Some Crypto-Capitalists Just Want To See The World Burn

“In battle, the commander is the first one to go over the top,” Joe McKinney, shirt unbuttoned, wearing a shower cap and one of those aeroplane neck pillows, exclaims over music swelling from every direction. He’s having a great time, romping around San Francisco as part of a “distributed dance party” — a roving DJ set controlled by an FM transmitter, beamed to dozens of boomboxes, and led by men who look like Road Warrior extras drenched in neon paint. One of them advises through a megaphone not to step on or trip over a homeless man in the path of revelry.

This is the culmination of the Startup Societies Summit, a two-day conference organised by McKinney and his friend Thibault Serlet. Advocates for cryptocurrencies and planned communities, free trade and special economic zones, moon colonies and the Northern California independence movement — anyone who sought to circumvent or dismantle regulations was represented by a 15 to 30 minute presentation.

McKinney spent some of his youth in Celebration, Florida, a planned community built and bungled by Disney; Serlet is the son of former Apple Senior Vice President of Software Engineering and the “father of OS X” Bertrand Serlet. They bonded over weed and libertarianism, then fell out with the latter, and have kept busy since graduating university. For the 24-year-old McKinney at least, much of that work culminated at the Summit, where in his opening remarks in the cafeteria of the City College of San Francisco he exclaimed that “every era has its hubs of the future and we are building those centres. Consequently we could perhaps get rid of the scourges of disease and poverty, and perhaps even death itself.”

But future-building is inherently risky stuff, and gathering technologists, venture capitalists and intellectuals who see most government intervention as an oppressive and often tyrannical force can breed as many opportunists and snake oil salesmen as idealists. In the nondescript Silicon Valley casual of blazers and jeans, suits and branded hoodies, it was hard to tell which was which. Earlier that day when considerably more sober, McKinney told me, “I don’t think there’s a single person here that’s just here to fuck people over and get rich.” I believe that he believes that.

The blue frontier

When asked what he’s running from that requires a man-made island on the ocean, Joe Quirk says, “pretty much all the governments that exist.”

Quirk met Patri Friedman — grandson of Milton Friedman — in the Nevada desert at Burning Man 2011. Three years earlier, Friedman had founded The Seasteading Institute with considerable funding from Peter Thiel, and Quirk was brought on. With charisma and a voice like wet gravel, Quirk might have made a killing in public relations or selling used cars, but instead the first chapter of his life was spent writing thriller novels. Though neither Friedman or Thiel appear to still be involved, Quirk, a middle-aged man with the puckish, spiked hair of an eternal frat boy, maintains his role with the organisation as what he calls its “Storyteller-in-Chief”, and became a co-founder of Blue Frontiers, its entrepreneurial sister company.

As the name implies, seasteading is the pursuit of permanent cities on the ocean as way to flee regulation, alleviate overpopulation, reverse mankind’s damage to sea life, or all three. The history of these projects is rife with expensive, colossal failures. One of the first attempts, Operation Atlantis, was the brainchild of the wealthy Ayn Rand-loving Werner Stiefel, who made his fortune selling skincare products. Atlantis went through several attempts at breaking from extant governments by taking up residence among the waves between 1968 and 2006: One ship was destroyed in a storm. A terraforming attempt was brought to an end by Haitian gunboats. Eventually all the members of the project quit. More recent projects have been less catastrophic. The World, essentially a massive cruise ship, was described as too expensive to attract a full-time community. Blueseed, an attempt to build a startup incubator in the waters outside Silicon Valley, failed to generate adequate funding, despite existing solely to enrich wealthy technology companies by allowing them to skirt HB-1 visa regulations.

Still, the “startup” mentality of failing early and often allows the current crop of “seavangelists” to see prior attempts as buoys leading towards a bright, blue future instead of expensive wreckage.

“Blue Frontiers will create environmentally sound, self-sustaining, modular floating island with significant regulatory autonomy,” Quirk states matter-of-factly during his presentation at the Summit. He describes a lagoon in Tahiti that will become home to the first free-floating islands, a boon for both the environment and the people of French Polynesia, in Quirk’s estimation, and a source of “innovations in labour, in immigration, in FinTech, BioTech, medical”. Offshore medical research is something Thiel is already engaged in, and which has been described as “patently unethical”.

But most frequently, seasteading has been maligned as a venture for the rich and the rich only, “a billionaire playground,” as one poster on TSI’s own forum calls it. But Quirk bristles at the criticism. “Seasteads cost money and the people that would engage in financial risk would be the type of people that would risk their money on it. A poor person would probably take a job on a seastead. So the risk they would be incurring is possibly losing their job if the seastead fails,” he explains. French Polynesia, in that respect, makes an attractive locale: Besides Quirk’s insistence on portraying the area as a tropical paradise full of beautiful women, according to the most recent CIA data, the conglomeration of islands also boasts some of the highest unemployment in the world.

