The Legitimacy Crisis
The good, the bad, and the ugly of tokenizing self-worth
All else aside, times of extreme economic inequality make it obvious that money is a bad proxy for one’s self-worth: if it were a good one, after all, most people wouldn’t have much at all. Still, the American Dream depends on some notion that self-worth will eventually translate to monetary earnings, so we find ourselves in an uncomfortable state. We know it’s wrong, of course, to think that one’s value as a human can be measured by bank statements, but it’s not as though our politicians, screenwriters, and influencers have given us much alternative.
Note, for example, how often go-to ideologues like those above define virtue through superheroes, whose defining characteristic is that we could never be like them. There are the conservative Marvel superheroes, struggling to maintain an imperfect world against evil eco-visionaries, and there are progressive teen superheroes, the Gretas and Malalas who are held up as exceptional precisely because they are not aspirational figures. In both cases, we exist passively for them to save, and their criteria of greatness is not our own.
At the same time, we increasingly realize that even our traditional criteria of greatness—Ivy League degrees and social influence—often represent bank statements in disguise. Social capital is financial capital; if the American Dream lives on through Twitter and Tik-Tok, where completely unknowns trade their talents for clout, we can still determine the most popular figures by their earnings. Ryan made $30M last year.
In other words, we’re facing a crisis of legitimacy. Corporations express it in milquetoast terms about whether their value is from increasing profit for shareholders or improving the economy for everyone, but isn’t this a crisis many of us face as individuals too? As we all split our time worrying about the planet and looking for one more like, we’re faced with our own conflicting obligations to profit ourselves and the earth. That is, we’re faced with a question institutions can no longer answer for us: what are any of us worth?
In some ways, the question simplifies for those who question the traditional legitimacy of money altogether—not just in gauging self-worth but in serving as sovereign currency. This double crisis of legitimacy, of our worth and of money’s worth, nearly offers its own solution: what if we could use another form of value to measure our self-worth in radically new ways? Over the past couple weeks, a few major members of the crypto community have proposed different answers to this legitimacy crisis in ways we might label the good, the bad, and the ugly.
First, Bitclout launched a social media platform for creators to sell their own tokens. In a way, the tokens are another kind of synthetic equity—that is, they look and sound like equity, but they aren’t. Since it turns out that it would be illegal to own a human being, they do not represent actual governance over the underlying asset (the creator) nor a discounted cash flow of the creator’s income. Instead, they represent some financial approximation of one’s social capital, or as investor Chamath Palihapitiya put it, they let “people with reputation and trust signal that they have it.” In place of the blue checkmark, you can show that people have spent millions to buy your token.
One could argue against Bitclout’s tokens by saying they’re purely speculative, but then so are reputations, popularity, and desirability—the traits that Bitclout tokens are meant to approximate. In a pre-social media landscape, these traits would have arisen from financially rewarding creations like books, music videos, and albums. In the social-media landscape of 2021, however, creators’ most valuable sources of clout, including tweets, reddit posts, and instagram photos, are not financial assets. Like Tik-Tok, Substack, Roblox, Only Fans, and NFTs, Bitclout in theory intends to monetize creators directly for their creations, though not by selling individual posts but by selling a token in the project as a whole: the human being’s life.
As a dystopian reflection on the ways that creators live their entire lives as a series of gestures pumping and dumping their social value, Bitclout can’t be beat. We can imagine how influencers might tremble at the thought of their next blowout or think twice about liking a post: will it add $1,000 to their social capital, or $100,000? Bitclout forces us to recognize that emotional labor should be paid labor, but only by assessing the value of human beings as a whole, rather than the labor they produce. Likewise, Bitclout promises a decentralized quorum for humans, rather than banks and corporations, to determine our value—only for its quorum to turn out to be a market, its humans turn out to be the ultra-wealthy, and its value turn out to be purely monetary.
So Bitclout, I think, falls into the “bad.” If there are clearly some uncomfortable historical parallels here to buying and selling human beings for their work, what is most crass about the project is the way it makes us articulate our own unspoken assumption that we deserve to have varying values in dollars, cents, and ether. Of course, even if it’s demeaning to let strangers define our value in strictly monetary terms, that doesn’t mean it’s not worthwhile. The big question that Bitclout faces is how much influencers really do need to turn social capital into financial capital when successful figures have already done this—and whether measuring the social worth of a whole human being is the best way to do so.
After all, there are also ways to play the same game with less speculative metrics. Prediction markets, for example, let us bet on popularity and reputation in terms that are more directly tied to asset valuation and less directly tied to the value of humans as a whole. By letting us bet on whether Cardi’s album will go platinum, when Kim will get divorced, and how many likes Elon’s tweet will get, prediction markets enable a kind of derivatives trading on one’s social capital that’s seemingly more precise, more objective. And emotionally, these prediction markets don’t make us cop to the uncomfortable fact that we’re judging a life for its market value.
Second, in a troublingly brilliant interview with Tim Ferriss from last week, Balaji Srinivasan suggests another source for this crisis of legitimacy: the 2008 crash. In Srinivasan’s telling, banks got bailed out, bankers grew their intergenerational wealth through the intervention of the US government, and the US government defined its role in protecting backward-looking privilege against forward-looking innovation—or rather, in protecting the rich against the worthy.
