NFTs vs. China

From: POLITICO's Digital Future Daily - Monday May 23,2022 08:15 pm

May 23, 2022

Presented by Chamber of Progress

With help from Derek Robertson

BEIJING, CHINA - JANUARY 27: Ice Resurfacing Machine ice cleaning machines prepare the surface at the Capital Indoor Stadium on January 27, 2022 in Beijing, China. Beijing is preparing for the 2022 Winter Olympics which start on February 4th. (Photo by Richard Heathcote/Getty Images)

Ice cleaning machines prepare the surface at the 2022 Winter Olympics. | Richard Heathcote/Getty Images

The past couple of weeks have been bleak for crypto, with the collapse of a leading stablecoin and a deepening decline in the market for other digital assets.

But a story out of China offers a reminder that crypto isn’t just for investing. Increasingly, it’s also being put to political ends.

This one has to do with Non-Fungible Tokens — unique digital assets best-known as ways to collect digital art.

Lately, NFT's have attracted attention mostly because of the outrageous sums these digital artworks — including a series of drawings of bored-looking apes — were regularly fetching in online sales, at least until the market crashed.

But NFTs, at heart, are just entries on a blockchain that contain unique data.

Because blockchains store information across a network of independent computers, there is no single party — like a social media company or web host — that can decide, or be ordered to, take down content. A meme posted to Reddit can be removed from Reddit, but the same meme — or metadata and links to it — posted as an NFT to a blockchain network cannot easily be removed from the blockchain.

This has caught the attention of dissidents in China, where the ruling Communist Party has exerted growing control over online content in recent years.

Ahead of this year’s Winter Olympics, the artist Badiucao, often referred to as China’s Banksy, produced a series of subversive NFTs that reimagined the games’ marketing campaign with allusions to Beijing’s human rights violations and the Chinese origins of Covid-19.

Since then, the technique has gained new adherents, according to a weekend report in the Wall Street Journal. The story examines the use of NFTs to stymie Chinese censorship of a project called “Voices in April,” which highlights the human toll of the country’s strict Covid lockdowns.

Whereas censors regularly remove posts from Chinese social media platforms, they have no power to remove content from a blockchain network. So Chinese internet users savvy enough to evade government firewalls can access the NFTs, which provide links to many different copies of the underlying media, stored on servers outside of Beijing’s control.

While users savvy enough to get around firewalls could also access established Western web platforms, Beijing hasn't been shy about pressuring Western authorities to deplatform dissident content. Blockchains aim to offer insurance against deplatforming of any kind.

In addition to NFTs, dissidents are making use of a tool called Arweave, which seeks to offer permanent, decentralized data storage. One app built with the tool has been scanning China’s popular microblogging platform, Weibo, and preemptively copying posts that are likely to be censored to the blockchain.

Though these uses remain largely experimental, and not readily accessible by most people in China, they illustrate the challenges that blockchains present to anyone trying to exercise control over online information.

In the West, this sort of technology could also have implications for the debates over censorship and moderation of online content, by making it harder to remove stuff from the internet. This means that lies, defamation or content that simply runs afoul of prevailing norms could be effectively locked into place by the blockchain.

Blockchain enthusiasts are working on Web3 social media platforms that would limit the power of social media companies to remove content deemed offensive, misleading or dangerous.

Before he left Twitter to devote himself to Bitcoin adoption, Jack Dorsey oversaw the creation of a non-profit, Project Bluesky, tasked with creating a decentralized social media protocol.

It’s not clear exactly what form BlueSky will take, but other projects have already popped up that rely on the blockchain to ensure that users’ writing remains indelible. One of them is Mirror.XYZ, a writing platform that also uses Arweave to foil attempts at content removal.

The blockchain grew out of a libertarian desire to evade centralized control of information about money, but as people adapt its methods to all kinds of other information, techno-libertarians could end up getting even more than they bargained for.

In the domestic context, this offers cause for celebration or mourning, depending on how you feel about the content moderation debate.

A message from Chamber of Progress:

New polling shows that American voters do not see regulating tech companies as a priority. Their top concerns are strengthening the national economy (38%), followed by controlling inflation (37%). By contrast, only 5% of respondents prioritized regulating tech companies.

Learn more about the survey results here.

who has your face on their servers?

Today the United Kingdom became the latest country to order Clearview AI to delete all data it holds on its residents, another blow to the beleaguered facial recognition software company. Australia, France, and Italy recently did the same, and earlier this month in the U.S., the company reached a settlement with the ACLU that bars it from selling its technology to private companies.

That’s a string of big wins for civil libertarians and the privacy-minded. But how do governments actually enforce these bans? Especially in the U.S., where government takes much of a lighter hand toward data privacy than its European counterparts, transparency about data collection and storage can be scarce at best. How do we know that data isn’t living on some secret server, waiting for a more favorable regulatory environment, or whether companies might even continue to use them in defiance of a court order?

