Anonymous and the SovereignDAO

Listener Nathan asked me to explain why the hacktivist group Anonymous would promote SovereignDAO, so in this epic episode we learn about the origins and evolution of Anonymous, how DAOs work, and whether the components of a DAO align with the philosophy of Anonymous. 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. He there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeartRadio. And how the tech?
Are you all right? This is going to be an
epic episode. I'm calling it now. And I got an
email from a listener named Nathan who was hoping I

(00:25):
could shed some light on something that he encountered online.
He was watching a video that was published by the
activist group Anonymous that directed viewers to something called Sovereign Doo.
That's DAO, and he said this felt a little out
of step with the group's philosophy. It felt like he

(00:47):
was being channeled toward some kind of multi level marketing
scheme or Ponzi scheme or something, and he wanted to
know more about it. And there's only so much I
can say about Sovereign now because I haven't joined it.
But Anonymous is or has put out a video. At

(01:07):
least someone in Anonymous has published a video that has
publicized a dow called Sovereign Dow. So this whole question
that Nathan has asked opens up multiple cans of worms.
So in this episode, we're going to cover a ton
of ground in order to get a full understanding of
what this all means. That's going to include a quick

(01:29):
review of what are not so quick review of what
Anonymous is and what they're all about. We'll also refresh
our minds on what a decentralized autonomous organization that is
a dow a d ao, what it is and what
they can do, which gets pretty broad. Will also quickly
explore the word sovereign to kind of get a grip

(01:51):
on why Anonymous would want to promote something called sovereign dow.
And I think this will start to peel way the
layers and let us get an understanding as to what's
actually going on here, how the concept of the tao
in general or not the doo. I should just say
doo because there was once upon a time a doo

(02:12):
called v doo. And also what sovereignty is and why
this all actually does align with at least the perceived
motivations behind Anonymous. You can't ever say super firm, definitive
things about Anonymous because the organization itself defies that is,

(02:33):
it is too amorphous to ascribe specific descriptors and say
this universally applies. So let's tackle the hackers who are
known for wearing Guy Fox masks both online and occasionally
in public, being called Anonymous. Now, before we get to that,

(02:56):
I'm going to explain who Guy Fox was first, because
if Anonymous has adopted this image, this mask, why did
they do that, Who was Guy Fox, what did Guy
Fox do? And moreover, what other element in pop culture
adopted the guys of Guy Fox? Because that's really what's important.

(03:18):
But we need to understand the whole picture. Context is
always critical, I say so, we have to actually look
at the early seventeenth century, the early sixteen hundreds in England.
Guy Fox was a Catholic living in England under the
reign of King James, who was Protestant. Now James's predecessor,

(03:41):
Elizabeth the First She was also a Protestant Church of England,
which her father established in England in order to be
able to divorce a woman to marry somebody else. That's
a whole story we won't go into. But Elizabeth kind
of walked a middle line between Protestants and catholic She
did not firmly proclaim Protestantism and oppress the Catholics, at

(04:08):
least not to huge extent, especially not considering some of
her predecessors, and she wanted to avoid the chaos and
violence that would break out when one side would end
up persecuting the other. Her sister Mary did a really
great job of illustrating what happens if a hardline Catholic
decides to persecute the Protestants. Elizabeth wanted to avoid that

(04:33):
kind of strife within her kingdom. James, he was leaning
much harder into Protestantism than Elizabeth did, And for the
Catholics who were living in England, who were really hoping
to get another Catholic monarch, or at least someone who
had Catholic sympathies, this did not sit well, particularly among
the nobility who had seen some of their a lot

(04:54):
of their wealth stripped away in the guise of religious strife, which, honestly,
when you look at the history of England, really comes
down to who thinks they can steal more of the
other person's stuff and get away with it than anything else.
That's not Maybe that's considered a controversial view, but honestly
it's the truth. Likes it largely comes down to I

(05:16):
want what that guy has. They happen to identify as Catholic.
I'm a Protestant. I'll use that as the excuse to
take all their stuff. Anyway, Guy Fox is a Catholic.
He opposes James the Protestant, and so he joins a
band of conspirators who ultimately have the goal to assassinate

(05:36):
King James, to commit regicide and replace him as regent,
hopefully with his daughter, who they saw as being more
pliable and perhaps more sympathetic to Catholics. The popular, but
probably apocryphal version of this story had the conspirators planning
to tunnel under Parliament with the intent to stack a

(05:59):
whole bunch of barrel of gunpowder underneath the House of Lords,
and then they would light up the barrels and blow
the English government into the afterlife. Do not pass go,
do not persecute Catholics. Now, in truth, they actually found
access to a chamber that was underneath the House of Lords,
sort of like a seller, and so they didn't actually

(06:21):
have to tunnel anywhere. They just had to get access
to this chamber and then make sure that nobody else
found what they were doing before they were able to
execute their plan, and they secretly began loading in a
bunch of barrels of gunpowder into this chamber. They hid
them under piles of coal and wood, and you know,

(06:42):
because it wasn't winner yet in England, they were hoping
that no one would go poking around in there until
Parliament was in session. They were essentially saying, like, this
is a storage of fuel that will probably be untouched
until we can get parliament. The problem was there was
also plague in England at the time, and any large

(07:02):
gathering of people was seen as a potential way of
spreading plague, which was you know true, and as a result,
Parliament wasn't entering into session as part of cautionary measures.
So we get up to late October. Parliament is finally
gearing up to go into session, having delayed several times

