Per Axbom
UX podcast episode 290.

[Music]

Per Axbom
I’m Per.

James Royal-Lawson
And I’m James.

Per Axbom
And this is UX podcast balancing business, technology, people and society every other Friday since 2011. And with listeners literally all over the world from Mozambique to Indonesia.

James Royal-Lawson
Joining us today is inclusive design expert Laura Kalbag. Laura is a designer who we often find talking about accessibility, inclusivity, privacy, web design, and development. Today, we’re talking about how she can help us apply the lens of rights respecting design to the concept of Web3.

Per Axbom
And we’ve been talking about web three amongst ourselves for a while now. I think one of the first longer videos we looked at was, what’s his name? Dan Olson. Yeah, “Line Goes Up.” And that’s over two hours long. Yeah, because we just want to understand this concept. Because we’ve been around for a while we know about Web 1.0. Web 2.0. Web 2.0 actually changed a lot for designers because it impacted how the entire web actually became interactive.

James Royal-Lawson
I think something Per is that we’ve been following crypto for a while. I mean, our first podcast about it was nine years ago. And time and time again, I felt like a… I don’t know…I felt like it must be my fault that I don’t understand…It was me, the problem was with me not being able to grasp this new – these new things. Which is a very strange and weird feeling for me. Because normally, you know, we’re curious, and we dive into all the kinds of new stuff and have at least an understanding of it. But crypto and blockchain and NFTs, time and time again I’ve been thinking, “Nah, this can’t be it.”

Yeah. As soon as you think you understand it, you become surprised because then you realize, “Well, this is just hot air? Or is it?” And then you just sort of doubt yourself because you think, “I can’t have understood at all, because everybody’s talking about it.”

Yeah, exactly. For some time, I’ve been thinking, “No, I mean, if it’s like I think it is then that’s just ridiculous.” So we keep reading things and seeing things that, I suppose, confirm some of our feelings about this. So we’re not neutral on this topic.

Per Axbom
No, basically not. And then I think you found this excellent talk by Laura, where she, in this really clear, sensible way, describes what all the components are, like, including blockchain. And why there is even a Web3 movement, per se, and how people and planet are actually being hurt by it.

James Royal-Lawson
Yeah, it’s a ‘Smashing Magazine’ talk she did. And Laura is good at explaining things in a calm and nice way. This episode with Laura was recorded as part of our collaboration with ‘Ambition Empower.’ ‘Ambition Empower’ is a continuous learning programme that rethinks how you learn new topics within the field of design, instead of attending a conference where you sit down and listen to all talks in one day, you attend ‘Ambition Empower’ and take part in one or several tracks every week by industry design leaders.

Per Axbom
And you do this over a year, which makes it an obvious way of taking these learnings and actually doing what you always say you want to do, applying them in your everyday work. Plus, members also get to listen to some shows of UX podcast ahead of release, bloopers and all. If you’re curious about Empower, you’ll want to visit uxpodcast.com/empower to read more and use the code ‘uxpodcast’ for a discount if you decide to sign up.

James Royal-Lawson
So Laura, when when I was preparing for this chat, I noticed you just can’t get away from the fact that this topic is absolutely riddled with terminology. I mean, I think we’d probably need a day long interview, if we wanted to have a chance to get through it all. But is there a like TLDR to describe what Web3 is?

Laura Kallbag
Yeah, I could say. So. If we think about the fact that we are currently in the era of Web 2.0. So the idea of Web 2.0 is when maybe about a decade and a half ago, web started getting social. We started having user generated content. We started being able to upload our own stuff to platforms. And that became the business model around the web and around tech was a lot of the time it was about using that content, generating, monetizing from that content. And because of Web 2.0, we kind of realised well of this is Web 2.0, then Web1 must exist. And Web1 we think of as being that very static era of the web. So when you had read-only kind of websites like brochureware, as you might call them, websites where really the most interactive thing on there was links and maybe a few forms. And before it got into a lot more of the complexity that we see today, particularly with the social media era.

And so Web3 was coined by Gavin Wood, who is one of the founders of Ethereum, which is a type of cryptocurrency. And the idea behind Web3 is that they want it to be the next big thing. That’s why they called it Web3. And I think it’s very important for us to realise the difference between Web 2.0 and Web3 is that Web 2.0 was named such many years after it came about, like you don’t tend to name a movement at the beginning of a movement. And so one of the things that I think we need to be cautious with Web3 is it’s kind of a very clever branding exercise because they’ve gone, “Right, well, we’re saying that this is the next big thing. We’re naming it following Web 2.0. It’s Web3, and it is the next big thing.”

