There’s no better example of the power, and the terror, inspired by blockchain than Gab.com, the social network used by the accused Pittsburgh synagogue gunman to threaten Jews.
About a month and a half before the alleged gunman made good on those threats by opening fire in a Pittsburgh synagogue and killing 11 people, Gab submitted paperwork to the U.S. Securities and Exchange Commission to raise $10 million via an initial coin offering (ICO). The offering, dated September 18, 2018, has so far received commitments to raise $5.6 million in capital for the “free speech” social network, which is a favorite of white supremacists, neo-Nazis and other members of the “alt-right.”
Since the shooting on Saturday, Gab has been shut down by a host of mainstream services including payment processors Stripe and Paypal, Web-hosting company Joyent and briefly, domain registry GoDaddy. But that might not matter, because Gab has already taken the first step toward freeing itself from dependence on traditional infrastructure and support mechanisms, thanks to its funding via the ethereum blockchain. Ultimately Gab’s goal is to build an entire ecosystem beyond the reach of centralized authorities—whether Facebook, Twitter or venture capitalists—making it nearly indestructible. On this, the tenth anniversary of the publication of Satoshi Nakamoto’s whitepaper, which gave birth to bitcoin, Gab epitomizes the darker consequences of his vision.
Gab’s goal is to build an entire ecosystem beyond the reach of centralized authorities, making it nearly indestructible
Gab’s ICO is a vivid demonstration of blockchain’s ability to let people raise money anonymously outside of mainstream financing. But Gab and others now have access to even more powerful tools that could make centralized servers, domain managers, and much of the internet infrastructure as we know it obsolete.
“Ultimately, what we’re trying to accomplish is to cut out the middleman,” said Gab co-founder and CEO Andrew Torba on a Bitcoin Uncensored episode last year. “I want to see VCs tremble, just crumble.
If it weren’t for Andrew Torba’s associations with the alt-right, his success in tech might be heralded. A Moosic, Pennsylvania, native who graduated from the University of Scranton in 2013, Torba caught the attention of the storied Silicon Valley incubator Y Combinator after he created an automated advertising company called Kuhcoon, Inc. Torba’s startup received seed funding from the incubator as a graduate of Y Combinator’s winter Class of 2015.
Those dreams fell apart when after the 2016 presidential campaign, Torba, whose company had been renamed Automated Ads, was kicked out of the Y Combinator alumni network for taunting fellow members on Facebook. “I helped meme a president into office, cucks,” flamed Torba, known to wear a green MAGA hat, admitting he spread Trump endorsements over the internet during the months leading up to the presidential election.
In August 2016, Torba launched Gab, citing censorship by Facebook, Twitter and Reddit as examples of why he founded the ad-free social network. His initial funding came solely from donations. Almost from the start, membership on Gab took off like a rocket despite that fact that it was rejected by Apple’s App store and Google Play. In July 2017 Torba told the controversial Bitcoin Uncensored host Chris Derose that Gab had 200,000 users. By the time Gab filed its paperwork to use the ethereum blockchain to raise capital, the number of users had almost doubled to 394,000. In an updated SEC filing from last month, that number had grown to 635,000 people. It reportedly now has around 800,000 users.
According to Torba, it wasn’t just Google Play and Y Combinator who shunned him, but also venture capitalists who “blacklisted” him, preventing Gab from realizing its true potential and scaling even more rapidly. So Torba sought out StartEngine, a crowdfunding website launched in 2014 that had been taking advantage of Obama’s Jobs Act exemptions to help companies sell equity to small investors. In 2018, StartEngine launched a new ICO funding service, which Torba quickly signed up for.
Starting in January, Gab offered 2 million tokens issued on the ethereum blockchain at a price of $5 each. According to the most recent SEC documents, a fully subscribed offering would give token investors a 12.5% ownership stake in Gab while Torba and his cofounders would retain the rest. Despite blockchain’s promise of democratization, Gab token holders have no voting rights. Based on the StartEngine website, Gab has so far sold tokens to 1,820 holders, committing $5,630,502.64.
In terms of financials, Gab’s most recent filings show that it had gross revenues of $93,260 in 2017, mostly from premium subscription services that allow its members to monetize their audiences. Despite donations of more than $116,000, Gab was still losing money at the end of 2017, according to its offering statement. Operating costs were reported to be $364,676, including $65,000 in salary for Torba.
While the world has come to know the social network as a place where extremists like the synagogue killer could gather and swap hate speech, the company, as it describes itself in Securities and Exchange Commission documents, paints a very different picture.
The offering documents portray Gab as a supporter of free speech and a defender of “the free flow of information,” mirroring in many ways the rhetoric increasingly used by promoters of blockchain to describe the democratizing benefits of the new technology:
“We empower creators, support free speech and defend the free flow of information online. We stand for bringing folks together of all races, religions, and creeds who share in the common ideals of Western values, individual liberty and the free exchange and flow of information. Our mission is to provide people with the tools they need to create and shape their own experience.”
What tools? GabTV, for example allows members the ability to build followers and tip revenue by streaming video programming on Gab’s platform.
Perhaps in a veiled message to would-be followers, the image plastered on the front of the company’s offering statement is that of a green frog, similar to the Pepe the Frog meme that has been co-opted by neo-Nazis and the alt-right.
Today, Gab tokens are still being sold on StartEngine.
Earlier this week, as the FBI and Department of Justice investigated the Pittsburgh shootings, Paypal, Stripe, Joyent and GoDaddy terminated service to Gab. In a post on his disabled website, Torba claims the company is cooperating with the authorities “to bring justice to an alleged terrorist.”
Of course, Torba hasn’t stopped ranting against the establishment. “No-platform us all you want. Ban us all you want. Smear us all you want,” he says on Gab’s homepage in response to being shut down. “You can’t stop an idea.”
Torba may be right. There are blockchain alternatives to every single service currently disabling Gab. Paypal and Stripe may not want Gab using their services, but Gab can easily accept payments directly using bitcoin, ethereum, or privacy cryptocurrencies like zcash and monero.
And Gab can also use other blockchain services if mainstream providers try to kick it off the internet by refusing to provide critical services. If Gab needs to replace GoDaddy for domain service (the addresses people use to find websites), Ethereum Name Service provides domains for decentralized applications built on the ethereum blockchain. Web hosting? No problem. Ethereum’s Substratum provides a decentralized alternative to Joyent. Others have already pioneered the idea. PeepEth is a nascent ethereum-powered social network, and Mastadon is a blockchain-based Twitter.
If navigating all of those blockchain alternatives seems daunting, Gab and other blacklisted entities could simply tap into Blockstack, which is creating an entire stack of Web services designed to create an uncensorable web. Earlier this year Blockstack, which is backed by Tyler and Cameron Winklevoss, announced $1 million in grants specifically for social networks that could one day put Facebook and other centralized social networks out of business. Already, one of 300 grant applicants, Afari, claims it will give users of its social network control over their own usage data by increasing privacy.
As we mark the tenth anniversary of bitcoin’s birth, it may not be the corrupt banks and totalitarian regimes envisioned by Satoshi that we should be fearing most, but the dark corners of the internet and the dark minds that inhabit them.
Bitcoin Uncensored host Derose, who condemns the synagogue attacks but has himself been accused of racism, sexism, and bigotry, offers a stern warning:
“What happened with Gab is that people of a like mind brought their ideas together and created something that’s worse than a sum of their parts.” He adds, “We created the bogeymen we fear, and encouraged them.”