(07:24):
due to plague outbreaks, and the conspirators had regularly been
checking on these barrels that they had been storing in
the cellar over time to make sure they were secure
and that no one had found them, and no one
had like the plan was on and they were getting
closer to the time of attack when Parliament would go
into session in early November of sixteen oh five, but

(07:47):
some of the conspirators were a little worried because not
everyone in Parliament was Protestant. There were some Catholics who
were also as members of the House of Lords, and
while it seemed like it was jolly good sport to
blow up Protestants, it was considered bad form to do
the same to their fellow Catholics. So someone among the

(08:11):
conspirators sent an anonymous letter to Lord Monteagal that essentially said, hey,
call out sick when Parliament opens up, because things are
gonna get spicy. I am paraphrasing here. So then Lord
Monteagle goes over to King Jimmy and he says, hey,
I got some potentially really bad news, And King Jimmy

(08:34):
commands that a security force sweeps the sellers beneath Parliament
to find out what the heck is going on. And
a security detail happened to come across the path of
one guy Fawks, who had been sent to check in
on the barrels in the cellar to make sure that
everything was fine, and he was caught in the middle

(08:54):
of the night on November fifth, sixteen oh five, and
he was put to the question that's a very polite
way of saying that the King's forces tortured the ever
loven pants off of him, probably literally, and over the
course of repeated torture sessions that got increasingly brutal, Fox

(09:17):
gave up his co conspirators and continued to endure really
brutal torture over the course of his confinement. In late
January sixteen oh six, so like a couple of months
after the planned attack, Fox and several of his co
conspirators were transported to Westminster Hall, forced to mount a scaffold,

(09:43):
pronounced guilty of high treason, and they were executed. That
is the polite way to describe what happened to them.
I will say that if you get into the details,
it goes beyond the level of cruelty. Then they were
also chop dup so that their body parts could be
sent around England to warn other would be traders about

(10:05):
what could happen if you plot against the crown. To
this day, November fifth is Guy Fox Day, and tradition
has people in England lighting bonfires to celebrate not the
plan to assassinate the king, which is often how it
gets portrayed, but rather to celebrate how the king escaped assassination.

(10:29):
And there's a little poem that goes with it. Remember
remember the fifth of November, Gunpowder, treason and plot, for
there is a reason why gunpowder and treason should never
be forgot. It changes a bit depending upon the interpretation.
You have to keep in mind that the language of
sixteen o six England was modern English but antiquated, so

(10:55):
slightly different from the way we would say it today.
But anyway, that was the whole point of Guy Fox
Day was to remind yourself, hey, we almost had regicide
in the Kingdom. It was stopped, and we also need
to remember what happens if you go against the king.
That's kind of the purpose of Guy Fox Day. Now
skip ahead a couple of centuries and get up to

(11:17):
nineteen eighty two. You had writer Alan Moore and artists
David Lloyd and Tony Weir who create a comic strip
titled V for Vendetta, and the comic strips were later
collected into a graphic novel. Now, in this story, there's
an anarchist who simply goes by V and he commits

(11:39):
acts of violence in an attempt to bring down a
fascist government in England, and he does it while wearing
a Guy Fox mask. So it's really more this version
of Guy Fox that Anonymous would draw their iconic look from,
as opposed to the actual historic figure they were taking

(12:00):
it from, this pop culture comic book version. And again
v is not Guy Fox. He's adopted that because he
is an anarchist. He opposes not just fascism, he's really
not in favor of any kind of organized government at all.
He sees government as ultimately an institution that is bound

(12:22):
for corruption, like there's just no way to avoid it,
and so he prefers anarchy to any kind of organized government. Moreover,
V for Vendetta is the story of someone who is
special in that he is willing to go to whatever
extreme is necessary to defeat an overreaching, unjust, unfair, corrupt

(12:42):
status quo. So he's not a superhero, right, He doesn't
have superpowers. He does display some pretty unbelievable skills and
physical abilities through the course of v FA Vendetta, but
he's ostensibly a regular old human being, and the message
seems to be anyone can change the world. And in
this graphic novel, the rhyme of remember remember the fifth

(13:06):
of November is not about remember how this traitor nearly
committed regiside. It's about remember how the normal person can
upend an entire government. So the message gets flipped with
V for vendetta than it did in actual history. Now,

(13:28):
the decentralized, loose confederation of activists, activists, anarchists, trolls and
others that would form Anonymous did not immediately adopt the
guy Fox mass that would come later in their history. Initially,
if you look at the very earliest kind of emergence

(13:49):
of anonymous, you have to look at the image based
message forum for Chan, and this used to be looked
at as one of the wilders on the wild West.
That was the web, right, Like the web was this
place where you had established brands, but you also had

(14:09):
these kind of pools of anarchy where all sorts of
shenanigans could happen. And four Chan at the time was
looked at as like kind of like Moss Eisley, the
hive of scum and villainy. These days, other forums like
eight chan and Kiwi Farms have said hold my beer
and really taken the mantle of home to the worst

(14:30):
of the worst on the web. But four chan used
to be the place. Now when we come back, I'll
talk about how anonymous first began to take shape on
four Chan. But first these messages okay, we're back. So

(14:54):
if you were to join four Chan, you could do
so without creating a handle, right, You didn't have to
create a handle that would identify you as someone who
is a participant. You could just join and you would
get the default user name anonymous. And so you had
these groups of like minded people trolls on four Chan

(15:18):
who began to coordinate their efforts to essentially cause grief
and frustration to other online communities, often to online communities
that were catering to younger users, because it just seemed
really funny to them to upset and upend these communities.
They say, Hey, look at these little kids who are

