Kickstarter and Discord face backlash over moves into crypto

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Chris Rat­cliffe | Bloomberg | Get­ty Images 

When Kick­starter unveiled its ambi­tion to devel­op a blockchain-based crowd­fund­ing sys­tem, the com­pa­ny char­ac­ter­ized the move as a way to push cre­ators clos­er to their audiences.

“Back­ers should be able to eas­i­ly dis­cov­er and par­tic­i­pate more deeply in projects, bet­ter con­trol their data, and have more robust tools to assess the trust­wor­thi­ness and via­bil­i­ty of a project,” Kick­starter said in a blog post ear­li­er this month.

The reac­tion from users was hard­ly the sort of response Kick­starter had been hop­ing for.

A tweet by the com­pa­ny announc­ing the news was met with imme­di­ate back­lash from Kick­starter cus­tomers who threat­ened to aban­don the ser­vice, cit­ing con­cerns with the envi­ron­men­tal impact of cryptocurrencies.

Bit­coin and oth­er dig­i­tal cur­ren­cies require huge amounts of elec­tric­i­ty for pro­cess­ing trans­ac­tions and mint­ing new units of cur­ren­cy. For its part, Kick­starter said it would use Celo, a “car­bon-neg­a­tive” cryp­to pay­ments plat­form, for the initiative.

Kick­starter envi­sions the new crowd­fund­ing mech­a­nism as a “decen­tral­ized” pro­to­col that would make it eas­i­er for peo­ple to raise funds for projects, even out­side of its own plat­form. The even­tu­al aim is to move its entire web­site over to the new infrastructure.

‘Web3’

Kick­starter’s pro­pos­al is all part of a buzzy new move­ment in the tech­nol­o­gy world known as Web 3.0, or “Web3.”

Web3 pro­po­nents argue that today’s online plat­forms are too cen­tral­ized and con­trolled by a hand­ful of large inter­net com­pa­nies, like Ama­zon, Apple, Alpha­bet and Face­book par­ent com­pa­ny Meta.

Like the “meta­verse” tout­ed by Meta, Microsoft and oth­ers, Web3 is still a hazy concept.

Most pro­po­nents describe it as a decen­tral­ized ver­sion of the inter­net based on blockchain, the tech­nol­o­gy behind many major cryp­tocur­ren­cies. You can think of the blockchain like a ledger of trans­ac­tions that’s con­stant­ly being updat­ed by mul­ti­ple com­put­ers around the world.

It’s attract­ed lots of inter­est — and mon­ey — from ven­ture cap­i­tal firms such as Andreessen Horowitz and big tech names like Twit­ter and Stripe. Sev­er­al con­ver­sa­tions on Twit­ter about the trend are from peo­ple with NFTs, or non-fun­gi­ble tokens, as their pro­file pictures.

Kick­starter isn’t the first to expe­ri­ence back­lash over a cor­po­rate move into the world of Web3.

Dis­cord, the online chat app, recent­ly teased some fea­tures that would let users con­nect their cryp­to wal­lets with their account. The tool, shown in a tweet by CEO Jason Cit­ron, was met with swift backlash.

Some users raised con­cern over the poten­tial for scams and mon­ey laun­der­ing in cryp­tocur­ren­cies and NFTs, while oth­ers slammed the vast amount of ener­gy required to process trans­ac­tions on the blockchain.

“We have no cur­rent plans to ship this inter­nal con­cept,” Cit­ron said in response.

“For now we’re focused on pro­tect­ing users from spam, scams and fraud. Web3 has lots of good but also lots of prob­lems we need to work through at our scale. More soon.”

What it means

Large com­pa­nies and investors with deep pock­ets are rav­ing about Web3. But there’s a dis­con­nect between how tech and finance indus­try pro­fes­sion­als view cryp­to and the per­cep­tion of the tech­nol­o­gy from the gen­er­al public.

With cryp­to, the pri­ma­ry use case among con­sumers con­tin­ues to be spec­u­la­tive trad­ing. And there is still a huge edu­ca­tion gap. Accord­ing to the U.K.‘s Finan­cial Con­duct Author­i­ty, 69% of peo­ple under the age of 40 don’t real­ize cryp­to isn’t a reg­u­lat­ed prod­uct.

“There’s clear­ly a goldrush…leading to spec­u­la­tive invest­ment,” David Chaum, an Amer­i­can com­put­er sci­en­tist and dig­i­tal cash pio­neer, told CNBC by email.

Chaum is best known for invent­ing a sys­tem of untrace­able elec­tron­ic cash in the 1980s called e‑cash.

“Gen­er­al skep­ti­cism about ‘cryp­to’ and dig­i­tal cur­ren­cy has exist­ed for as long as I can remem­ber — long before bit­coin,” Chaum said. He thinks peo­ple’s dis­trust of cryp­to today will ease once the mar­ket matures.

Sev­er­al major com­pa­nies, includ­ing Tes­la, Pay­Pal and Meta, have tak­en the plunge into cryp­to lately.

Such moves have helped dri­ve the price of bit­coin and oth­er major cryp­tocur­ren­cies high­er this year, with investors bet­ting on their poten­tial to reach main­stream acceptance.

But if Kick­starter and Dis­cord’s attempts to move into the mar­ket show any­thing, it’s that this goal is still a long way off from becom­ing a reality.



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