Now, the idea around what Web3 actually is, is that so Web 2.0 With all of this monetizing of our user generated content, there’s a lot of problems with that. There’s a lot of centralization. And centralization means that all of these platforms that we’re sharing our content with – these Twitter, LinkedIn, Facebook – pretty much most of the stuff that we use in tech today, most of mainstream technology, is centralised. And that centre power is left with the people who make the technology, us as users have no power, no control over how our information is used, and how our data is collected. And a lot of the time, we’re also stuck using these technologies, because our workplaces use them. Our children’s schools use them, all of our social and work infrastructure is based around them. And so one of the things that they want to drive behind Web3 is decentralisation – so distributing power back to the individuals. And their means of doing this is using the blockchain. And I can go into a little bit more detail on what the blockchain is later. But the idea of Web3 is decentralisation based on the blockchain.

Per Axbom
But I think that’s an important point you made as well that if we jump 10, 15 years into the future, what we are calling Web3 right now may not be what Web3 turned out to be.

Laura Kallbag
Exactly. And we might call it something completely different as well, depending on how things shift. And I think we are in a place where so after…I guess, if you think about from the very beginning of the web to Web 2.0 was probably about 10, 15 years. And it’s been about 10, 15 years, that Web 2.0 has been around. So we maybe are at the point where we’re at a shifting point. But I would say given, the majority of technology is still very centralised and given that the bubble hasn’t burst, yet, there’s still a huge amount of money going into technology and tech companies, huge amount of VC, venture capital going in. And so I think when that bubble bursts, which I think it probably will, then I think we may see new movement emerging.

James Royal-Lawson
Yeah, no, it’s really, I think it’s really important to reflect back like that. Because, you know, when we were in the 90s, doing web stuff, it was it was the internet, it was the web, but it was a world wide web. And it was really exciting, really cool. And then we then we realised we like disrupted quite a lot of stuff. And people started getting jobs in that sector, and companies started changing how they behaved. And it was notable that we’d done something with that little experiment. And then we fall into that period with Web 2.0. And also mobile comes in that doesn’t it as well, I guess. And then we kind of do the same thing again, we like stumble into Web, 2.0, and mobile and disrupt a whole load of things. And well and actually with that one I guess we start changing society a little bit with social media, and even democracies and so on, and it gets really scary. So now I presume we’re going to stumble into a third thing now when we disrupt something really kind of blindly and unknowingly.

Laura Kallbag
And I think it is… it’s important to say that while I criticise Web3, I do think that decentralisation is necessary. And if you look at the people who build technology today, the people who are in control and in power, they are broadly white, cis, mostly male. It’s the same people who have always been in power and often it does result in the exploitation of people that are from more traditionally marginalised groups. And a lot of things like I give you one example of, say, discriminatory algorithms that use your data collected on social media platforms for, say insurance purposes. It’s a very common use case, and it happens a lot. And the people who tend to suffer as a result of that automated collection, and using all these automated systems are the people who are traditionally already marginalised. And they’re the people that are going to lose out. And so all the while that we do have these big, centralised platforms with the same kind of people in control, very centralised, particularly around the US as well. We’re going to keep having problems with this coming up, we’re going to keep having people’s privacy being exploited, we’re going to keep having systems that aren’t inclusive, that aren’t accessible. And so I think we need to get away from those centres and away from those people of power in order to actually make the web better for society again.

Per Axbom
Because that’s, that’s significant, isn’t it? That it’s so clear to see that the people within the space of Web3 are not really putting a lot of effort into including people into making it easier to understand and to make it more accessible. Rather, it’s almost the opposite, that they benefit from it being really complex. Because that then it’s easier for them to persuade others.

Laura Kallbag
Yeah, they absolutely do. So I think one of the things that people find very complex is the concept of blockchain. Now, one thing that they find complex about it is that it’s one word, like it sounds like it’s one big thing and it’s like how can something that’s decentralised? How just be one word: blockchain. And actually when they say blockchain, they mean blockchain technology, which is many different blockchains. Although actually, a lot of them use the same blockchain. So for example, a cryptocurrency is based on one blockchain. And so if you are using a platform that relies on that cryptocurrency, you’re all using that one blockchain. Now, Blockchain, the concept is it’s a, it is a string of transactions where each transaction is signed with a hash with like a little signature of the contents of the previous transaction. So the whole idea of it is that it can’t be changed. And that copies of it can be kept in across many different, like computers, many different places. And the idea is that everyone has a copy and you can compare that against each other’s copies to see, which is the source of truth, like they’re all a source of truth. That’s the idea behind it.

