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We can’t all be friends: crypto and the psychology of mass movements

bitcoin social trading

The crypto community can be toxic. There’s trolling and brigading (try to post anything even slightly critical of XRP without muting your notifications), ad hominem attacks, and delighting in the misfortune of other people. I didn’t know there was a mute feature until I discovered crypto twitter.

Conflict is organized around tribes. People form tribes around projects (like Bitcoin, XRP), people (like Vitalik, Justin Sun), and theses and beliefs (like Fat Protocols, Fat Moneys, Crypto is rat poison). Oftentimes, individuals are members of multiple related tribes.

Members of these tribes exhibit some curious behaviors:

  • First, seemingly irrational certitude in their beliefs (e.g. XRP will be used by all of the world’s banks; all altcoins will go to literally zero).
  • Second, antagonism towards seemingly uncompetitive crypto tribes (why does money need to compete with a world computer?).
  • And finally, frequent switching of tribes.

The market draw-down of last week offers a recent example of these behaviors. Prices grinded down for a couple weeks and then on August 13th, crashed, with Bitcoin falling ~5% and most other cryptoassets falling ~20% against Bitcoin.

This led some “fat money1” evangelists to take to twitter, telegram, and even television to congratulate themselves and others for holding only Bitcoin and ridicule anybody who held basically anything else. I’ll refrain from posting any excerpts because I think they will reflect poorly on the authors. As they say, “praise by name, criticize by category2.”

These two reactions by investor Arianna Simpson basically summed up my perplexity with the behavior.

First, people I know to be thoughtful and kind stating with irrational certitude that their belief is right, and simultaneously ridiculing those that hold non-Bitcoin cryptoassets.

And then, a mass of people (many of whom I know for a fact had differing viewpoints as recently as weeks ago) band-wagoning.

To be clear, the point of this piece is not to criticize “fat money” believers. In fact, I tend to agree with the concept and have said so publicly in the past3. I detail the behaviors above to illustrate a norm, not an aberration.

It’s hard to explain these phenomenon. Why behave this way? Irrational certitude seems like a great way to be embarrassingly wrong in the future. Antagonism seems like an unnecessary risk of being labeled an asshole by your industry peers. And switching tribes amplifies both risks.

I’ve been interested in the in-fighting and tribalism of the crypto community for some time. I wrote “Crypto-anarchism vs Crypto-incrementalism” to describe one such divide. And I have a long draft applying a religious lens. But neither seem to adequately describe the community’s dynamics.

Recently, something clicked when I read The True Believer by Eric Hoffer, a book on the psychology of mass movements like Christianity and Communism.

Crypto in-fighting makes sense when viewed through the lens of mass movements.

The psychology of mass movements

Eric Hoffer, author of “The True Believer”, img source

All mass movements generate in their adherents a readiness to die and a proclivity for united action; all of them, irrespective of the doctrine they preach and the program they project, breed fanaticism, enthusiasm, fervent hope, hatred and intolerance; all of them are capable of releasing a powerful flow of activity in certain departments of life; all of them demand blind faith and single-hearted allegiance

In 1951, American writer Eric Hoffer wrote The True Believer: Thoughts On The Nature of Mass Movements. It was published to immediate acclaim, with President Eisenhower giving copies to friends and recommending it to others. The book has resurfaced in part due to the 2016 US Presidential election. In 2017, Clinton shared that she recommended the book to her staff during the campaign.

I won’t summarize the whole book in this post, but I recommend reading the source. It’s concise and written like aphorisms. But if you prefer posts, there’s a good summary on the Farnam Street blog.

Instead, I’d like to propose a framework for starting a mass movement and apply that framework to the tribalism and in-fighting of the crypto community.

The players

Different groups of people play different roles at different times across a mass movement. In roughly chronological order:

“Men of words,” anti-establishment intellectuals

The mass movements of modern time, whether socialist or nationalist, were invariably pioneered by poets, writers, historians, scholars, philosophers and the like.

The words of anti-establishment intellectuals sow the seeds for revolution. They present ideas and sometimes discredit the establishment, paving the way for a charismatic leader to package their thinking into a movement.

