a second look at it and consider that maybe they’re not seeing the whole picture.

I’m just trying to make as much impact as I can as far as where this industry might go, how unregulated it might be allowed to continue to be. My goal is to just try to make a difference in what I see as a concerning direction of both the web and technology in general.