DIRT raises $3 million to put truth itself on the blockchain
Fundraising notwithstanding, Dirt might be a disaster waiting to happen.
A cryptocurrency platform called DIRT has just raised $3 million in private fundraising from a slew of big names, including highly regarded VC firms and Coinbase co-founder Fred Ehrsam.
Its mission, in an age of fake news, is to put truth itself on the blockchain.
Truth on the blockchain
The idea has an economically utilitarian charm to it. On paper, one might see the spreading of fake news as an activity with potentially high rewards and a very low cost. There will always be various reasons to spread fake news and there's not much to be done about that, so instead you can adjust the cost of doing so.
"Think of Dirt as a set of rules that make it economically irrational to spread false information," said Dirt founder Yin Wu. "With Dirt, if you want to spread a piece of information, you’d need to stake a [DIRT] token."
Functionally, it's a kind of system where people can vote on what the truth is by staking tokens. Someone who loses the popular vote after staking a claim on a truth will lose their tokens, while those who vote for a falsehood will also receive a small financial penalty. Those who offer up information to prove the truth, or correctly vote for the truth, will receive a reward from a portion of the tokens staked on that issue.
Of course, in this case the truth is whichever one happens to win the vote, rather than whichever one is factually correct.
"We're creating Wikipedia, but with machine-readable data sets that belong in the public domain, and don’t belong to a single party," Wu said.
In a nutshell, it's a system that lets people put money where their mouth is, and lets them place bets on what the truth is.
Down the line, it might also penalise those who spread misinformation by ranking their votes as less credible.
Falsehoods on the blockchain
Initially, it will be turned towards the crypto space, with the goal of letting people bet on claims made by blockchain projects. This might be a good way to stress test it right from the start. Scams, schemes and outright lies are common in crypto, and there's a lot of money at stake to motivate people into sabotaging rivals and gaming the system any way possible.
By getting started here, Dirt will be very much jumping into the deep end.
It's naturally possible that someone with a large following could break a vote their way with more resources, Wu concedes, but she points out that this is what's already happening on other platforms.
"If someone has a large Twitter following, they can still spread whatever information they want," she said.
But by attaching some kind of reward for finding and promoting truth, and some kind of financial cost to spreading fake news, or factually incorrect fun facts, the Dirt platform as a whole might end up being innately more accurate than others. And if it does end up being regarded as a credible source of truth, there will definitely be some solid incentives to break the system any way possible.
Dirt has a lot of problems to look forward to in the future. The main one might be that the truth isn't as clear cut as it might seem, and that even with factual accuracy and reliable sources as a guide, there are still plenty of grey areas. Picture two voting sides arguing over whether climate change is real or vaccinations cause autism by presenting scientific-looking papers of their choosing as evidence, and then slinging DIRT at each other until the one with more money is deemed to be the truth.
The main problem might be that Dirt's incentives aren't actually aligned with discovering the truth. In some ways, they're actually more closely aligned with pushing and voting for falsehoods. This is because the heart of the incentive mechanism is not being correct, but being on the winning side as profitably as possible.
This means ensuring that a lot of people cast votes for the other side of the issue, and the best way of doing that is by supporting falsehoods.
From there, you can just crush the other side with however much voting power it takes. And because everyone wants to end up on the winning side, regardless of what the truth actually is, it would probably be much more cost-effective than one might think.
The sky is green
Contrary to popular opinion, Bob thinks the sky is green, so he asserts on Dirt that the sky is green and puts a large bet behind the claim.
Most people know a trap when they see it, and so avoid challenging the claim. But some people do take the bait, and put an equally large amount of money behind a claim that the sky is actually blue.
Bob and his compatriots simply keep matching the blue team's bets, buying up more Dirt and roping in more compatriots where needed to stay ahead. Many strangers also come onto the green team unprompted because they see exactly what's happening and would much rather be on the profitable winning side than the unprofitable truthiness side.
And if needed, Bob and his team are willing to buy and put down a very large investment if that's what it takes to win the bet. They're in it for the money, not the empty satisfaction of confirming what colour the sky is, and so have a much larger incentive to do whatever it takes.
Bob wins the bet. He and his team pocket more money than they started with, and the sky is now officially green.
The blue team doesn't take it lying down though, and points at scientific evidence that the sky is blue. Depending on how Dirt will work, that evidence either doesn't mean anything or it prompts a central authority to come along and unilaterally declare the sky to be blue despite all the voting evidence to the contrary. Either way, it's not a great way of discovering the truth.
It later emerges that Bob is colour blind and actually sees the sky as green.
Wu has considered this possibility, but points out that there's an innate incentive for participants to use the network in good faith because the value of the tokens themselves will only hold up if the platform is used as intended.
"As a network, there's an incentive to be honest because the value of our tokens will only stay up if people are using them in good faith," she said.
Unfortunately, as EOS's mistakes with openly hostile, elected block producers have shown, this simply doesn't work. There are thousands of cryptocurrencies out there, and profiteers have no specific loyalty to any of them. Their goal isn't to invest in a project's future, and they don't really care whether the sky is blue or green. Their goal is to exploit it for maximum profit, and then move onto the next thing when it all burns down.
Coins don't burn down easily though, and popular projects have tended to show remarkable price robustness in the face of adverse circumstances. After everything that's happened, EOS is still the number five cryptocurrency by market cap. Verge's price similarly managed to tick along for ages despite everything, and even an ongoing spree of 51% attacks haven't had much effect on affected coin prices.
Truth is beauty and beauty is truth, but things at Dirt are going to get ugly.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and NANO.