And so it’s supposed to be an incredibly secure way to have transactions. And that’s why banks are quite in favour of the idea of blockchain. Because it’s the idea that you can’t go back and spend money twice, you can’t go back and you can’t, you can’t transfer money to your own account say it was yours, if you haven’t gone through the process of having your transaction signed correctly. Now, the reason why… blockchain is also very transparent. So you can also see you can have a copy of the blockchain, you can see exactly all of the transactions, and which wallets those transactions went into. So this is very appealing to people.

The problem with it is that in order to make these transactions, and to sign them, it uses a system that is called ‘Proof of Work’. Now ‘proof of work’ is a basically a way of two computers competing with their computational power to solve a very complex problem, and the one that gets there first signs the transaction. So what that means essentially, the bit that you really need to care about is, each transaction made uses a huge amount of computational power. And what computational power uses is energy. And so basically, all of these machines that are mining for cryptocurrency, or that are signing these transactions are using significant amounts of energy. And you cannot get away from the significant amount of energy use in the blockchain. It is an integral part of it – it is part of the security of the system. And so that is why it’s very dangerous for the climate, because there are these huge centres using all of this power. And now our data centres are already pretty bad and already using huge amounts of power. I mean, I live in Ireland. So there’s a real issue there with so many Silicon Valley companies being based there and so many huge data centres using as much if not more energy than the population itself. And we’re seeing this significantly with Blockchain as well.

So if I understand correctly, I mean, you just keep adding to the blockchain, which means it just gets bigger, bigger, bigger, bigger, and the more transactions you have, the more work has to be formed. So as people if people get really excited about it, and there are more people getting into cryptocurrencies, more and more power will be used that will be worse and worse for everything.

Yeah, now there are alternative, there’s an alternative mechanism called ‘proof of stake,’ which is a different way of working out, which is less computationally intensive, but it still has some intensity, and very few blockchains actually use it. So it’s kind of irrelevant right now, probably the two of the biggest uses of blockchain is Bitcoin and Ethereum, which are both cryptocurrencies. So these are just currencies that you can use that are, it’s a token system. And so you can use these instead of cash or instead of your local currency, and these are probably the most popular uses. And the whole idea of Web3 is that you build on top of those cryptocurrencies, you build technologies. So it provides you with a way of making them financially sustainable, because you might pay to use something like one of these systems. So you might pay to use an app that is a game, so you might pay to have a go at the game. But you may also be paid for hosting an instance of that game. So there are ways for people to make money. So the idea is that they wanted it to be a sustainable economy.

And that’s all based around cryptocurrency, which I mean, it’s a given that we have an issue with sustainability financially in the tech industry, and that a lot of it is based on venture capital. I don’t see that as the worst idea in the world, however, it’s destroying the environment. And also there is a problem when the entirety of your participation on your platforms is based around financial contribution and financial transactions. Because it doesn’t really incentivize community, it doesn’t really incentivize spaces where everyone feels welcome. It incentivizes platforms that are all based on, “What can you get out of it? And what are you going to get paid for it.” And that was really reflected. If you look at the most popular apps that are built on Web3, you’re looking at marketplaces for various NFTs which we can get into later. Sort of gambling betting apps, different financial services, and different wallet apps. There’s very few apps that are built around any kind of community. And I think that that’s a real problem with Web3.

James Royal-Lawson
I think this is a really interesting point. Because I mean, I agree with some of the aspects of the talk about with Blockchain sound really appealing, you mentioned, I mean, having a robust network where in 51% of the machines agree on something, you know, it’s validated, that sounds quite appealing, and so on. But from what I’ve understood of it, then these cryptocurrencies are basically used as financial instruments. And I’ve been, you know, I thought I was just an old man who didn’t really understand this new toy that all the kids have come up with. Because, you know, younger down the age group you get more and more people seem to be involved in it. I mean, my kids, they’re nearly 16, and 14, and my daughter told me that in her class, this is her words, all the boys talk about are the value of their cryptocurrency. And they’re 15, 16. And I just didn’t realise how deep some of this went, and I saw some stats that it’s like, in America, I think it was of the people who hold crypto, 23% of them are black Americans, as opposed to 11% that are white. So you start started to kind of understand a little bit of the, the financial dream of this, that there was, there’s a lot of people putting a lot of their financial hopes it would seem on investing in a cryptocurrency.