(15:38):
trying to have fun online. How about we mess with
them very much? Not a noble cause, right, is undeniable
that they were just out to cause trouble and to
make people upset for their own amusement. So they got
joy out of making life miserable for other people. A

(16:00):
quick note just in my own experience, I have found
that you actually can get way more joy out of
doing nice things for people than you get from causing
grief to folks. Although I get it, like there's some
people out there that just seem like they really need
to have some misery visited upon them because they are

(16:21):
causing misery to other people. Right, you might see someone
and say, this person is disproportionately making life terrible for
lots of people. I want to see some come upance.
I get that, but I also think that you know,
just anonymously trying to cause strife to people who you
don't know and have no connection to. I think that's

(16:43):
just lame. I would much prefer to see people do
nice things. It takes a little more effort, but I
think it has way more payoff. Anyway, that's getting sidetracked. Okay.
From two thousand and three to around two thousand and
six or so, these trolls, which began to collectively identify
themselves as anonymous because again that's the default anonymous user

(17:05):
name on four Chan, they started to harass various online
communities just for fun. Some of these communities were also trollish,
so in some cases you had trolls attacking other trolls.
This escalated by two thousand and six to targeting specific
people rather than an online community. So in other words,

(17:26):
you might target an actual individual who you think deserves
to be taken down a peg for whatever reason. So
typically these people were fairly high profile, They had some
sort of platform from which they espoused their views, and
they had come to offend this group of trolls on

(17:47):
four Chan through saying those views. In some cases, these
were like far right commentators and media, and they became
prime targets. But it wasn't just them really, anyone one
who was seen as being you know, hypocritical or insincere,
anything like that. If they seem like they were putting

(18:09):
up a front that hidden motives, they can become a
target too. Now Anonymous went after them in an effort
to really humble these folks, but it was mostly again
for the lulls. It wasn't like a crusade to right wrongs.
It was more about this person deserves some frustration in
their life or worse, so we're gonna do it and

(18:31):
we're gonna laugh about it. Now, you might wonder how
did this group transition from being this loose collective of
trolls to turn into a decentralized activist group. A big
part of that transition actually came from outside the group itself.

(18:51):
It came due to mainstream media, which kind of just
got the whole thing wrong. Mainstream media ended up having
the wrong interpretation of what Anonymous was, and that in
turn kind of shaped Anonymous. So there was like a
broadcast in Los Angeles that was on Fox Television. They
reported about Anonymous and suggested that Anonymous was in fact

(19:16):
a domestic terrorist group. Now keep in mind, Anonymous had
been targeting some far right media personalities at this point,
so perhaps that was part of it. Because Fox often
kind of, you know, at least leans to that side.
In some markets, it doesn't lean, it absolutely lays down

(19:38):
on the far right side. So they were saying that
Anonymous were domestic terrorists capable of great acts of violence.
They even included in their broadcast video footage of a
van exploding. Never Mind, this had no connection to Anonymous, Like,
Anonymous had not done any kind of acts of violence.

(19:59):
They were rassing people, but they didn't bomb cars or anything.
So this was like just it was so absurd. It
had no connection to the actual group, but the group
was being portrayed as if they were this incredibly sinister,
dangerous group of individuals, which, honestly, if you are not

(20:21):
identified as being part of that group. But you get
the benefit of feeling like people are looking at you
and thinking you're important and dangerous. That can really boost
your ego quite a bit, right, Like it feels good
to be looked at and thought of as a badass.
That just it's like an ego boost to that the
world thought that Anonymous was dangerous, at least the Fox

(20:44):
broadcast station in Los Angeles did, anyway, and that kind
of made them feel like they were important. There was
also the case of a Canadian Security Intelligence Service agent
who went to a guy named Aubrey call who was
involved in Anonymous and tapped him as joining a task

(21:05):
force designed to infiltrate and disrupt online terrorist groups. But
Caddle was like, I just mess with people to make
them angry. I don't like this is like James Bond
level stuff, and I am not James Bond. But again,
it showed that the outside world was looking at Anonymous

(21:27):
as being way more powerful and capable than they actually were,
and it made people who were part of Anonymous feel
important and more people wanted to join because they wanted
to feel like they were part of this power group.
And then we get to Tom Cruise. And you know,

(21:48):
I think without Tom Cruise, we wouldn't have the Anonymous
that we have today. In fact, the group Anonymous might
not even exist without Tom Cruise. This is not hyperbole.
So by early two thousand and eight, Anonymous was still
mostly a group of folks who like to harass people,
and again, mostly they were doing this online, and mostly

(22:13):
the people they were harassing were people they felt deserved
to be harassed, although the criteria for what made someone
deserving varied depending upon who in the group was doing it.
And Tom Cruise would change things. So on January fourteenth,
two thousand and eight, someone published a video of Tom

(22:34):
Cruise talking about Scientology and his participation in the Church
of Scientology. Now, this episode's already going to be a
long one, which means I am not going to dive
into the rat's nest that is Scientology. I will say
it is an organization that's registered to be a religious organization,

(22:55):
which means that they enjoy tax exempt status in the
United States. It's an organization that has a very long
history of allegations made against it and its leadership that
range from stuff like the organization encouraging members to surrender
more and more of their own personal wealth to the church,

(23:15):
essentially saying that the church siphons money out of its
members to super scary allegations like the church using the
US legal system to intimidate or even bankrupt people who
were identified as threats to the church itself, including people
who were just trying to leave the organization. It's got

(23:37):
a really bad reputation, which is putting it lightly. Anyway,
Tom Cruz's interview did not make him look very good,
and it made the church look even worse. Cruz was
not trying to bring down the Church of Scientology, far
from it. He was an eager participant. However, his descriptions

(23:58):
and demeanor in this video we're seen as harmful to
the image of the Church of Scientology, and so the
church sent YouTube a copyright violation claim that prompted YouTube
to remove the video, and that is where anonymous would
jump in. So people with an anonymous saw Scientology's actions

(24:20):
as leveraging a company's policies, in this case YouTube, in
order to commit censorship to remove information from the Internet,
which just kind of goes against the whole ethos of
the Internet and the Web in general. Like you've probably
heard like once it goes up on the Internet, that's it.