Examples

  • Greek philosophers that ridiculed the pagan cults that Christianity eventually displaced
  • Cypherpunks that described an idealistic world that inspired the Bitcoin whitepaper

“The fanatic leader”

It is a truism that many who join a rising revolutionary movement are attracted by the prospect of sudden and spectacular change in their conditions of life. A revolutionary movement is a conspicuous instrument of change.

Interestingly, the intellectuals that prepare a society for a mass movement tend not to lead the movement4.

Christ was not a Christian and Marx was not a Marxist

Instead, when the moment is ripe, a fanatic leader galvanizes the ripe population and pushes it to a point of no return. The leader translates the ideals published by the “men of words” into doctrines promising sudden and spectacular change.

Examples

  • Lenin
  • Trump
  • Gandhi

“The devil” to fear and fight

Hatred is the most accessible and comprehensive of all the unifying agents … Mass movements can rise and spread without belief in a god, but never without a belief in a devil.

Whereas the “men of words” sought truth, the “fanatic leader” seeks to unify the masses. The “fanatic leader” has two tools at her disposal: hope and hatred. Hope comes in the form of spectacular promises of change. Hatred takes the form of those forces that would prevent that change.

Examples

  • Capitalists for communist revolutions
  • Jews for Nazi Germany
  • Legacy financial system, Altcoins for the Bitcoin community

“Men of action” to implement the revolution

The chief preoccupation of a man of action when he takes over an “arrived” movement is to fix and perpetuate its unity and readiness for self-sacrifice. […] He inclines, therefore, to rely mainly on drill and coercion. […] The genuine man of action is not a man of faith but a man of law.

After the mass movement has been pushed to a point of no return, practical actors must step in to maintain and legitimize the mass movement. Sometimes, when the promise of the mass movement outstrips the reality, this phase requires violence.

Examples

  • Xi Jinping
  • George Washington

The playbook

With all the players present, a mass movement can begin. Its course can be described with these three stages: forebearance, conception, and legitimization.

  1. Forebearance: “Men of words” sow the seeds of revolution with idealism that alludes to a better world and discredits the current powers
  2. Conception: “A fanatic leader,” inspired by the words of the intellectuals rallies a ripe population with promises of sudden and substantial change. The promises are vague and grandiose, set against “the devil” to fear and fight.
  3. Legitimization: Once the movement reaches critical mass, “men of action” do whatever possible to legitimize the mass movement and convince the population that, “the new order [is] the glorious consummation of the hopes and struggles of the early days.”

Applied to Bitcoin and Ethereum:

Bitcoin

  1. Forebearance: Cypherpunks publish subversive pieces like The Cryptoanarchist Manifesto leading to Nakamoto’s Bitcoin Whitepaper.
  2. Conception: Fanatics such as Andreas Antonopolis, Fred Wilson, Roger Ver, and more evangelize Bitcoin, promising freedom from the tyranny of authoritarian regimes and legacy financial systems.
  3. Legitimization: We’re not here yet, but this will look something like a group of pragmatists doing everything in their power to maintain a perception that Bitcoin succeeded in fulfilling its promises.

Ethereum

  1. Forebearance: Members of the Bitcoin community publish critiques of Bitcoin’s properties and some launch alternative coins to address new use cases or experiment with new designs. The Ethereum Whitepaper is published.
  2. Conception: Fanatics such as Vitalik Buterin, Joe Lubin, and “Silicon Valley” evangelize the promise of a decentralized web, promising freedom from the tyranny of states and internet monopolies.
  3. Legitimization We’re also not here yet.

Try it yourself with your favorite (or least favorite) cryptocurrencies, political leaders, or cultish companies (like Tesla).

Competition in mass movements

Let’s return to our three perplexing behaviors observed in members of crypto tribes.

  1. Irrational certitude in their beliefs
  2. Antagonism towards other crypto tribes
  3. Frequent switching of tribes

The nature of competition in mass movements contains clues.

When people are ripe for a mass movement, they are usually ripe for any effective movement, and not solely with a particular doctrine or program […] (a) all mass movements are competitive, and the gain of one in adherents is the loss of all the others; (b) all mass movements are interchangeable

The ripe population in a mass movement isn’t only ripe for a particular religious or financial or other forms of mass movement, they’re more ripe than average for any mass movement, including directly competitive movements. It’s more likely that a radical group will be able to recruit from a competing radical group than from an apathetic group.