Laura Kallbag
Yeah, and the thing is with cryptocurrency is if you get in early, you can make a lot of money. And so if you get in early, and then you encourage more people to join, that inflates the value of your initial investment, and then you have a lot of money to play with. And I mean, that’s kind of also the structure of a pyramid scheme, because you’re getting encouraging other people in order to inflate your own value. And that is also I think, why we see so much of it online, because I think that the popularity of Web3, if we put things like cryptocurrency and NFT investment aside, is massively overinflated, because people are incentivized to talk about it. Because if they post about it, and they make it seem really great, they’ll encourage more people to join, and their investment will go up. And so it’s kind of you’re feeding the machine if you keep promoting it in that way. And I think it’s interesting that you’ve got teenagers using cryptocurrencies, which is one way of looking at the fact that it’s fairly unregulated right now, and they’re kind of I can’t imagine that they’re putting much money in to begin with but they stand to lose what they’d put in, which is maybe a lesson but could be really dangerous.

And whilst… I think a lot of people think that cryptocurrencies and the blockchain operates, like somehow outside of the law, like it’s some kind of international waters is how I compare it to. In fact, international waters is a really apt comparison, because most people think that international waters means that your crime won’t be prosecuted. But what international waters actually means is your crime will be prosecuted by the nearest authority. And that’s very much the case with scams and things with cryptocurrencies is that the companies you form using Web3 and the cryptocurrencies you scam, you can still get done for fraud, and you can still get arrested for illegal activities. Just because you’re doing it online doesn’t make it any less in the real world.

But I think NF Ts are an interesting case, because… so NFT are non fungible tokens. So they’re just a type of currency. But it’s like a coin who’s like just one coin, one token, you just have one very unique coin that nobody else can have. And the idea behind it was that people could could attach things like artwork to these tokens, and then maybe artists could use it, in order to make money from their artwork, which, again, is one of those ideas, that sounds really good. If you think “Oh, it’s another way for artists to make money, and to be able to sell their work very easily.” But the problem is that within NFT, very rarely is the artwork, you don’t actually own the artwork, you just own a coin equivalent of the artwork, what an NF T gives you is really just a URL. You can’t own that URL, unless you own the web hosting behind it, unless you own the domain registry system behind it, then someone can easily take it away from you.

James Royal-Lawson
I thought that actually blew my mind, Laura, when because at first I didn’t understand NFTs at all. And and the I read about how many millions the first ever tweet got sold for… And then I think well, “how do you sell the first ever tweet? Is it a picture of it? Is it framed? Something like this…” And then I realised, exactly like you say, that was the link to the tweet that was signed into the NFT. And I think “Well hold on, but that’s on twitter.com? Possibly, or did they did they use the mobile domain that they used to have originally when it first started, I mean, which version of the link was it and what happens if they change it?” Ah, and I couldn’t believe it was true.

Laura Kallbag
And Twitter, Twitter has the rights to that link. They can change it if they wanted, and then you don’t even have access to it anymore. So really, when you’re buying an NFT, what you’re really buying is bragging rights. It’s I like to compare it to remember when the iPhone first came out and someone made the ‘I Am Rich’ app that you could buy on the App Store. And the idea behind the ‘I Am Rich’ app is you spend the maximum amount of money that Apple would let you charge for an app to have an app that all it did was have a very shiny gem on it. and it said ‘I am rich.’ It was a scam. Like you don’t get anything out of it. You just get bragging rights. And it’s the same with NF Ts. And one of the problems with artists and NFTs is a lot of artists are finding that people are just taking their work offline, like online and selling them as NF Ts without the artists permission. So actually, very few people are actually benefiting from what it’s supposed to be. And you can see online like so much that there’s just scams with NF Ts and with cryptocurrencies in general, for as many tweets that you see promoting various NF T’s you will see the ones saying, Oh, this account has been hacked, this marketplace has been hacked. This cryptocurrency turned out to be a scam, I invested in it, and then all my money disappeared the next day. And it’s a real issue. These are called rug pulls, where people design these things to entice you in and then pull the rug out from under your feet leaving you lost without your investment. So it’s really quite scary environment I think.

Per Axbom
It seems you hear about these stories all the time and it seems that a lot of people using Web3 and into cryptocurrencies are very naive about what goes on there. And so it’s now everybody’s calling for some sort of regulation. Whereas, as you were saying before, what they didn’t want was regulation, but they do need it. And they do need to centralize because they realize, well, you need these organisations to keep track of my accounts. And somebody needs to host the image and somebody… so there are these centralized exchanges as well. So they’re sort of going against their own principles.