Tahiti is only step one of the grand vision laid of in the book — aptly titled Seasteading — co-authored by Quirk and Friedman, which describes a seafaring future when citizens will be free to unmoor their floating platforms and merely sail to new forms of governance when the present one stops suiting them. It’s a die-hard libertarian’s wet dream. But talking to Blue Frontiers’ legal counsel Tom Bell, also a speaker at the Summit, freedom of movement as itself a luxury seems lost on him. He later told me, “even for an impoverished Honduran it’s not that difficult to load up the truck and drive into a better economic situation.”

Pages and pages of Seasteading are devoted to the considerably less sexy applications of floating structures: Using seaweed and molluscs to filter pollution, attract fish, feed impoverished coastal peoples. But ultimately, the rationale for moving to the ocean is printed in black and white, in its key financier’s words: “The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.”

Token characters

“We’re incredibly excited about the structure of this token and what it can potentially mean for the token holders of the Science token,” Greg Gilman, attorney and co-founder of startup incubator Science explains, eyeing another of the firm’s lawyers in the front row, and peppering his explanation with as many possibilys and potentiallys as sentence structure allows. The hazy language could be a the result of a Federal Securities and Exchange Commission press release from just two weeks earlier, a shot across the bow of Initial Coin Offerings (ICOs) like the one Science — the company which sold Dollar Shave Club for about $US1 billion ($1.3 billion), cash — had in the works. SEC compliance could have wide-reaching implications on the grey market of this new, popular fundraising tactic, and many of the Summit’s speakers alluded to ICOs in winking terms.

As Gilman joked earlier, “‘No one looks good in orange’ is our motto.”

Companies pursuing ICOs have reason to tread lightly: In the few short years cryptocurrencies have existed, they have been at the centre of several high-profile scandals, of which more than a few ended in gaol time. There’s the flavour of the month pump-and-dump cryptocoins, the drastic implosion of Bitcoin exchange Mt Gox, the prosecution of dark web drug market The Silk Road’s Ross Ulbricht, and accusations of corruption levelled at board members of The Bitcoin Foundation. (Among the current directors is Brock Pierce, an accused rapist who founded the quasi-legal MMORPG loot-selling company Steve Bannon was involved in.) “Thankfully I’m going to go to a comfy federal prison camp,” Charlie Shrem, the founder of Bitinstant and former Bitcoin Foundation board member, says in the 2016 documentary Banking On Bitcoin. “White collar. Those guys in prison are the best ones to use bitcoin. They’re smart. I’m very excited to talk to them about it.” He was sentenced to two years for his involvement in the Silk Road in 2014.

While seasteads and cryptocurrency may not appear naturally attuned to one another, both stand in contrast to, and feed on distrust of, bloated systems. Fortuitously, Bitcoin — the most valuable and stable major cryptocurrency — came on the scene around the height of the financial crisis, a decentralised and seemingly incorruptible alternative at a time when it was impossible not to feel burned by extant financial institutions. Sevan Chorluyan, an excitable Summit speaker and the founder of Bad Mirror, was among those who invested early. He pays his staff in Bitcoin and claims to have enough stashed in his digital “war chest” for five years of runway. “I was using five different websites to pay people,” he says, describing the frustration of managing an international team of 20. “They were all taking fees.”

But while seasteads can wow futurists with renders of tomorrow’s cities, crypto draws a smaller and more technical crowd, with many in the audience looking lost or bored. Attendee Mike Doty straddles both worlds, with an interest in the “open ocean aquaculture” aspects of seasteading, but running a crypto-based business called Ark. He described Ark as a system of chains, of exchangeable tokens which can also be services. What it all meant, or how anyone would use it, was a mystery. Doty handed me his business card — a poker chip with a cartoon of his bearded face on it, as if to reinforce the notion that this entire sphere of financial technology is a gamble.

As any gambler knows, the house always wins. But who exactly would be the house when cryptocurrencies are decentralised by design? “VCs are driving this thing right now, they’re pouring money into it,” Wall Street Journal reporter Paul Vigna says in Banking On Bitcoin — and looking at Science, the Winklevoss Twins, or controversial software engineer John McAfee (who was scheduled to speak at the Summit but did not attend) — it does seem the techy idealists are being slowly pushed out by capitalists smelling an opportunity, if regulations don’t stifle the market first. Early adopters barely pulled Bitcoin’s value above $US150 ($189) for the first few years of its existence. The weekend of the conference, it hit $US4000 ($5035) a coin.

Your laws abroad

“I’ve actually had some hardcore environmentalist leftist friends who defriend me on Facebook. I say, ‘Don’t you care about the poor?’ They don’t like — they just can’t stand the notion that SEZs and sweatshops and capitalism is one of the greatest moral benefits of all of humanity,” Michael Strong, a Seasteading Institute board member and and co-founder of Conscious Capitalism — a 501(c)(3) nonprofit that “create[s] a world in which business is both practiced and perceived as the greatest force for good” — alongside Whole Foods founder John Mackey, preaches to the applause of almost all 300 attendees at the Summit.