(24:40):
It's there, Like whether you try and take down the
original one or not, it's up there. People have shared it,
people have cloned it. Whatever. Now they were thinking that
the Church of Scientology was abusing YouTube's policies in an
attempt to hide information that was not very flattering to

(25:01):
the church from the general public. Then there were all
the other alleged misdeeds that the church was said to
have committed. So on top of that, there's everything else.
If you really want to go down a rabbit hole,
search the term fair Game and Scientology and you'll see
what I'm talking about, a tip of the iceberg really
of what I'm talking about. So Anonymous thought of Scientology

(25:26):
as being an organization that was perfect to take down
a few pegs, like this was an organization that clearly
had a lot of power and influence, and in the
opinion of those an Anonymous should not have those things.
So they wanted to hold an operation. That's what a
lot of projects within Anonymous end up being called an operation.

(25:49):
This one was actually called Project Channology, in which Anonymous
organized protests against the church in the real world. People
showed up at locations connected to the Church of Scientology,
many of them wearing guy Fox masks. And meanwhile, the
online part of Anonymous was using all sorts of tactics

(26:13):
to disrupt Scientology's Internet based operations. So they were doing
things they were actually pretty simple in the grand scheme
of things like denial of service attacks. These are not
sophisticated online attacks, but they can be effective. Essentially, what
you're doing is you're targeting a web server and you

(26:33):
are sending an enormous amount of traffic to that web
server in order to overwhelm it so that it cannot
respond to legitimate messages. So like you could target the
web server that hosts the Church of Scientology's web page,
and because you have overwhelmed that server, anyone trying to
go to the Church of Scientology's webpage is going to

(26:53):
get an error message. Again, this is not a very
sophisticated attack. There are actually a lot of companies out
there that you can and work with that specifically look
for that kind of attack so that they can prevent
it from affecting your web servers. So it's not something
that typically gets used a ton against high profile targets.

(27:14):
Because a lot of high profile targets have moved to
adopt these measures to protect themselves against that kind of thing.
But these actions marked a real change for Anonymous. Rather
than harassing folks and communities just for the lulls, the
group began to use its base of skills and decentralized
membership and desire to push back against what they saw

(27:37):
as overreaching authority to create change both in the real
and in the online world. The group would target large
financial institutions, which were seen as foundations of power and
influence that have a disproportionate amount of control over our lives.
They would target government organizations that they felt were corrupt

(27:58):
or that were infringing upon people's freedoms, including issues like
agencies like the NSA that were found to conduct espionage
on American citizens. They supported social movements like the Arab
Spring and Black Lives Matter. They took aim at things

(28:19):
like child pornography rings to bring those down. They continue
to provide support to Ukraine in its war against Russia.
They've used their skills to disrupt Russia's online operations to
varying degrees of success. But at the heart of things,
Anonymous is still a decentralized organization. In fact, to call

(28:39):
it an organization is a bit of a stretch. Anonymous
consists of lots of people. How many is impossible to say.
There's no official membership for obvious reasons. If you want
to be Anonymous, you can't have one, And within the
group there are a variety of opinions and political philosophies
and value. So not everything attributed to Anonymous is necessarily

(29:03):
the result of Anonymous, or at least not of the
overall collection of people who identify as being part of Anonymous.
In some cases, it's a splinter group of folks who
have a common goal, but it's not necessarily a goal
that's supported by the overall Anonymous community, and they go
out and do their own operations. Sometimes the media connects

(29:25):
those operations with Anonymous overall, and on rare occasions, the
overall organization might even distance itself from some of those activities. Okay,
we're going to continue talking about Anonymous and then Dows,
but first let's take another quick break. Okay, we're back.

(29:53):
So I described earlier how Anonymous works generally, and it's
mostly through consensus and brainstorm. People within the community start
to toss back and forth some ideas, including who they
think is at fault for perhaps oppressing others, and then

(30:13):
potential ways to address that oppression. Sometimes a small group
of folks within Anonymous will adopt a cause and gain
more support from other members as things evolve and it
becomes the overall group's objective. Sometimes a person, government agency,
or a company will behave in a way that is
so counter to anonymous as core values of individual freedom

(30:38):
and a desire to wrest control away from institutions that
it really won't take a lot of convincing. The whole
group will more or less beyond the same page, and
what needs to happen is consensus on what to do
about it. So that is Anonymous. Now let's talk about
decentralized autonomous organizations or doos d aos. This is a
continuation on our recent episode about Web three and the

(31:01):
hype cycle which published last week, so it kind of
builds on that as well. Now, what the heck is
a decentralized autonomous organization the DAO or DOO. Well, at
a very high level, it is an organization made up
of people who share some common goal. Now, the specifics

(31:23):
of how to achieve that goal, or what conditions need
to exist in order for each member to consider the
goal to have been achieved in the first place. That
can be different from person to person, and it can
require a consensus among the group to decide on particulars,
but generally speaking, the group has the same outcome in mind.

