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‘Parasitic’: Why the founder of Dogecoin thinks crypto is a scam

Having founded one of the most popular and valuable crypto projects - meme currency Dogecoin - you might not expect Australian software engineer Jackson Palmer to be one of the industry’s harshest critics.

But Palmer is unequivocal in his criticism and has been for some time, having exited the crypto space in 2016 and denouncing it as exploitative. Meanwhile, Dogecoin has continued to grow, hitting a market capitalisation of $15 billion and attracting the support of the world’s richest man Elon Musk.

Dogecoin founder Jackson Palmer is now one of cryptocurrency’s most prominent critics.

Dogecoin founder Jackson Palmer is now one of cryptocurrency’s most prominent critics.

These days, Palmer has - in a sense - reentered the fray, launching a new podcast called Griftonomics which he hopes will shine a light on new-age scams and rorts - of which he believes crypto is one of the worst offenders.

The Age and The Sydney Morning Herald spoke to Palmer for our new weekly series You, Me and Web3, which aims to examine, challenge and demystify the ideas behind the emerging industry by speaking to the people who live and breathe it.

How did you go from starting Dogecoin to making a podcast about grifts?

When I made Dogecoin, I was already a very sceptical person, and it was created as a joke to make fun of crypto. But it happened to coincide with a unique period of time when crypto was having its first big run-up. And, as a result, I got quickly enveloped in the ecosystem.

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So, I decided I’d give it the benefit of the doubt, thinking: surely everybody in this space can’t be terrible. And I tried that for the good part of a year, and I made many friends in the crypto space, but having to deal with all the crap going on with Dogecoin and the community, I was quickly shocked back to reality. My scepticism was entirely warranted.

In 2016, I quit crypto and didn’t do anything in the space for a good two or three years until the next run-up in 2017/2018. And I had so many people asking me about it, so I decided to make an educational YouTube channel to inform people, and that went pretty well, I think I racked up around 30,000 subscribers.

But, again, I quickly realised there were channels out there promoting things like ‘how to get 10x on your investment’ that were getting hundreds of thousands more views than mine, so I was like, what am I doing this for? So, in 2019 I deleted all of my social media and stayed away.

Last year, I bought the domain name for Griftonomics. And as I was about to start recording the first episode I was like, why? Why am I putting myself through this again? So I walked away for another year, and part of me thought in that time some of this stuff might implode, but it hasn’t. If anything, there are more scams than there was a year ago. And so, in the last few weeks, I decided it was time to get back into it.

Dogecoin, founded by Palmer, is a joke cryptocurrency that is currently the 10th largest crypto with a market capitalisation of $15 billion.

Dogecoin, founded by Palmer, is a joke cryptocurrency that is currently the 10th largest crypto with a market capitalisation of $15 billion.Credit:Getty

In the grand scheme of grifts, where do you think crypto falls?

When I set out to do Griftonomics, I wanted the series to be mostly about things that weren’t crypto-related, like hustle culture, online gambling, carbon credits, things like that. But the interesting thing about crypto is, as you start to scratch the surface of the things I just mentioned, in every topic, you find a crypto angle.

There is some way that this parasitic thing has got its claws in every single kind of scam that is out there. It’s a facilitating technology. Crypto acts as an enabler of many groups of scams by providing an unregulated, harder to control system for scammers to perpetuate their scams. Wherever there’s smoke there’s probably crypto.

So if it is such a scam, why are so many people drawn to it?

Crypto has this narrative attached to it that exploits the fears or the situations that the average person finds themselves in, and grifters have used this to sell people on the idea of crypto, that it’s some sort of cutting edge new technology. And this puts people in this situation where they’re like ‘oh, there’s this crazy way that I can make a bunch of money, and it’s some whiz-bang technology that celebrities and billionaires thinks is good, so it must be great’. And that’s the closer.

‘When Matt Damon gets up at the Superbowl and tells you that apes will be the future, some people then think ‘oh well, maybe I was wrong’.′

Dogecoin founder Jackson Palmer on crypto

Every two or three years there’s a new narrative. In 2009, it was that Bitcoin was going to replace all these banks that just screwed you over. Then a few years later when that didn’t work out, the narrative was that it was just a store of value. Then it pivoted again to ICOs [Initial Coin Offerings], democratising fundraising, and then recently we went through the DeFi [Decentralised Finance] narrative, which was just a total sham.

Now we have NFTs [Non-Fungible Tokens], which are simply the latest in a long string of changing narratives, so the industry can get a bunch of new suckers in.

I, for one, am completely shocked that some expensive pictures of apes might actually be a scam.

[laughs]. That’s the thing - I think many people suspend their disbelief when it comes to things like that.

If you went back five years and people were telling you JPEGs of apes were selling for a million dollars, people would have laughed at you. But the problem is it has been legitimised by its promoters who are putting money in the pockets of celebrities or politicians to legitimise it.

When Matt Damon gets up at the Superbowl and tells you that apes will be the future, some people then think ‘oh well, maybe I was wrong’.

How much do you think that sort of Elon Musk factor plays into it? When the world’s richest man is on Twitter talking about crypto, does that further legitimise the space?

Elon has had a big impact, especially on the Dogecoin market and making people believe that it is something, which I obviously don’t agree with. But it’s not just Elon, I think it is also various large names like Marc Andreessen, Mark Cuban, and several other big names in investment that are heavily on the crypto train and probably carry just as much, if not more, influence than Elon Musk.

If you go and look at the people who were involved with Y Combinator or 500 Startups 10 years ago, I pretty much guarantee they’re all running a crypto venture fund right now. And some of them are pumping millions, if not billions of dollars into trying to legitimise this stuff.

In your view, is any part of the Web3 space legitimate? Could any of it stick around and actually be useful?

Not really. I think it’s a hammer in search of a nail, and it doesn’t provide much value back to society in any meaningful way.

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I’m a huge proponent of decentralisation, I had a person on the podcast who was the creator of Mastodon, a decentralised social network a lot like Twitter. Does it need a blockchain? Does it need cryptocurrency to function? Absolutely not. And the same can be said of so many peer-to-peer protocols.

What crypto does is play on the incentives of gaining adoption through making the product something people can speculate on, and that undermines a lot of its ability to service many of these use cases.

I think it’s very telling that the people who are seemingly most involved in, pouring the most money in and exerting the most power over cryptocurrency right now are the same people who destroyed the economy in 2008, the same people who are billionaires in the real world.

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