Crypto Means Business

The Greatest Social Network of All Time

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Mark Zuckerberg

When I spoke with Tyler and Cameron Winklevoss last summer, they described bitcoin as “the greatest social network of all time.” Was revenge on their minds?

Given the identical pair’s well-documented history, it’s a teasingly loaded statement. It’s also true. If Mark Zuckerberg got the upper hand the first time around, the world famous twins have reinforced the notion that they have a keen eye for The Next Big Thing, as part of a growing contingent of crypto-celebrities.

Little irony, then, is lost on the fact that they’ve poured the fruits of their Facebook settlement—then valued at over $70 million—into every facet of the burgeoning cryptocurrency ecosystem.

They were early investors in consumer services, like BitInstant, which, regrettably, took a turn for the worse. They’ve conjured up investment vehicles, like their proposed exchange-traded fund. Their hands are in the mining cookie jar, too, with their reported investment in a secretive Silicon Valley mining startup called 21e6 (which is the scientific notation for 21 million, a reference to the total number of bitcoins that will ever be mined). And then they have their massive crypto-stash—last reported to account for one percent of all bitcoins in circulation.

The Winklevii are clearly all in. And though it may not have been a conscious decision, their impressive and all-encompassing involvement in the rise of cryptocurrencies could provide their ultimate vindication, having been infamously outplayed by a certain hoodie-cloaked Harvard freshman—a narrative that would come to define an era and jumpstart the second great digital gold rush. It was, quite literally, the stuff of Hollywood dreams.

Today, after a much ballyhooed IPO, Facebook is worth north of $170 billion, making the Zuck— yet to turn thirty (to the envy and chagrin of Millennials everywhere)—the 20th richest person in the US. Taking into consideration that even Sean Parker’s oft-referenced, Justin Timberlake-delivered grandiosity was a few zeros short, it’s a truly remarkable feat.

While bitcoin is a currency (or an asset or a commodity depending on who you ask) and a payment protocol, it’s also, as the twins cannily suggest, a social network. And while tech observers will coo over the likes of Instagram and Snapchat as the next “Facebook Killer,” what eventually falls Goliath may very well be armed with crypto.

For now, the world’s most popular social network rules. But Facebook is fundamentally flawed, a fact its user base—the size of which nearly matches the population of China—is becoming increasingly aware of.

As a centralized service, we’re beholden to the whims of Zuckerberg, who in turn, is beholden to profit-seeking shareholders. Under this dissonant model, his true customers aren’t the users that give Facebook any real meaning but the other businesses that actually pay the bills. Less so a pure social network ten years after its humble, dorm room beginnings, it’s become what is essentially an advertising platform. And thanks to Edward Snowden, we know it’s not just companies that are interested in our information.

“Everything we know about technology tells us that the current forms of social network communication, despite their enormous current value for politics, are also intensely dangerous to use,” Eben Moglen, an impresario of digital rights and Columbia law professor told the Times in 2011, inspired by the events of the Arab Spring. “They are too centralized; they are too vulnerable to state retaliation and control.”

“It is not hard, when everybody is just in one big database controlled by Mr. Zuckerberg, to decapitate a revolution by sending an order to Mr. Zuckerberg that he cannot afford to refuse,” said Moglen, who mockingly tore down Facebook as nothing more than “free web hosting and some PHP doodads.”

“I’m not suggesting it should be illegal. It should be obsolete,” he rallied during a lecture at NYU in early 2010, entitled “Freedom in the Cloud.” “We’re technologists. We should fix it.”

Inspired by Moglen’s passionate speech, four students at NYU’s Courant Institute for Computer Science would draw on these ideals to launch the ill-fated Diaspora project, an initiative that would capture the imaginations of technologists and prominent figures—like Al Gore, who phoned in to tell them they were fighting the good fight—make mainstream headlines, and break fundraising records on still nascent Kickstarter. But in the end, it would fail spectacularly—a sad but telling tale that I covered two years ago for VICE’s tech vertical, Motherboard.

Their idea was simple enough: an open source, decentralized, and peer-to-peer social network made by the people for the people. If the idea was noble, it may have also been naive—at least at the time—according to our conversations with Tim Wu, a Columbia professor that helped coin the term “net neutrality” and former FTC advisor, and Bram Cohen, creator of the breakthrough BitTorrent protocol,  which hinted that the effort may have been doomed from the start.

While there were undeniable human factors that served to undermine the possibility of success, the overarching issues were inherently technological and economic. In short, the model was neither secure nor financially sustainable, as the idealistic, would-be entrepreneurs eventually discovered—to devastating effect.

In a way, Diaspora’s demise is an emphatic testament to Satoshi Nakamoto’s genius. In elegantly solving those problems in one fell swoop—devising an approach that creates both trust and profit—open source, decentralized solutions become not only possible but, in some cases, overwhelmingly preferable. As Economist finance editor Ludwig Siegele recently observed: “Bitcoin is not just a protocol or money, it’s a new business model for Open Source Software.”

The result is the potential democratization of networks, which has historically been theoretically and frustratingly unattainable, observed Wu. We call it the network effect: since the utility of an information network directly correlates with the size of their user base, the convergence toward monopoly is inevitable.

”Apart from brief periods of openness created by new inventions or antitrust breakups, every medium, starting with the telegraph, has eventually proved to be a case study in monopoly,” Wu told the Wall Street Journal in 2010, pointing out that many of those firms survive, including AT&T, Paramount, and NBC.

In breaking the cycle, the implications of a true decentralized social network are profound. Suddenly, we could own our own data and users as a whole would own the platform, protected against the influence of Wall Street, Madison Avenue, and maybe even the National Security Agency. Free of Zuckerberg’s tyranny, we would control our own destiny.

From a technical perspective, this evolution of the cryptocurrency concept is known as a distributed autonomous corporation, or DAC—made possible by embedding a layer of scripts, or “smart contracts”, as they’re called—which unlocks a wild array of functionality.

Ripple CTO Stefan Thomas discusses smart contracts

The possibilities are lucidly and insightfully discussed by crypto-luminaries like Andreas Antonopoulos, chief security officer for, and Mike Hearn, considered by some to be the movement’s Ray Kurzweil.

Fittingly, some of the entities most susceptible to the promise of DACs in the short term are natural monopolies—including centralized information networks like Facebook. In other words, Mark Zuckerberg might not have the last laugh after all.

Photo: Max Morse

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