(31:46):
So a DAO can kind of act like a company,
or it can act like a charitable organization or a
community action group. It can have a single purpose. For example,
one DOO actually had the express purpose of purchasing an
original copy of an historic document, which we will get

(32:06):
to in a bit, Or it could have a more
general purpose, like it exists for the betterment of a
specific community or maybe the global community, and in the
process of doing that it could pursue many smaller but
related goals. However, a DOW is owned and operated by

(32:29):
the members of that organization, So instead of having a
single hierarchical leader or even a board of directors who
ultimately are allowed to approve or deny requests for specific
business decisions, the overall group gets to vote on these things.
So instead of having one person decide, well, our goal

(32:50):
is X, so we're going to do why and that
will achieve our goal. The whole groups to decide if
why is the right thing to do or may mean
there should be some other method to achieve that goal.
And in fact, with enough support, the organization can actually
choose to change the goal, so it's not X at all,

(33:12):
it's something else. They could do that with enough support
and with a successful vote. Now, the way this thing
works is through voting, but it's not necessarily a case
where every member has a single vote. No, that's not
necessarily the case. It can work to be more like
shareholders in a publicly traded company. So the more shares

(33:34):
of the company you own, the more votes you have.
If you own a high enough percentage of the shares
that exist, effectively you can actually dictate the direction of
the company right if you were to own that much.
Even if all the other shareholders collectively disagreed with you,
tough for them, because if you hold enough votes to

(33:56):
decide what you say goes, then that's it. This is
actually one of the challenges that dows can face, but
will touch on that leader as well. So basically, a
DOW is a way for a group of people to
identify and pursue a common goal through a decentralized democratic process,

(34:17):
and in that way, I think you could probably see
how Anonymous would want to adopt a DOW. Anonymous is
a decentralized organization of people who share some common values
and beliefs and goals, but not everyone shares every specific
goal with everyone else. There's a lot of then diagram

(34:38):
stuff going on. So you've got some groups with an
anonymous who have an overlap with the overall groups values
and beliefs, but there's also some outliers. Then you have
other subgroups that maybe just barely tap into the same
value system that the overall group of anonymous has, but

(34:58):
they're all part of Anonymous, at least as far as
being part of Anonymous goes. Okay, So now let's talk
about how a DOW actually works, because so far we've
just been looking at really a high level approach. A
DOW is built on top of the blockchain, and we're
usually talking about the Ethereum blockchain here, and so this

(35:18):
is the blockchain is the thing that cryptocurrencies like Bitcoin
and ether depend upon. In fact, Bitcoin introduced the concept
of the blockchain a couple of decades ago at this point,
or almost a couple of decades ago. A blockchain is
essentially a record of transactions, and they're grouped into blocks
that have been verified by the overall community that makes

(35:39):
up the system, and then each block is added sequentially
to a chain of earlier blocks of transactions. In the
case of bitcoin, those transactions are stuff like actual financial transactions,
but they can pretty much be anything that involves data
points that track chronologically and that can transition in state

(35:59):
in some way. One other important factor about the blockchain
is that its structure makes it very difficult to change
earlier points of data within the chain, So each block's
identity depends in part on all the blocks that came
before it, and everyone in the system who is part
of this blockchain system. Everyone can view the blockchain. It

(36:24):
becomes a common ledger, a publicly shared ledger that everyone
is able to see. And since everyone's able to see it,
they can see if someone tries to mess with it.
So if someone were to try and go back and
change a data point that happened earlier on in this
chain of blocks of data, that change would be reflected

(36:48):
in that block's identity, but that would also affect every
single block that came after it, so let's say that
your blockchain is twenty blocks long and someone try to
change the data that was in block fifteen. Well, from
block fifteen to block twenty, that change perpetuates down the chain.
Everyone connected to the system would see that something hinky

(37:10):
was going on. They could clamp down and stop it
reverse it. By the way, there are some issues with
this system. For example, if the overall organization, whether it's
a cryptocurrency community like bitcoin miners or a dow if
they cannot come to consensus on the direction of the blockchain,

(37:33):
you can have a fork. So, for simplicity's sake, let's
say that half of this blockchain community thinks that they
need to go in one direction, like this happened with
In fact, it's happened with like all the major cryptocurrencies,
but this did happen with Bitcoin. Let's say that like

(37:54):
half of the community thinks, we want to implement some
improvements to blockchain and bitcoin, but it's going to necessitate
that you download new software to be able to interact
with the blockchain system in order to adopt this motion.
But let's say the other half of the community is like, no,

(38:15):
I kind of like the way it's working now. I
don't want to adopt these new approaches and I want
it to stay the same. And you get to a
point where half the group chooses to update their software
to adopt this new direction, the other half doesn't. You
have two different versions of bitcoin at that point, right,
You've got the updated version and you have the original version. Eventually,

(38:39):
what you have there is a fork. Both versions continue
to build upon the original blockchain, but they branch off
into different directions because of this change in the community,
this disagreement within the community. Sometimes both of these branches
can continue and become healthy and stay solvent the entire time.

