Treatise on Hyperfinancialization
The New Frontiers Opened by Cryptocurrency
A spectre is haunting over the internet - the spectre of hyperfinancialization.
Economic development under capitalism has lead to financialization, or the supremacy of capital markets (speculating on commodity production) over commodity production itself. Hyperfinancialization refers to the emerging of a speculative market overlaying all aspects of reality.
Cryptocurrency deterritorializes hyperfinancialization from inefficient legal and technological structures and allows for the creation of ad-hoc online event prediction markets and tokens that represent items, communities, memes, and anything at all. These tokens function as bets to the underlying and represent shares that increase in price as the object’s perceived importance increases.
That gambling is deep lindy and that a huge percentage of normies are attracted to sports betting (a step between gambling and hyperfinancialization) are some initial signs that the process will take off. On the other hand, many thinkers on the high IQ sectors of the internet such as Gwern and Slatestarcodex have independently converged on the importance of prediction markets. Miya was one of the first to notice the trend towards universal speculation.
The only certain thing we can deduce about trends on the internet is that whatever leads to higher dopamine spikes will necessarily be implemented, as if by darwinian evolution or gradient descent. Hyperfinancialization opens up the ultimate frontier for resource acquisition, as money is the biggest dopamine trigger.
Hyperfinancialization is especially attractive to dissidents (high IQ + disagreeableness) because they’re better at perceiving objective reality - as opposed to socially constructed reality. Regarding the classic saying about the naked emperor, a dishonest person will indeed say that the emperor is naked, but can they bet money on it knowing that the correct response will eventually be revealed and cause them to lose the betted money? Hyperfinancialization makes participants have skin in the game in other words. Empty assertions disconnected from reality that virtue-signal and win points in the social arena lose money in the market.
This is combined with an increasing disappointment with the collapsing western economies and detachment from the corporate world and traditional routes of money-making, a collapse that disillusions more and more people who to turn to other means of resource accumulation. The middle class is decimated, the doors of social mobility are closing, soon class/status will be frozen forever in automated UBIlapse, except if you bet more.
I’ll write about some implementations of hyperfinancialization we’ve seen before expanding to more general thoughts.
Case studies
Milady Maker NFT seems to be the biggest effort until now in financializing a counter-cultural community and an artist. A combination of artistry and cultural bootstrapping gave Milady a unique spot in crypto. The financial element encourages people who believe in the community to shock the timeline or make edits or write posts about the NFT so that their investments increase in valuation, and Milady succeeded and received mainstream attention. We can discern 2 constituents that define Milady:
The counter-cultural part of the NFT that goes against mainstream crypto/VC stances and politics and rallies dissidents of esoteric twitter.
The part of the NFT that is defined by the more specific aesthetic sensibilities and memes cultivated by Remilia. Referring to whiteheart/xiahongshu posting etc.
There’s no special reason that Milady has succeeded at (1), except that Remilia had the first mover advantage and executed it properly and that other dissidents have failed to make the move to hyperfinancialization. Other than this, (2) has criticism from people who do not share the same aesthetic.
This leads us to a question: if you don’t like it, where is the response? Where is the competition? Why have the other niche microcelebs not created investment opportunities for their followers? I’m not talking about the crypto world btw, competition by definition cannot come from financers trying to astroturf a subculture, only from actual subcultures trying to financialize themselves. What do we have until now on the dissident parts of twitter?
Zero HP Lovecraft already has used NFTs for the distribution of his book, “They Had No Deepness of Earth”. He sells the book as an NFT that is accompanied with a hardcover of the book and a PDF file, with the latter being considered the support of the value of the NFT.
the technology is tremendously powerful and has a lot of implications beyond buying a JPEG. It’s special because you also get a physical copy sent to your house
This is not a bad implementation but it doesn’t use the full potential of financialization, I’ll give some criticism for the sake of pedagogy:
Why NFTs instead of a normal token? Obviously because 0HP wants a 1-1 isomorphism between books (who are discrete, non-fungible) and NFTs, but is this actually useful? This is even more paradoxical because the NFTs themselves do not represent actually different artifacts, they are all the same (fungible) representations of ownership of a book, just… not fungible. This limits financialization by decreasing liquidity and complicating the technology. Also a fungible token translates more easily as “shares” of an object, affirming the financial nature of the transaction VS an NFT translating more as a fan loyalty object not meant for trade.
Since NFTs allow you to financialize ownership, why do you also financialize the content itself? Locking anything behind paywalls limits the propagation of your work and reframes it as content to be consumed instead of as important work that you want the world to know about. If the content is free, paradoxically it could lead to greater gains in the case that the increased popularity spikes the token’s price. (ignoring the fact that the book pdf can easily be found)
The 2nd point is not very important in 0HP’s case, because the content is just a fiction book meant for entertainment. It is more striking in the case of e.g. Bronze Age Pervert or Logo Daedalus, who represent the epicenters of certain subcultural spheres on twitter, and yet instead of making productive use of their status they instead use it to cash out on those closest to them.