Laura Kallbag
Yeah, absolutely. So I think a lot of the ideology behind Web3 is based around libertarianism and part of it comes from participating in centralised platforms where people didn’t appreciate that they could be blocked or have their accounts taken away. And so they were like, “Well, great. We can create a system where I can’t be blocked.” And you just think, “Well that might be great for you, but is that great for the people that are on the receiving end of whatever abuse and harassment got you blocked in the first place?” And again, I don’t necessarily think that centralised systems are the future. But there’s no moderation built into these Web3 platforms. And it’s actually very difficult because you have many copies of the same blockchain like you can have some abuse and harassment recorded in a transaction. And that’s there forever. Because that’s the nature of the blockchain, it can’t go away.

James Royal-Lawson
It can’t even, from what I’ve understood, you can’t, there’s nothing to…you can’t accept or deny receiving something, can you? So if someone pays something into your wallet, or writes it onto your blockchain or whatever, then it’s there. So someone could send you something that’s really nasty, I mean, illegal, nasty.

Laura Kallbag
Yeah, they can pay to harass you, they can send you illegal material, for sure. And you have no choice. And the whole thing is that with wallets that you have. So your identity is essentially your wallet in the world of Web3, you are your wallet, which I think is quite apt in such a financial oriented system. And you have like two codes or signatures, or identifying hashes that you can use, one you use for that you keep to yourself. So it’s like your password. And the other one you use to provide to people to give you coins or whatever you want to get with your wallet. And the problem is that once you give someone access to that information, they have access to your wallet. So not only can they give you like tokens or whatever, they can also see the entire history of all of your transactions. So it’s a real privacy issue. So much so that the recommended approach in terms of Web3 is to have many different wallets, and split your stuff up so that you have hot wallets where you’re actually spending money but then you quickly transfer these things to your cold Wallet. So you can have your money, like hidden away where it’s harder for hackers to get to it.

This is not inclusive at all, I mean, how many of us have the time to keep like all of these different passwords, all these different information, remembering which wallet I’m supposed to be paying out of and which wallet I’m supposed to be paying into. And this is the only way to keep yourself safe and secure. So there really is very little effort into making, helping make it easy to use, which of course makes it even easier for the scammers to do what they want to do because most of their scams, they can just do it by human engineering by just tricking you into giving them the number that they want. And all of those things. So it’s makes it the lack of inclusivity actually makes it more of a security risk too.

Per Axbom
And I know you always make this point as well, that there really aren’t that many people using cryptocurrencies as it appears because they are incentivized to talk about it. So they talk about a lot and everywhere. So it seems like it’s a lot bigger than it really is. But the reason we are talking about it here, I think is what you are alluding to now that there are so many people getting hurt, there are so many people getting hurt in this space, and who is out there to help them understand what’s going on, to prevent them from making the mistakes that mean that their lives are ruined when they actually invested to do the opposite.

Laura Kallbag
And that’s why I became interested in the area because I’ve been researching decentralised technologies for quite a few years. And so I have… I’m lucky that I have some knowledge in the area already. And I know that blockchain is not the be all and end all of decentralisation, there are plenty of other alternatives out there that don’t destroy the environment. And that don’t rely on centralised systems in one way or the other. And I think it’s important that we work on those decentralised technologies and try to make those more inclusive and accessible to everyday people. That’s one of the things that we’ve been working on at Small Technology Foundation. And it’s why I – a person who cares so much about accessibility and privacy and I saw so many people scared to criticise Web3 because they didn’t understand it. And people I quite rightly it’s much better if you can criticise something and you have facts behind you to back yourself up and so I was like “Alright, well, I better see if I can try to make this easier to understand help my own understanding in the meantime,” but also to help people understand that this is..and maybe there are a few well intentioned people out there but the vast majority are trying to get rich quick and often trying to scam you out of your money on their way.

James Royal-Lawson
Because that is something… like I said, I mean…some of this I didn’t really and especially NFTs in the beginning I didn’t really understand and I started to see people who I respect or acknowledge are clever people who, you know, have been in the branch for a long time, and you know, their words weigh something…were really getting behind some of the, you know, Blockchain stuff and NFTs and crypto stuff. And I’m trying to think, well, I, you know, I am just missing something here. And, you know, I think that’s maybe one, one thing I want to try to get out of this is how do we as designers, and maybe not always push back, but at least what tools do we have to question…”You know, we can just do that with a blockchain” or whatever kind of post it exercise idea comes up to solve something.