(39:01):
Sometimes one will collapse, maybe both collapse. It can happen.
That's a risk, and arguably you could say this is
a risk with any organization. Right, you can get to
a point where within the organization there's a disagreement about
how to do stuff, and that disagreement might lead to
the point where part of the organization splits off to
become its own thing. Happens all the time, well, the

(39:24):
same thing is true with blockchain. With cryptocurrencies, some exchanges
will actually suspend trading in the wake of a hard
fork or even a soft fork in an effort to
mitigate risk and volatility, because the value of these cryptocurrencies
can change even more dramatically than they already do in
the wake of a fork. Those suspensions usually last long

(39:47):
enough for the dust to settle before trading commences again.
But if one of the forks seems particularly unstable, the
exchanges might just ignore that one and only accept the
other fork. And it may be that no matter how
many people believe passionately that they've done the right thing,
their efforts will be in vain. Okay, back to DOW. Now,
I haven't really touched on the autonomous part of decentralized

(40:11):
autonomous organization. A DOW runs by using rules called smart
contracts to guide specific actions in pursuit of a larger goal.
So the smart contracts essentially take action when certain criteria
are met. You can think of it as, let's say
that you got like a long term goal, and you

(40:32):
break down that goal into steps, the steps you need
to take in order to achieve your goal. The smart
contracts represent the action points of those steps, and if
you can think of them in very simple programming terms,
you can think of a smart contract as being kind
of an if then statement like Let's say a very
simple one is that you join a dow that's going

(40:54):
to be investing in bitcoin ultimately and maybe the if
then stay and as if the value of bitcoin drops
below twenty thousand US dollars per bitcoin, buy x dollars
value in bitcoin. Then if the value bitcoin is above
twenty thousand dollars, the smart contract doesn't take any action.

(41:16):
But if the value drops bid leath twenty thousand, the
smart contract comes into play and the doll starts to
buy a bitcoin, with other smart contracts deciding when it stops.
Like there could be another if then, like if the
amount in the doll's treasury drops below x amount of dollars,
stop all purchasing activities. This is an extremely basic, oversimplified example,

(41:41):
mind you, but it's one that I thought could be helpful.
So that's the autonomous part. You have these smart contracts
that are doing the work so that humans don't have
to assuming that the conditions are met for the smart
contract to actually come to play. Otherwise remains dormant and

(42:02):
all the while it's trying to achieve this shared goal. Now,
the humans as the part of the DOO, they collectively
decide what the smart contracts do. So. It might be
that a DOO exists for a while and someone in
the organization says, you know, this is not the most
effective way we could do this. These smart contracts are clumsy.

(42:26):
They are not achieving our goal efficiently. Let's do it
this other way, where we'll rework the smart contracts so
they work under these new conditions. Well, then the group
would have to decide and come to a consensus about
whether or not to adopt or reject that proposal, and
the DOW would just keep on behaving autonomously. It would change, however,

(42:48):
if the consensus agreed on the change, and then people
implement a new smart contracts and overhauled the DOO, at
which point it would now behave under these new rules.
Now for all of this to work, there's got to
be money involved, right, Like this stuff like, it doesn't
matter what your doll is are, what your goals are,

(43:10):
or anything like that if there's no money behind it,
because nothing gets done. So your typical doll receives outside investment.
You typically are seeking capitalists to invest into the DOO,
and then the members of the doll also have to
hand over their cold hard cash in return for tokens

(43:30):
that cold hard cash, maybe in the form of cryptocurrencies
like ether, but you do this to purchase tokens that
represents membership and voting power within the organization. So these
are digital tokens. They're similar to cryptocurrency, except instead of
behaving like a currency, and don't get me started, because
cryptocurrency doesn't always behave like a currency. In fact, many

(43:53):
times it doesn't, but that's a separate topic. They behave
like a share in the overall organization, and you can
own more than one token. You can own as many
tokens as you want to buy that the organization will
meant anyway. And these collected funds that people have poured
into the TAO, they become the treasury for this organization.

(44:17):
The members get to vote on how the organization will
direct the money in the treasury to be spent in
its effort to achieve whatever the goals of the organization
happened to be. All right, let's talk about a couple
of specific doos for a moment to understand some more
issues with this approach. Way back in April twenty sixteen,

(44:37):
a group of investors got together. They pulled a huge
amount of money into an organization that they called the Tao.
It was meant to serve as a venture capital fund,
so in many ways, the idea here was to give
smaller investors the chance to take part in bigger investment opportunities,
the kind that you would normally see huge VC firms

(44:57):
participate in when funding a startup, for example. Unfortunately, the
group hit a major snag. So the Dow's token also
called DOO. Dao was listed on cryptocurrency exchanges and it
was built on top of the Ethereum blockchain. But the
Dow's security had a really serious vulnerability in it, and

(45:20):
in June of twenty sixteen, just a couple of months
after it got started, someone stole oh about a third
of the money in the organization's treasury. That was around
fifty million dollars worth of Ether currency that was stolen
from the DOO and the stolen funds were moved into

(45:41):
a different Ethereum account. However, thankfully, the dow had some
smart contracts that put some some limitations on this. The
money had a twenty eight day holding period on it,
so the people who who conducted this theft were not
able to access the money and then withdraw it, So

(46:03):
there was a ticking clock that was going where there
was this twenty eight day hold on the money in
this account, and then the ethereum community had to decide
want to do about it, and some wanted to reverse
the transaction and return the funds to the DOW and
its investors because they had been stolen from even though

(46:25):
some would say, well, it was due to the fact
that they had poor security measures in place, Others said, yeah,
but that you know, you can't blame them for a theft.
A theft is an action taken by someone else, right,
It's not like they misplaced the money, It's that someone
purposefully redirected money. So there was some people who said,

(46:45):
let's reverse that transaction, but that means we're gonna have
to go back in the chain and change that, and
as we've said, that means changes all the way forward
down the chain from that point, and that can cause
a headache for anyone else who's done transactions on this chain.
The people are saying, no, no, no, no no, no no no.
I don't want that to mess with everything else. We
don't want to upset the whole apple cart because of