This should be emphasized because there’s extreme irony involved in the contrast. RWers criticize the financialization that Milady went through, with the usual comments about NFT’s being expensive jpg files, and yet everyone that participated early in Milady has made enormous returns on investment, while everyone that bought anything BAP or Logo produces ended up some dollars poorer. The latter made heinous comments about crypto being a scam and Charlotte pulling off a rug pull during their break from twitter after the cancel event, even when the floor price of the NFT was still higher than the mint price, while having done nothing good for his followers other than selling them pdfs. I’m not conducting a trial and throwing categories is not the point of this post, but I hope the irony involved in the events of this paragraph makes people re-think their stances on financialization and NFT’s.
On the other hand, I see BAP as one of the best examples of potential hyperfinancialization. He himself is not simply a big account but a cultural icon, a leader of a movement, and the work he sells is not peripheral to it. The book Bronze Age Mindset book is almost like an Iliad/Bible of the related subculture, and his Caribbean Rhythms podcast like its sermons. Anyone deeply involved in the community feels either a guilty compulsion to support the movement by paying for this content, or simply doesn’t want to miss out on it and be left out of discussions over it.
Meanwhile, BAP’s work loses its value by being reframed as content to be peddled instead of serious political material, putting personal monetary gain over propagation. The direct solution provided by crypto would again be to monetize ownership of the content instead of the access to the content. Imagine if frogs bought `$BAP` shares when he still had 5k followers.
As an example of misuse of crypto financialization and of failed mainstream adoption of NFTs, consider the release of NFTs of pictures of idols from the Kpop groups ARTMS and TripleS by the Korean music label Modhaus. The NFTs themselves are on the blockchain, but all the buying/trading is done from an app that manages the wallets and hides the wallet private keys from the users (and does not have an option to reveal it), meaning they don’t actually own the NFTs and if the company shuts down they are gone with it. Also there’s an infinite limit of objects sold by the shop at a standard price which ruins any chance of speculation. The result is that literally none of the advantages of hyperfinancialization are actualized. Kpop is a funny case because fans keep buying releases as CD’s which are just collectibles never actually used ofc because of streaming, so it’s primed for a takeover by digital collectibles (e.g. NFT’s or shares of groups) that are public proof of fandom and support on the blockchain, perhaps have actual scarcity instead of mass produced goods and the shipping and other noise is skipped entirely. If it wasn’t for low IQ fans.
Financialization item-wise and group-wise
Prediction markets are a form of straightforward hyperfinancialization that does not involve tokenization, and do not require further elaboration. In the examples above we notice that the most interesting forms of hyperfinancialization involve tokenization, either of items (images and other files) or of people (individuals, groups, communities).
Tokenizing an item as an NFT is the most natural method to financialize it and most instantly reach out for this solution due to its simplicity. Besides, classic works of art to this point have been turned into commodities to be traded in a similar fashion, just not on the blockchain. That NFT collections of image files achieve high valuations irrespective of their art begs the question of what drives their value, and the answer ofc is that the creators and other people who back them are somehow important, therefore the bet on the NFT is indirectly a bet on them. The logical next question is, why do we then make indirect bets through the items created and not direct bets on the creators themselves?
This is similar to buying shares of a corporation instead of buying its products with the aim of reselling them higher. NFT ownership already implicitly functions as shares of the creator company anyway, only obscured, but it suffers from problems like lack of liquidity and of item inflation. Every new NFT created by a company is a new market that can drain attention/liquidity from its previous ones similarly to a corporation printing new shares and therefore decreasing the valuation of the already existing ones. The creators are therefore disincentivized from putting out more work in order to not soft-rug previous works. The group/collective/corporation can simply create a $GROUP token (e.g. as a ERC20 token), and then every work of art they produce - instead of increasing its own valuation at the disadvantage of other works - increases the valuation of this token which mediates every other creation of the group and functions as a straightforward bet on its (and its works’) success and clout from 3rd parties.
It’s not as simple as just disregarding item-wise hyperfinancialization and making everything group-wise, see traditional paintings again as a good counterexample: sometimes people just want to own the actual item (even on the blockchain) instead of making some abstract bet. Sometimes you want to achieve some distance between item and creator, so people bet on items disregarding that someone undesirable or unknown created them. There’s a lot of memetic drift and inertia as to why an NFT collection might be preferable, with the PFP avis etc. I’m writing this section just to bring to attention on the fact that a lot of details can be tweaked and a lot can go wrong in the effort for efficient financialization.