If seasteading and cryptocurrencies represent emerging technologies, full of promise but with many glaring pitfalls, Special Economic Zones (SEZs) are a rapidly expanding present which has been quietly enveloping the globe for decades. Though the nature of these zones varies wildly — from single companies granted tax incentives to whole cities operating under less stringent laws than their geographical host nations — all rely on a favourable easement of regulations designed to provide an economic boon through direct foreign investment. The most frequent and prosperous example, Shenzhen in China, is the ace in the hole for those calling for deregulation and greater privatisation. (Ironically, City College of San Francisco, where the Summit was held, functions as socialised higher education thanks to taxpayer dollars.)

“I judge the humanitarian effects of any special economic zone by whether poor people are voting with their foot to go there as quickly as possible,” Joe Quirk says, rehashing a popular talking point. “So in a place like Shenzhen, privileged people like us can criticise it as much as we want. The real question is what do the actual people who lived outside Shenzhen on their farms think. I don’t have to ask them because I know they’re racing to go there as fast as they can.”

So what goes on in these glorified corporate parks? Workers are often fired for attempting to organise, and investigations have revealed that companies which fail to outfit employees with proper safety equipment do little for them once they become injured or too sick to work. While Strong frames the horrible conditions for the working poor in cities such as Dubai as an alternative to “selling your daughter into sex slavery” many SEZs disproportionately employ young women out of the belief that they will be more docile and accepting of being taken advantage of. The hope, for those like Strong, is that these experiments will not only alleviate global poverty, but show otherwise oppressive nations a better way forward — a concrete oasis that paves a path to more liberalised future governance — but it’s unclear if that’s been the case in any of the dozens of countries currently hosting a SEZ. If wages and conditions improve in one zone, what prevents corporations from packing up and finding a new crop of foreign bodies to run the machines? “Insofar as this movement is portrayed as, ‘Oh those evil capitalists exploiting locals,’” says Strong, “we’re gonna lose.”

Among the most extreme examples of expanding SEZs was Michael Castle Miller’s presentation on “refugee cities” — a proposal to turn refugee camps into their own Shenzhens. “We can actually convert refugees into economic assets that drive us towards the economic and social progress we want to achieve,” he says. Through one lens it gives those stuck in political limbo a semblance of normalcy; through another it sees immigration as a problem in need of solving and turns refugee camps into company towns running off the labour of the displaced. “It’s an investment opportunity because now all of a sudden there’s a huge labour force out there of untapped skills that nobody else can access.”

The day of reckoning 

If Mark Frazier’s nearly four decade involvement in free cities, seasteads and SEZs reads like science fiction, it’s at least partly due to his hand in the abortive Earthport project, which Arthur C. Clarke and Robert Heinlein — two greats of the genre — were both involved in. Described by McKinney as the grandfather of Startup Societies, Frazier is entranced by a post-scarcity gig economy, and was first drawn into free cities in 1980 by “a breakaway movement in the New Heberdies [now Vanuatu] against the British and the French colonial powers that was supported by these millionaire free market types” during his time as a journalist. That movement was funded largely by a Nevada businessman named Michael Oliver, who was quoted in People at the time, saying, “I need [the country] like 10 holes in the head. I just want to see it become a good country, not another creepy little mess.” That independence movement resolved, in Frazier’s words, as “wreckage”. “Basically, they locked up the indigenous leader of this new country movement.”

He’s helped to plan dozens of projects over the years. Some, such as Zonamerica in Uruguay, were successful. Most were not.

Most people are not business owners who stand to gain by deregulation. Most people don’t live in the places Frazier and his associates are attempting to change. Most people aren’t possessed of the fundamental distrust of government on display at the Summit. So I asked him why most people should care. That’s when he warned me about “a day of reckoning”.

“I think [most people] care only when the systems start to crumble. There are these massive IOUs that are hanging over and when the dollar loses the reserve status — if and when it does — there will be big, big disruptions in the flows of benefits that people have expected, or rampant inflation, or deflationary implosion,” he cautions me, as the cafeteria’s tables and chairs are put back into storage. “At that point many, many people are going to be saying, ‘There should be better ways to do this.’”

Thinking back, most of the major factions represented at the Summit contained the expectation of some coming infrastructural apocalypse: Monetary institutions, the nation-state, the land itself. And everyone here wanted to speculate early for when it happened, to mete out Judgement Day’s cataclysm unequally and build a privatised new world that, intentionally or not, kept things that way. For the global one per cent, tomorrow’s utopia is an economic fallout shelter on the sea where benevolence is measured in consumer demand and little thought is given to the disposable poor indentured to keeping it afloat. For anyone but them, it sounds more like hell on earth.

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