Note that for Srinivasan, the issue is not redistributing wealth from rich to poor, but rather from privilege to talent. Over and over again, he suggests the ways that US citizenship alone is a privilege that could be its own undoing, used to lock out enterprising talents from the rest of the world who would contribute far more to the economy than nepotistic bankers. “Yes, absolutely, there’s smart people at MIT and Harvard and Stanford,” he says. “But there are smart people in the middle of Brazil, and Hungary, and India, and Nigeria, and the Philippines, and I can see they’re the equal or better of the more pampered kids at these more expensive schools.”
Crypto doesn’t only open up a financial system to anyone with a phone, he suggests, but could offer badges for learning and creating that would take the place of resumes and Ivy League degrees to earn jobs in an all-remote future. “Anywhere there’s a phone, there’s a job,” he says, effectively deterritorializing the American Dream for a borderless world that can give anyone “a shot if they’re willing to put in the work.” Instead of fighting for likes on twitter, he says, we’ll work towards skill-building that can make an impact in the world while bettering our economic opportunities. Education badges will be the new tokens giving us legitimacy.
I should say that when I hear of people wearing badges to attain or lose certain rights, I start to feel disturbed at the historical echoes—but what else are wealth and college degrees, except, as Srinivasan rightly says, badges that accrue to families who already have them? His badges at least would be “proof-of-skill,” meaning they would universalize access to educational opportunities for those who have never had it. Or is this a missionary’s salvation to those abroad?
This is why Srinivasan’s argument, which I find to be disturbingly in line with so much of my own thinking, might qualify as “the ugly.” Srinivasan’s favorite verb to describe his more fair, accessible meritocracy is “airlift,” as in, “we can kind of airlift them out,” or “encourage them to airlift themselves out,” or “airlift them from whatever situation they’re in” without even removing them physically. The overriding impression is of a desolate hellscape of kids desperately coding smart contracts in a vain attempt to gain access to a sunny virtual office on Sand Hill Road and all the dealflow it entails. Indeed, Srinivasan has spoken eloquently on the political power of people to abandon failed states, and he frequently returns to various forms of “airlifts” throughout his conversation with Ferriss: how tech leaders are leaving San Francisco for Miami, for example, or how humans will embrace “transhumanism” to leave a suffering earth for outer space. Rather than work towards institutional goals to support the planet and societies, Srinivasan focuses on saving the best and the brightest while their non-virtual peers are justly left behind in a burning, altogether non-virtual world. Elitism is perfectly acceptable if it’s meritocratic.
How we define the best and the brightest, of course, is also a matter of a smart contract: completing exercises that are verifiably correct on-chain. As he puts it, “expensive schools” put “less emphasis on getting the right answer and more emphasis on canceling.” It may seem strange that a wonderfully contrarian, free-ranging, and altogether associational thinker like Srinivasan would advocate for teaching students how to get the right answer rather than how to think critically, but it’s entirely in line with the rest of his technocratic assumptions.
As Justin Reich wrote recently in Failure to Disrupt: Why Technology Alone Can’t Transform Education, tech advocates often correlate educational success to STEM competency, not only because they’re inclined towards STEM themselves but because STEM exercises are much easier to score and grade at-scale. “Much of what we can assess at large scale are routine tasks, as opposed to the complex communication and unstructured problem-solving tasks that will define meaningful and valuable human work in the future,” Reich writes. “Computers can mostly assess what computers are good at doing.” A smart contract can verify whether students got extremely difficult coding problems correct, and these problems may even require significant creative thinking. But they would be in no position to evaluate, nevermind derive, arguments like those Srinivasan puts forward as his own badges of intellect.
No value without credit
And finally, there is the piece that inspired this one: “The Most Important Scarce Resource is Legitimacy,” by Ethereum founder Vitalik Buterin. In a way, Buterin refuses the premises of both Bitclout and Srinivasan. Instead of saying that legitimacy is a commodity that can be quantified and sold as a derivative of an underlying asset, like Bitclout does, Buterin suggests that any asset is in some sense a derivative of its project’s legitimacy; if people choose not to believe in a project as legitimate, it can be forked and lose all worth, no matter what a smart contract says. Likewise, instead of saying that crypto can give us legitimacy, as Srinivasan does, Buterin is clear that it’s we who give legitimacy to crypto. It’s up to us to believe whether a crypto badge is really worthwhile—we have to give worth to the project for it to give us worth in return.
What is wonderful in Buterin’s piece is its treatment of “right answers” as social constructs, preconditioned on a group of humans that are incentivized to decide what’s right and wrong. One gets the impression that the real beauty of a smart contract isn’t that it can ensure moral and legal legitimacy to our interactions, but that it allows us all to weigh in democratically on what we believe to be true: it is relativistic, not deterministic, a way to weight our biases. If Bitclout and Srinivasan both suggest a somewhat dystopian future in which virtual avatars become more human as they gain complexity, even as humans simplify their measures of self-worth to become more like code, Buterin offers a biting reminder that all codes—Python, Bitcoin, and US Laws—are historical phenomena that last only as long as we agree they’re true.
Here is a vision of math and technology as inherently unstable, the reflections of human subjectivity. It may not sound particularly emancipatory to remember that code is founded on personal bias, but Buterin’s argument qualifies, I think, as the “good.” It reminds us that legitimacy is the basis for our projects—not vice-versa, whatever social media may suggest. In the social and crypto networks of the 21st century, our self-worth is a construct that we try to convince others of, but there’s a great reward if we succeed: they confer it back to us, and it becomes, in some sense, true.