Distraction Free Reading

GameStop, the Platform-Democracy-Complex and the Promise of Crypto

The trading platform Robinhood tried to wiggle itself back into the heart of the masses with a prime-time ad during the Super Bowl break the first weekend of February. The headline was simple: we are all investors. Unsurprisingly, people got mad very quickly: what were the company executives thinking? They had in fact just done the exact opposite during the recent GameStop Saga, which saw the platform (temporarily) suspend stocks and prevented people from trading.

RobinHood advertisement that was aired during the Super Bowl ad-break on Feb 7th; the tagline: ‘We are all investors’

Let’s go back to the beginning of this story and start with the basics. In the last weeks of January, many people who would usually keep away from the stock markets were glued to charts and graphs tracking the absurd movements of some stocks, first and foremost the shares of the brick-and-mortar video game chain GameStop. What was happening? Masses of ordinary people had taken to trading platforms such as Robinhood to ‘stick it to the man’ – and/or make some money in the process. Forums on Reddit (especially WallStreetBets) and Facebook (e.g.  Robinhood Stock Traders) had been ‘hijacked’ by wanna-be-market-specialists such as Keith Jill to incite the ‘herd’. The goal: flood a number of stocks – GameStop, Nokia, ARM, Blackberry and others – which had been ‘shorted’ by hedge funds. These billion-dollar professional investment funds, including Citron and Melvin Capital, were betting that the share prices of these companies would go down – and would have profited hugely from these bets. That’s when the collective of retail investors hit.

United and driven via the social media groups and platforms and using the cheap-and-easy functionalities of ‘democratized finance platforms’ such as Robinhood, millions of ordinary people acted against these bets; within a week shares prices of companies like GameStop went up by up to 1700%. The explicit goal was to send a ‘message to Wall Street’ as much as following any financial incentives. And they succeeded – at least for a moment: some hedge funds were ‘short squeezed’ (i.e. they were forced to further buy stock to forestall losses which accelerated the stock price rise) and had to clock in staggering losses of $30bn. At the height of the price rally, the platforms stepped in: Robinhood stopped trading in  the most volatile stocks; some Facebook, Reddit and Discord groups were made private or temporarily suspended. As it turns out – when Elon Musk interviewed RobinHood CEO Vlad Tenev on Clubhouse at the end of the turbulent week – at least Robinhood was forced to suspend trading by regulators (and raise cash from existing investors, as a ‘precaution’).

Many of the traders didn’t care very much about the ‘why’ – but mostly focused on the fact that they didn’t keep their promise of ‘democratizing trading’ and make it accessible easily for everyone.

While some have filed lawsuits against Robinhood for halting trading, others found new outlets. They have taken to cryptocurrencies, such as Bitcoin and Dogecoin – as a safe haven and most importantly: as a way of ‘standing together’ and ‘making history’.

Let’s unravel this through the lens of a simple question: what role have ‘technologies’ played in the events of the GameStop saga?


Several different narratives have already been spun about this saga – from the perspective of the regulator, it boils down to a question of conspiracy, fraud and manipulation (they are looking at Keith Jill for instance); political-economists are concerned with issues around ‘irrational’ and ‘incoherent’ markets; short-sellers are mainly afraid, to lose their livelihood. What has not been written about too much is what I would call the ‘platform-democracy-complex’, and specifically the role technology plays in it. How was the ‘small man’s’ rebellion first enabled and eventually disabled by platforms – and what does crypto-currency then have to do with it?

A commentator on Reddit in a highly popular post from the day after Robinhood suspended trading in GameStop expressed the following feeling: ‘Wall Street Bets Taught us That IF WE TRUST EACH OTHER AND ACT AS PARTNERS, WE CAN MOVE MOUNTAINS. […] How can we create a sense of community with one another?’ What role does which kind of tech play in this community building?

What the commentator is describing is the feeling of empowerment, being able to collectively organize, move and change something which platforms promise. A conglomerate of unlikely allies – from Facebook and Reddit to Robinhood – was employed to do exactly that: enable normal people to fight someone more powerful than them, in this case certain hedge fund investors. While the social media apps brought the community together and allowed them to communicate and influence widely (similar but more openly so as Facebook was used during the Arab Spring), Robinhood provided the deathly (and cheap) weapon: a cheap and frictionless online trading platform easily enable for (almost) anyone. The app (which itself is not at all without its blobs, bugs and critiques) allowed the people to collectively attack the ‘short’ and forced them to take several billion dollar losses. In that moment, it seemed that the platforms had indeed contributed, made possible, a democratized attack on a force that many would agree has become too powerful. They also showed that  ‘normal people’ could – given the right toolkit – change markets the way they wanted.

I listened in on a 2-day long Clubhouse (another hyped audio-only social media app) conversation on the topic and people were uniformly supporting this view: ‘We can’t attack rich people in real life, but this is the way we interact now, via the financial markets […] Normal people are starting to fight back.’ Another commentator in the same group used perhaps the most apt metaphor: ‘There was a chain around everyone’s leg which was recently taken off, now they are hopping on a horse and are catching up.’ The room was aptly called ‘Occupy Wall Street (with teeth)’. Was this a new form of rebellion facilitated by a collective alliance with online platforms?

It turns out that also those platforms crumbled – and ended up disappointing again, just as Facebook, Twitter, Uber and AirBnB before. Robinhood ended up taking the power away from the small man and restricted trading in the most volatile stocks. The reasons for that almost don’t matter; fact is that it wasn’t able to uphold its promise which it again repeated in its recent Super Bowl ad: everyone can be an investor everywhere all the time. While the money was frozen in Robinhood accounts, hedge funds (and other institutional investors) were able to recover. The rebellion was very brief, indeed. Or was it?

The saga wasn’t finished yet – despite most mainstream media deciding otherwise. What many commentators didn’t follow is the flux of money completely away from platform technologies into an altogether different, decentralized medium: cryptocurrencies. They presented themselves as a very volatile ‘safe haven’, at least to some. As one Clubhouse speaker proudly explained: ‘Media and government are controlled by money […] but the people have options and alternatives; new technologies help us to fix what we have […] decentralised solutions overcome the power of dollar, power of central bank, the influence of hedge funds, the platforms.’

One dogecoin in an actual minted coin-shape

Dogecoin is one of the cryptocurrencies which has gone as far as minting its own coins (Photo by Aranami, Flickr Creative Commons).

Cryptocurrency that run on blockchains, from the well-known Bitcoin to less-known (and valuable) Dogecoin, received billions of dollars of influx overnight. This shift can be seen as one to a completely different medium, a technology which instead of centralizing power in the hands of a (platform) institution (whether it is a hedge fund, the state or Robinhood) distributes it across a transparent ledger. Obviously, the soaring cryptocurrencies are also about making quick money; they are part of a new culture of investing-qua-betting. But how quickly cryptocurrencies are becoming mainstream also has consequences beyond the investment world; as more and more people buy into cryptocurrencies, they are exposed to the ideology of decentralisation. They will hear (and understand, when cases like Gamestop repeat themselves) about the new kind of platform-less freedom it provides free from institutional interference. It is undeniable: people crave new ways of ‘doing community’, of coming together and cryptocurrency seems to provide one way of organising that – while also taking away power (in the form of capital) from traditional systems.

Have we seen a new technology – decentralised tech – at play that is able to organise an alternative kind of democracy or rebellion for the first time? This is the much more interesting question than what the regulator needs to do about market interference organized through ‘democratizing platforms’. What we have seen is possibly the first big ripple of something much bigger.

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