The most interesting phenomenon would be to not just be able to bet on the clout and output of consolidated groups, but of completely decentralized communities, where the member distinction is fuzzy, meaning everyone can not only invest in the token but also participate to some degree in the cultural output that the token represents. The recent meme crypto tokens are early versions of this: $SPX6900 functions as a token of a bootstrapped culture that doesn’t even have a centralized group at this point besides some early investors, and people just go crazy on twitter posting about it and making memes to make it go viral and pump their bags. Milady had the same recipe of course, except as an NFT controlled steered by a corporation. The fast paced nature of speculation at this time demands that these tokenized subcultures revolve around simplistic memes optimized for viral expansion to be followed by quick death as ephemeral internet phenomena, but nothing prevents elaborate internet subcultures with serious artistic output to form and tokenize themselves in a manner not dissimilar to $SPX6900.
I’d like to see more efforts of group-wise financialization in the future because of its potential to align incentives and connect finance with culture. Better content = more money. Hyperfinancialization will help bootstrap internet subcultures and collectives, decrease sectarianism and promote unity, as more people become aware of the benefits and choose to connect with each other to reap the rewards. A premonition of mine is that the role of internet group chats will steadily increase as people realize how much of their internet life revolves around them and we’ll see many cases of “corporatization”, of group chats incorporating themselves officially under official names and banners, to undergo more efficiently the process of hyperfinancialization and to control more consciously their subcultural products.
Wagmification
Wagmification is the phenomenon where short-term price action of a token becomes the central focus of a community while its actual goals and culture are forgotten. While inevitable in the early stages of hyperfinancialization, wagmification is not harmful to it because it forms a negative feedback loop, as it’s obvious when it occurs and it drives investors off to more authentic, low time preference spaces, when the initial short-lived euphoria of price pumps reaches its end.
Wagmification actually catalyzes financialization, as the initial price pumps serve as advertisements for it, creating FOMO to spaces adjacent of the community that undergoes it. “If them, why not us too”: the more novel a space undergoing financialization is, the more accumulated demand there is from crypto/finance for investing in it. Thus the first movers have an enormous incentive to “sell out” and kickstart the process of hyperfinancializing a scene, with other adjacents rushing to jump on the train. The financers too are in constant PvP among themselves and their increasingly contrived communities, media and technologies they create as vehicles for gathering investments from each other, and thus benefit from reaching out to disparate scenes instead.
What I cannot deny is that the expansion of financialization might overall turn a lot of authentic and high quality culture into catchy kitsch trash, because in this dark age quality is more often inversely correlated with popularity than not, and same the relationship between wealth and sophistication. We don’t live in the Renaissance and the wealthy are not intelligent patrons of art anymore, but investors of ape jpgs instead, so even genius artists and communities might have to pander to them and sacrifice quality. This is a criticism people often have against anything undergoing financialization and I don’t think there’s a way to properly eliminate it.
NO FRIEND.TECH KEYS, NOT NOW
Friend.tech is a recent social-fi app that grants users the opportunity to bet on twitter accounts, where most of the cryptocurrency community resides. The user buys shares of another user in the hopes that it increases in the future as others buy. The app is an important step forwards for hyperfinancialization but has many faults that prevent its wide adoption and long term staying power.
It’s likely that high fees, slow/buggy/unintuitive UI and frequent crashes are its main disadvantages, as any competitor that cloned the app and fixed these would instantly drain liquidity from it, but that’s offtopic and the issues that interest us more is how friend.tech implements hyperfinancialization.
There’s a misunderstanding not only in Friend.tech but most crypto about “inherent value”. Hyperfinancialization does not have any regard for any underlying value behind the assets being traded, only that there are efficient markets for them. People tend to conflate crypto trading with traditional stock trading, where the price stands on the future payouts of an asset. It is argued that e.g. an NFT or a friend.tech share have no underlying assets to gain value from or dividends and therefore have no value. This conflation is mistaken and crypto trading should be understood as something closer to a prediction market (or to sports betting if you will), where there’s no bs about inherent value to conflate the actual aim of the asset, which is… to place a bet. Besides, a good trader does not ask if something is a ponzi or not, only if they are early. Friend.tech shares are simple bets and they do not gain (or need to gain) value from future payouts, nor from the group chats which could be skipped entirely with 0 change in the app’s popularity, and the developers completely miss this by renaming user shares to “keys”, as if unlocking the chats is the main reason to buy them. BTW shares could actually generate payouts from the trade fees of an account, meaning if someone owns shares of an account not only the user and the platform gain % of the fees but also the share holder. But this would just conflate things further because the justification of value should in the end be completely ignored, chats and other features are just extras.
Otherwise, why can’t I bet on Chloe when she had 500 followers and have to wait until she creates an account on friend.tech before being able to buy her shares? Why can I only bet on twitter users and not a user of an arbitrary web app? Why can I only bet on individual accounts and not on aggregations of groups as mentioned above regarding collectivization? I don’t have answers on how all of this should be implemented but it should be taken into account in the creation of a next and more robust platform for social hyperfinancialization.
Is hyperfinancialism resistant to cultivating a class or structure that may be socially or economically maladaptive in the long run? Are there strategies to mitigate dysgenic economic activity?