Laura Kallbag
Yeah, and I think the most important thing you can arm yourself with is knowledge. And a lot of the time you just need to ask the question, “why?” So if someone says blockchain, you say, “why blockchain? What is the value that blockchain is bringing to what we’re building?” Is it that it’s a transparent log, because I can see the value of that if it’s not including people’s personal information, perhaps if you’re using it to track the lifecycle of a product, or maybe something like that would work if it wasn’t based on a proof of work system, so it wasn’t destroying the environment simultaneously. If you’re talking about anonymity… Well, it’s very easy for you to get someone’s wallet address, and then you there’s no anonymity, there’s no privacy there. So that’s not a great reason for using blockchain, you could say that you want it to be a distributed system, and you want a system where it has less likelihood of downtime, you have a system where it can be under the control of many different people, well, then there are other decentralised technologies that you can use to do that. And so I think it’s – when people start to talk about it – it’s important to get them to separate the hype from the actual functionality of it and find out what they actually want to do with it. And see then if there’s a more ethical alternative.

Per Axbom
Because I think that’s what’s going to be happening a lot is that designers are going to come upon the case where they’re being asked to add cryptocurrency to some sort of payment system, or add something around it, because the company’s getting into it or because everybody is because it seems to be all the hype and who wants to be left outside. And so like you’re saying, arm yourself with knowledge, but then also see that as an opportunity to actually create awareness around these issues, and allow for research to uncover what could go wrong, because you’re still supposed to be working according to privacy by design, there are so many principles you still have to adhere to, that probably could help you uncover what you have to say, to perhaps avoid a situation where you have to incorporate cryptocurrency at all.

Laura Kallbag
Yeah, and a lot of the time, when you dig into the reasoning behind when people well if your boss or someone tells you that they want to integrate this in, if you ask them a few questions, you might fairly quickly realise that they don’t necessarily know why they want it either, they just want the next big cool thing. And then maybe you’ll be able to find something else that’s big and cool. Looks as shiny, but isn’t as bad.

James Royal-Lawson
One thing that is concerning me. And we’re gonna have to wrap up a little bit now. But the one thing has concerned me is the amount of charities and like crowdfunding and good causes that are jumping onto crypto as a way of, of gathering money. And, you know, I’m worried that because it is a pyramid scheme, a lot of this, that all these good causes, are gonna have the rug pulled out from underneath them. And, you know harm, real harm is gonna come to people that would be beneficiaries of this if it was a real currency.

Laura Kallbag
And this is one of the things that frustrates me so much is that a lot of people that are interested in it, they’re struggling under the current system, and they are finding it difficult to make money and so they are looking for any way out of it. And honestly, I kind of understand if you’re struggling under the current system, and you want to try and make some quick money out of it. If you know what you’re doing. I don’t blame you for it. I don’t blame you for participating in it. I think that life is hard right now, and very expensive. And I do think it is bad if you are preying on other people in order to make your money. And I think that’s a really big issue. And I think they’re the people that we really need to be focusing on like who are the people that are trying to encourage charities to use these cryptocurrencies like that’s seems like some really bad information that they’re getting or that they are going to somehow benefit if they are really in on that cryptocurrency then they’re encouraging a charity. It makes them look really good that they are using a charity and helping them get money but then if they’re making money out there as well. And, yeah, I guess sometimes you have to be a little bit cynical about people’s motives.

Per Axbom
Exactly. One thing I took away from your talk was this point you made about, we love to make fun of people buying NF Ts because it’s so easy to joke about it. But in the end, we need to actually address these unethical actions with seriousness that we need to actually do it more. Well, more coherently creating awareness, helping people understand better instead of just making jokes about it, and I think you’re helping us do that really well.

Laura Kallbag
Thank you. I think that it’s, it’s easy to learn about stuff, it’s much easier to make fun of it. And also, sometimes when you make fun of it, you give them a bit more ammunition, because you give them that way that they can say, “Oh, well, you’re just you’re being unkind, You’re being unfair.” It’s, it’s like if you want to criticise someone that you don’t pick on how they look, you criticise what they are doing that is wrong, you criticise their actions. And I think it’s the same, it’s a low blow to just laugh at them and say, “Oh, you’re stupid.” But if you say, “Hey, this is not a wise decision for this reason, and that reason – the environment, because of the lack of privacy, because of the lack of access,” I think you get a…you go a long way. I had a really bad experience at an Ethereum conference where I went to talk to them about making decentralised technologies easier to use and more accessible. And I got so much abuse for it from the community there. And I was honestly just trying to help them out. I wasn’t saying anything unkind, but they were awful to me in return. But what’s interesting is with this Web3 talk, I’ve had very little criticism back. And I think that part of that is that I really tried to be specific and factual in the information that I’m provided, like that I’m providing. And I’m saying that I believe it to be harmful. But I’m also saying here, these are the reasons why.