(47:06):
this one instance. The theft was awful it technically didn't
violate the rules because the rules were constructed poorly, but
it's clearly an awful thing. But we don't want everything
else to suffer because of this one incident, so we
have to keep it going. Ultimately, Ethereum had a hard fork.
The original version of Ethereum continued as Ethereum Classic, and

(47:30):
the new version, which returned the funds to the TAO,
became Ethereum Blockchain. There are other examples of DOO as well,
including Constitution Dow, which formed to purchase a copy of
the US Constitution. I referenced that earlier in this episode,
and that's an interesting story too, and I have a

(47:50):
little more to say about that, but we're getting super long,
so we're going to take another quick break. When we
come back, I will wrap all this up. Okay, I
know it's an epic episode. I don't usually have that
many breaks in one, but this one I felt was

(48:13):
a great question and it was really important. So we're
getting back to Constitution Dow. We get this DOO where
you have a group of investors who collectively their goal
is to purchase an original copy of the United States
Constitution that was going on auction at Sotheby's. Members of
the TAO invested heavily into this organization. I want to

(48:35):
say they raised nearly fifty million dollars. However, not all
of that money would be available for bidding on the
copy of the Constitution for reasons I'll get into in
a second. Ultimately, the DOAO did not have the highest bid.
The highest bid was for more than forty three million

(48:56):
dollars and the Constitution dow law this auction. Now, again,
the only purpose for the existence of this dow was
to purchase that copy. So once the auction was over,
the DOW had no purpose anymore and it was going
to just disband. So you had all these people who

(49:18):
had poured money into it. They wanted to get their
money back because the thing that they wanted to have
happened did not happen. Here's where they started to run
into problems, and it is an issue with dows that
are built on top of blockchain. For blockchain transactions to happen,
you have to cover the costs of the computational power
needed to process the transactions in question. As part of that,

(49:44):
there is a transaction fee for every transaction you make.
It's not that different from transaction fees you encounter when
you use things like credit cards. Often these transaction fees
are invisible to the consumer. The vendor is the one
who has to handle it. That's why you you go
to some stores you might see a sign that says
no credit card transactions for below a certain amount of money.

(50:06):
It's because there are transaction fees which cut into the
money that the vendor gets in that actual transaction right well.
With cryptocurrency, the transaction fees also known as gas fees,
to cover the cost of the computational resources needed to
handle these transactions. They can be significant, especially for proof

(50:28):
of work based cryptocurrencies, which Ether was at this point.
Ethereum has since moved to a proof of stake, which
is a different approach to cryptocurrency than proof of work.
The proof of work is what Ethereum worked on at
the time that this happened. It's also the way bitcoin works.
This is where you have bitcoin or cryptocurrency mining operations

(50:52):
that are competing against each other to verify a block
of transactions. In return, you get awarded a certain number
of crypto coins, so that is a gas fee. The
problem is the people who engaged in constitution DAO. The
people who invested into it, they were investing relatively small
amounts of money. I mean like like sometimes like one

(51:14):
hundred bucks, two hundred bucks, something like that, which is
you know, enough for It's considered a large amount of
money for a lot of people, but in the grand
scheme of investments, it's tiny, right. We often talk about
investors in the tech space who are working on the millions,
if not billions of dollars scale, But this was something
that was positioned as a way for the average person

(51:36):
to be involved in this particular d AO. So you
had people who are putting in one hundred or two
hundred bucks. The problem is the gas fees at the time,
we're ranging at around seventy dollars per transaction. That means
seventy dollars of your transaction of depositing money into the
doll is taken out as gas fees, and seventy dollars

(51:56):
of the transaction has taken out when you withdraw. If
you put in less than one hundred and forty bucks,
it meant that the transaction fees were the same amount
or greater than the money you put in, which means
you didn't get anything out all that money was gone.
It got burned away in gas fees. This is an
issue with the blockchain based organizations. Now the gas fees

(52:21):
are not always that exorbitant. It's not like we're still
seeing these crazy fees for all transactions. But it does
mean that there is risk associated with DAOs. Even if
you have a DO where you're allowed to withdraw your
money at any time, you're not going to get the

(52:42):
same amount of money back as you put in because
they're going to be these transaction fees that will be
deducted from those transactions. So you know, if if the
loss is small, it might be trivial, you might not care.
But in this particular case with constitution now it was
one of those things that left a bad taste in

(53:02):
a lot of people's mouths and made them feel like
the DOO approach has some real drawbacks. But all that
being said, we can start to understand why anonymous would
embrace a DOW because you can participate in a DOO anonymously.
It's one of the big benefits of blockchain. It's one
of the foundational concepts of decentralized finance, is this anonymity

(53:27):
where you are allowed to make these transactions without them
being tied to your personal identity. So instead of being
something that is forever associated with you, like every purchase
on Amazon that you make is associated with you, right,
and that history of transactions ends up being a portrait

(53:48):
of who you are as a person that has value. Well,
these decentralized approaches have anonymity baked into them, so that
you can purchase whatever you want, it's never tagged with you.
You can live your life without everyone knowing what it
is you like or don't like. So that whole market

(54:12):
of dealing with your information kind of disappears if you're
doing everything through blockchain, because you can do it through
this anonymous approach. Obviously that falls right into anonymous's ethos,
so you understand where that fits with the anonymous approach. Also,

(54:32):
you participate in the governance of the group, right, because
you have these tokens that represent your membership, that represents
your voting power, So you can vote for or against
measures proposals within the TAO that are designed to achieve
certain goals or complete certain tasks. You can be an