A Saul turning into Paul is neither a rarity nor a miracle. In our day, each proselytizing mass movement seems to regard the zealous adherents of its antagonist as its own potential converts.

This explains the fierce competition between crypto projects that seem unrelated aside from their choice of technology. While they may not compete from a business perspective, they compete directly for a population of true believers: “the gain of one [movement] in adherents is the loss of all the others.”

To understand why fanatics might state things with seemingly irrational certitude, consider what makes the doctrine of a mass movement effective:

Those who would transform a nation… must know how to kindle and fan an extravagant hope. It matters not whether it be hope of a heavenly kingdom, of heaven on earth, of plunder and untold riches, of fabulous achievement or world dominion.

and

The effectiveness of a doctrine does not come from its meaning but from its certitude … presented as the embodiment of the one and only truth. If a doctrine is not unintelligible, it has to be vague; and if neither unintelligible nor vague, it has to be unverifiable.

In the competition for adherents, evangelists are willing to risk being proven wrong if it allows them to cultivate an effective doctrine. The result: bold claims, semantic drift, and the motivation to make predictive statements in the face of all odds over and over again.

Oftentimes, these statements seek to deride and discredit the doctrines of competing movements. Viewed through the lens of mass movement, this might not be excessive force. A competing mass movement that reaches Forebearance threatens your mass movement.

Closing thoughts

Mass movements can help us better understand crypto. Its origin stories follow the mass movement playbook. Its followers behave like adherents, attracted by the promise of sudden and spectacular change. Competition and “in-fighting” is fierce. And adherents regularly switch from one movement to another.

We are very early in these mass movements–somewhere between Forebearance and Conception. The sources of Forebearance are established post-hoc: only after a successful mass movement can you point to the “men of words.” Today, we think they might be cypherpunks, Satoshi, or Vitalik. It remains to be seen whether the mass movement that reaches Legitimization spawns from the same sources as Bitcoin and Ethereum.

Jostling for narratives can be seen as an evolutionary battle to compose the doctrines most likely to attract the next wave of adherents. Coin prices amplify this mess. Market cycles–especially up-cycles–appear to pick winning narratives, leading to sudden increases in evangelism and waves of new adherents. And when the market swings the other way, a new narrative gains steam and steals adherents.

Should a mass movement within crypto grow very large, the established powers of the world will turn against it. Throughout history, all successful mass movements have been violent–much bloodier than twitter trolling and telegram sniping. When this happens, we’ll be somewhere between Conception and Legitimization. This is the boss fight.

Viewed through the lens of mass movements, there is no kumbaya moment for the crypto community. Competition between early-stage crypto mass movements will continue until there is literal blood in the streets5.

So what can we do? As individuals, we should be mindful of the psychology at play. Awareness can check unkind behavior. As projects, we can learn from successful mass movements to kindle our own. The psychology of mass movements expands the playbook projects can use to grow. And as a community interested in a freer world, we should think hard about whether the in-fighting increases or decreases the probability of any crypto project’s mainstream success.

What do you think we should do? Let me know on twitter.

Thanks to Nathaniel Whittemore and Spencer Noon for their input on this piece

  1. “Fat money” is basically a new label to describe what Bitcoiners already believe: that capital will flow to cryptoassets designed to be money (e.g. good monetary policy). Its name is a tongue-in-cheek reference to the “fat protocols” thesis popularized by Joel Monegro in 2016, so its supporters also emphasize that “fat money” also believes that non-money cryptoassets (e.g. utility tokens, smart contract protocols) will be worthless long term. A good and lengthy discussion on “fat money” can be found on the Village Global podcast. A primer by Arjun Balaji can be found here. ↩

  2. Attributed to Warren Buffett in his letter to Leon Cooperman ↩

  3. I cite “sound money” in my post “Sound digital goods” and say that the “money use case” is likely the most promising crypto investment in “Trustless digital assets (NFTs).” ↩

  4. Bitcoin and Ethereum are handy examples to illustrate this point. In Bitcoin, Satoshi was the “man of words” but his disappearance meant others had to play the “fanatic leader” role. This is typical of mass movements. With Ethereum, on the other hand, Vitalik can be seen as both the “man of words” and the “fanatic leader,” a less common formation. ↩

  5. Jeeze this was intense ↩