Per Axbom
Yep. Such a good core message. Thank you, Laura, for being with us.

Laura Kallbag
Thank you for having me.

James Royal-Lawson
And thank you for doing what you’re doing with this area, because I think it’s needed as well.

Laura Kallbag
Thanks.

James Royal-Lawson
Since we recorded the interview with Laura, which was only a couple of weeks ago, crypto has had another bit of a crash. And I think…

Per Axbom
A huge crash.

James Royal-Lawson
Well, the time, the time of recording this. I think Bitcoin is round about half the value it was in the autumn. I mean, I mean, it’s still well over 1,000% higher than it was, you know, a number of years ago. But now things are unravelling a little bit and we’ve had stablecoins going belly up and going you know vanishing.

Per Axbom
95% in one day or something like that.

James Royal-Lawson
Oh, yeah, what was really interesting about the 95% one day is I think it went 95% again the next day, because of course you can keep on doing 95 percents for infinity.

Per Axbom
But interesting, you say stablecoin. We didn’t talk a lot about that. But it’s stablecoin essentially, it sounds like “Well, that’s supposed to be more stable than something else.” But that confidence isn’t really there.

James Royal-Lawson
Now, this is one of the really interesting aspects of these currencies anyway, is that they aren’t really currencies.

Per Axbom
Exactly. The words don’t mean anything.

James Royal-Lawson
No they’re they’re actually just, I guess, risky financial instruments, without any underlying assets that back them up. You know, there’s no reserves, there’s not no nothing. So I think we’ve mentioned the zero sum game thing. Yeah, that is what goes in is what comes out.

Per Axbom
Yeah, that blew my mind. I thought when I was trying to understand this, like a year ago, or something I just couldn’t understand well, “how is that anything?” It just you put money into it, and the people who who leave when there was more money in it, they get more money back and so the other people lose? But then as we learned from Laura, as well, it’s a negative sum game because we’re actually spending money on electricity at the same time. So we’re actually losing by using cryptocurrency.

James Royal-Lawson
Exactly. I mean, it’s a classic pyramid scheme, you know, it’s a zero sum game. Money goes in, money goes out. There’s no generation of anything in the currency itself. The only time you win something is by pulling your money out. And you certainly see, we’ve got all these gas fees are these transaction fees, because it’s using resources to do these transactions, and they’re really expensive, and those are not included in the value of the currency as such. Which, so they have to be paid by someone. So they’re paid by you when you have a transaction, which is an extra fee because to try and internalise that cost.

So very weird thing, this. And I think it… ties into a little bit about… me and you…I think we’ve…I felt I didn’t understand any of this. And it felt really strange. It’s like this can’t be what it is. And I can read more about it trying to understand. And then I get to the point where no, actually, I did understand! You know, the economics of this are is broken as it looked like and it is a pyramid scheme. And I mean, I suppose Laura mentioned possible good uses of blockchain. And blockchain has been around for about 40 years now, or rather the underlying technology you know with paired keys and like all the kind of using crypto keys and stuff, to sign stuff, it’s not new things. And, yes, there might be situations where it’s possibly good. Laura mentioned the logistics audit trail. Yeah, and that I can see being possibly a good use.

In theory, at least, because I mean, again, with the environmental issues and the actual burning of fossil fuels, that you would require to achieve that. I mean, that’s, I could never condone something like that.

No, well, yeah, because of the costs of verifying the blockchain and the transactions. But the, if you’re looking for a slight more positive aspect of that is, if it’s used as an audit trail for for logistics, then that is a service that logistics companies will provide as part of the logistics, so you could charge customers for providing that. So that would be internalising the cost of doing all those transactions. Yes, you’re right, it’s still inefficient, but it would give benefit and people would be prepared to pay a price for the benefit. So, so there it’s not a zero sum game anymore.

Per Axbom
Oh, I see. Yeah.

James Royal-Lawson
Compared to NFTs and Web3 stuff, where it’s just what money goes in gets taken out.

Per Axbom
It’s still a trash fire, but some use.