(54:52):
active participant in that, and that way you can have
this group of people who collectively have some simil allure
beliefs and values, but not necessarily identical ones, and you
can hash out what the group will and will not do.
So instead of having like a splinter group go off

(55:13):
and do something and then the whole of that operation
gets associated with Anonymous, when the whole group may not
have approved of it, you now have a system where
ideas can be approved or rejected collectively. So that obviously
folds in with Anonymous's ethos as well, and I can

(55:37):
understand that. Now, let's talk about the sovereign part of
the name of sovereign Dow. Remember that's the name of
the dow that Anonymous's video was pointing people to. Sovereignty
relates to authority, So it's who holds authority over an entity,
whether that's an individual, an organization, a nation. So a

(55:58):
sovereign nation has ultimate authority over its governance, it has
authority over its borders. A country that invades a different country,
like Russia invading Ukraine violates the other nation's sovereignty. Russia
violated Ukraine's sovereignty by invading it and claiming that it

(56:19):
had ownership over territories that internationally are thought to belong
to Ukraine. Sovereignty is something that has to be recognized
both within and outside of the entity. It's not enough
for you to declare yourself sovereign. Others have to recognize
you as sovereign as well, so it becomes a tricky
thing now. Within blockchain, sovereignty also means partly that the

(56:43):
organization is independent. It's also resistant to outside interference, so
it is able to act on its interests without the
interference of say, regulators or government authorities. Also, sovereignty partly
first to the fact that the individual members of the

(57:03):
DAO have the sovereignty to engage in transactions with any
other members and nothing can stop that. So let's say
that you and I are both connected to the Ethereum blockchain.
I could send you ether plus the gas fees needed
to cover the transaction, and you could accept the ether,
and no one else in the system would be able

(57:25):
to stop and say hang on, you can't do that.
That also plays into the anonymous ethoughts, So you start
to see where this approach to organization and governance within
an organization falls in line with the goals of anonymous.
There are still problems you have to address. You have

(57:45):
to address how do you handle voting. If someone accumulates
enough tokens, could they become essentially a bully or banned
with a few others who also have a lot of tokens,
and together they become bullies who dictate the moves of
the organization at the expense of what everyone else wants.
You have to address that. This can be addressed by

(58:07):
the way, but it has to be built into the system.
It can't just be left up chance. Another potential issue
is if you have lots and lots of members, but
a lot of them are inactive. If they're inactive, then
they're not voting. And if you require a certain percentage
of votes in order to pass particular measures, you may

(58:29):
never be able to achieve that percentage because of the
number of inactive accounts that are connected to the system.
That's also something you can work around, but it's another
inherent danger with dows. So again, the DOW as a
concept I think is interesting. I don't think it's a

(58:51):
cure all solution. It requires a lot of careful thought
and architecture to make sure that it actually does the
thing it purports to do, and it doesn't just become
a way for a single entity or a small group
to completely take over control of something that's meant to

(59:13):
be a democratic and decentralized approach. One of the big
dangers of doos, by the way, is if they are
not constructed properly, you could potentially enter into a situation where,
let's say you've got someone who has an enormous number
of tokens and there are huge contributors, like lots and
lots of money has been contributed into the treasury. If

(59:36):
one person has enough power, they could propose a resolution
to award them the entirety of the treasury, like they
could just take all the money out of the treasury
of the Tao, and if they have enough votes to
make that proposal pass, they could do it. Now. Usually

(59:57):
you have protections in place where you need to have
not just a simple majority, but an overwhelming majority for
something like that to happen, which mitigates that risk. But
it is a potential risk, and it does say that
you have to be careful when constructing the tao. As
for the construction of sovereign Tao, I have no common

(01:00:18):
on that. I don't know what they've done, I don't
know how it's built, I don't know the nature of
the smart contracts. So I don't know how effective or
safe or risky it is, but I can say that
it doesn't surprise me to see Anonymous trying to move

(01:00:40):
toward a DOO structure for the purposes of achieving its goals,
because all of the composite elements of a tao seem
to fall in line with the core values of Anonymous itself.
I hope that's there's your question. I know this was

(01:01:01):
a super long episode, but I feel like it was
covering some really important things and again giving us that context.
We need to understand where stuff comes from and how
it plays together to really be able to form opinions
about it. Otherwise our opinion is going to be uninformed,
and often it means we can make decisions that are
not necessarily the best for us, simply because we did

(01:01:25):
not have a full appreciation of the information that's out there.
So that was my purpose for going super long with
this episode, which is funny because typically on Wednesdays I
aim for tech stuff tidbits that are supposed to be short.
This is clearly not one of those, all right, If
you have suggestions for future topics of tech stuff, you
can reach out to me by tweeting at tech stuff.

(01:01:47):
It's tech stuff hsw on Twitter. Send me a message there.
Or you can download the iHeartRadio app. It's for you
to download and use. Navigate over to tech Stuff by
putting it into the little search bar. It'll take it
to the text page. You can click on the little
microphone icon and leave me a voice message up to
thirty seconds in length. Let me know what you would
like to hear. Or you could be like Nathan and

(01:02:08):
do some work, then find an email address for me
out there in the world and send me an email.
I'm not going to share my email because I already
get a ton of stuff and I can't even file
through all of it. But if it gets through to
me and it's interesting, yeah, I'll tackle it. Good job, Nathan, Yeah, jerk,

(01:02:29):
I don't mean that. I'm just joking because you found
a way to email me, all right. One way to
email me, by the way, is if you're a fan
of Ridiculous History, because occasionally Ben Bolan likes to give
out my email address as the complaints department. So there
you go. All right, that's it. I'll talk to you
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(01:02:58):
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