I emailed Omer Tene, a technology partner at Goodwin Procter and former arbitrator for the U.S.-EU Privacy Shield Agreement, to pose the question. His answer is fairly simple: It depends on the country, but the implicit threat of criminal prosecution serves as a “stick” that may not need to be enforced to be effective.

Lucie Audibert, a lawyer and legal officer for Privacy International, put a finer point on it: “Of course we're never immune to someone at the company copying the data on a hard drive and keeping it somewhere,” she wrote in an email. “But if they do use it again in the future, someone will find out at some point — and the consequences can be dire.”

Audibert elaborated, saying that Clearview is unlikely to effectively comply with the order because their data collection is so vast and indiscriminate that weeding out which faces in its database are those of U.K. citizens would be effectively impossible: “This shows well why their business model is simply not tenable,” she wrote. “The very core of their operation relies on violating multiple countries' privacy laws.”

So no, there aren’t any U.N.-style inspectors auditing Clearview’s servers for forbidden data — not yet, anyway. But as the sheer volume and specificity of data collected by companies like Clearview continues to increase, there might be good reason for privacy hawks to seek them out. — Derek Robertson

Afternoon Snack

Blake Masters speaking with attendees at Turning Point Action

Blake Masters speaking with attendees at the "Rally to Protect Our Elections" hosted by Turning Point Action July 24, 2021, at Arizona Federal Theatre in Phoenix, Ariz. | Gage Skidmore/The Star News Network

Maybe even more than cryptocurrency itself, NFTs are a reflection of the principle that the only true “value” of something is what someone is willing to pay.

Which makes it only natural that the highest-profile (would-be) politician to embrace them wholeheartedly is Blake Masters , a protegé of the über-free-marketeer Peter Thiel and Arizona GOP Senate hopeful who minted a limited run of 99 NFTs to raise money for his campaign in March.

Masters is planning another series of NFTs for “May or June” according to his campaign website (I emailed the campaign for comment, but they didn’t reply by publication time). This sale of 20,000 NFTs of varying value could net their purchasers prizes like exclusive campaign Discord access, campaign swag, or even a signed copy of “Zero to One,” the startup manual penned together by Masters and Thiel.

Incentives, sweepstakes, and promises of candidate-donor elbow-rubbing are a longstanding part of the American political tradition, but there’s something remarkable about the extent to which Masters’ NFTs gamify the campaign contribution process. Prizes from the upcoming line are marked “COMMON,” “RARE,” and “ULTRA RARE” in garish graphics on the Masters website, appearing more like Pokémon or sports card promotions than traditional campaign solicitations.

Which, of course, is presumably the idea — Masters has consistently polled in third place behind his rivals in the Arizona primary, and stands to gain both media attention and influencer-world support from chasing the NFT wave. Arizona’s long primary season doesn’t culminate in a vote until August 8, so much like with Masters’ fellow Thiel acolyte J.D. Vance in Ohio, don’t be surprised if Masters is able to leverage hype toward an eventual victory in a highly fractured field. — Derek Robertson

A message from Chamber of Progress:

The Future In 5 Links

Billionaire philanthropist's Sam Bankman-Fried's ethics were shaped by his mother, a prominent legal theorist.
The Wall Street Journal makes the case that crypto has an insider trading problem.
A Ford-backed startup is testing autonomous vehicles in Miami and Austin — with no backup driver behind the wheel, in what some experts say might be the tech’s toughest test yet.
When will the rest of us get to see the VR headset Apple reportedly demonstrated for executives this month?
Microsoft has developed a dataset that aims to clean up potentially “toxic” language models.

Stay in touch with the whole team: Ben Schreckinger (bschreckinger@politico.com); Derek Robertson (drobertson@politico.com); Konstantin Kakaes (kkakaes@politico.com); and Heidi Vogt (hvogt@politico.com).

Ben Schreckinger covers tech, finance and politics for POLITICO; he is an investor in cryptocurrency.

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A message from Chamber of Progress:

New polling shows voters' top tech policy concerns are cybersecurity and data privacy. Only 7% of respondents prioritized antitrust action and only 1% prioritized changes to app store rules.

In fact, the majority (58%) believe the pending tech antitrust legislation would cause more harm than help to consumers. Between June 2021 and March this year, 79,000 voters signed petitions urging policymakers to oppose legislation that would disrupt the use of tech products and services, endanger their privacy, and prevent online platforms from addressing hate speech and misinformation.

During recent hearings on the pending legislation (S.2992) in the Senate, Democratic policymakers voiced similar concerns about the bill, including its harms to consumers, national security, and privacy. A round up of these concerns is available here.