James Royal-Lawson
I mean, they another aspect that, again, I think is and the crash that we’ve just seen this last few weeks is, is the start of something interesting now. When you look back and think okay, Bitcoin, it came about pretty much straight after the financial crash we had in 2008. And the period of time we’ve had since then, has been a very unusual period of time, historically, we’ve had a historic period of growth, we’ve had historically low interest rates. So the climate that these cryptocurrencies have flourished in, have been historically good. What we haven’t seen…

Per Axbom
A time when people have been willing to take risks, because they’ve had so much money to spend really.

James Royal-Lawson
Well and also, it’s an attractive because they’re a high risk investment vehicle, then people have been prepared to take the risk, investing the money in it, because, you know, it’s clearly more than interest rates more than gross. I mean, it was a, it was a pyramid scheme that was easy to win on. Whereas now, when interest rates start to rise, and growth starts to stall, people possibly start to lose jobs, or you know, things happen, the economy always turns…Is crypto actually attractive anymore?

Per Axbom
Exactly. How fast will people get out? And how much are they willing to lose?

James Royal-Lawson
Yeah, and given it’s a zero sum game, get your money out sooner rather than later?

Per Axbom
Yeah. So what I do love about how Laura approaches this is that she really does explain that there is like, there’s decent reasoning behind why you would want to do this with the decentralization issues. But she’s also so good and poignant at explaining how it’s not solving any of the problems that it claims to solve. Yeah, it’s all being centralized again. we’re hurting people. The stable is not stable. Currency is not currency.

James Royal-Lawson
Well, a lot of the financial regulations and things that we had in place for money laundering and the rest of it as a global financial system, were put in place to try and make it a better world. And if you…there was another article that we read, an interview with a computer scientist, Nicholas Weaver. Yeah. And he pointed out in that that the uses of cryptocurrency…well, one of the some of the big areas where crypto is used is drug dealing, child sexual abuse material and ransoms. And this also blew my mind a bit the whole thing with ransomware. It wouldn’t be possible if it wasn’t for crypto, money laundering laws in place and regulations and monitoring of transactions means that you can’t charge someone like $10 million to unlock their company’s computers, because that $10 million will be really easy to track down in the financial system.

Per Axbom
Exactly.

James Royal-Lawson
So we have this thing where the you know the big beneficiaries of it There are things we really don’t want to be encouraging, right? Well, people trading child abuse pictures, I don’t want people paying for drugs, I don’t want people getting threatened and paying $10 million to unlock the computer.

Per Axbom
Exactly. So we have this traditional financial system that has addressed all these issues. So it’s like cryptocurrency is going through 200 years in just five years and realizing, “Oh, we have to fix all this, we have to fix all this.” And it’s just, again, that’s also a trash fire. It’s just insane how naive people are, when talking about how crypto will save the world.

James Royal-Lawson
I think we’ve made a great point with the 200 years of history in like, micro amount of time that I think we’ve got really used to running fast and breaking things. And you know, you there’s some things that you don’t want to run fast with and you don’t want to break. And I think the global financial system is probably high on my list of things that I don’t really want us to break. It might have issues, it might have problems. But we didn’t make this up overnight. And I don’t want us to make another one overnight. We’ve tried and we’ve seen now; it doesn’t work.

Per Axbom
So the episode you’ll want to listen to next is actually one we did before about Bitcoin. Many many, many years ago, it was your friend who started accepting bitcoin at a pub, wasn’t it James?

James Royal-Lawson
That’s right. Yeah, he’s always liked doing technology stuff, programming things himself – making circuit boards himself and stuff over the years. And yeah, he was brilliant. He was the first pub in the UK to accept Bitcoin and it was in Cambridge. So it’s really interesting to listen back to this episode. I mean, it was a long time ago now it’s episode fifty…

Per Axbom
55. Bitcoins and pubs and Steve Early, 2013.

James Royal-Lawson
2013. But it’s interesting to listen back to the interview and realise that we were starting to pick up on…Steve was too…some of the problems with crypto, and he was trying to address them and we were like trying to look into it as well. But we were very positive back then about its usability.

Per Axbom
Yeah, because we are always so curious about new things. And I think that’s what gets people excited. “So there’s this new thing I want to try out.” Which is also a reason to, I think people were early investors in it. Do you have any bitcoin James?

James Royal-Lawson
No.

Per Axbom
Oh me neither.

James Royal-Lawson
If you don’t understand something, don’t invest in it.

Per Axbom
Oh, that’s sound advice. Remember to keep moving.

James Royal-Lawson
See you on the other side.

[Music]

My local butcher has started accepting crypto as payment.

Per Axbom
Okay.

James Royal-Lawson
Yeah, but only proof of steak.