Water Margin Call: Crypto and the Shui Hu Zhuan
What do blockchain and cryptocurrencies have to do with fighting tigers after drinking wine? Or dodging crooks while navigating a river?
The environment around the crypto space now looks like the end of a party. Many players are tipsy and unpredictable. The fun, in market terms, also seems to be over. Time for some to go home. Others, however, might be seen to “double down”, as the saying goes. Let’s look at the Wikipedia summary of a famous episode of doubling down from the Chinese epic, the Water Margin [水滸傳 / Shui Hu Zhuan]. The hero Wu Song, on his way home, passes a tavern.
The tavern… has a sign that reads “After Three Bowls, Do Not Cross the Ridge” (三碗不過崗). He stops there for a break. The waiter explains to Wu Song that the wine sold at the tavern is so strong that customers usually get drunk after having three bowls and are unable to cross the ridge ahead. That is the meaning behind the sign. Still sober after drinking three bowls, Wu Song demands that the waiter continue serving him wine. By the end of his meal, Wu Song has consumed 18 bowls of wine but he still appears sober. He is about to leave when the waiter stops him and warns him about a fierce man-eating tiger on the ridge. Wu Song suspects that the waiter is lying to him because he wants him to spend the night there to earn extra money from him. He ignores the waiter and continues his journey…
Around the world, ups and downs in the area of regulation are affecting blockchain, and the continuous lowering of valuations at the moment could be ascribed in part to this — as well as the rush of ICO startups to give themselves more runway by converting their Ethereum into fiat. China is among the countries applying stricter measures to crypto, including, as of late this month, restricting the public promotion of token-backed projects.
For companies engaged in the long-term and tricky business of establishing a genuine application for blockchain, such as Genaro (GNX), this is somewhat disheartening. Yet plenty of companies and individuals are showing a willingness to double down on their engagement with the space.
In the background of course, is the danger of the short-term trick, the scam. Not to be confused with a sincere but misguided venture that simply fails, the scam is a scheme that exploits social confusion and individual weakness.
Somehow the scammers of this world appear wherever great wealth or great poverty (or the collision of such forces) have already befuddled people’s brains. Think of how one is targeted as soon as one steps out of a busy train station when traveling, looking like a foreigner. You might look poorer or richer than the rest of the populace–either makes you a good target. The ShuiHu Zhuan story is full of tricks that people typically attempt to perform on strangers. In the story above, Wu Song disbelieves the waiter because he figures the man wishes to trick him. In the end, of course, as any Chinese schoolkid will tell you, he beats the tiger to death with his fists, after breaking his staff on a tree. After this he is given a job as a policeman by a local magistrate. Interesting reward for drinking 18 bowls of wine and beating up a giant cat.
The notion of “blockchain as one giant scam” has taken hold in the minds of many people. In fact, one can see the logic in pouring cold water on an overheated marketplace where people are losing money, while at the same time putting more money into deeper research into the technology itself — precisely what China is doing. University groups, sanctioned conferences etc. continue. As this writer points out, stories of fresh official “Bans” are often exaggerated. Of course, for many people, extensive regulation is the antithesis of what this revolution is about.
This is what got me thinking about fighting tigers and crossing rivers.
A great podcast on China in English is Sinocism, created and presented by Kaiser Kuo and Jeremy Goldkorn. In a beautiful recent episode, Kuo interviewed the translator and editor of a new edition of a collection of stories from the late Ming Dynasty, the ‘Book of Swindles.’
The collection chronicles the different kinds of scams and crimes that proliferated during this chaotic time. As Christopher Rea points out, the late Ming was a period of wealth creation. The boom meant that people could afford new clothes, and dress above their station–this among other things made it hard to know how to perceive strangers, and whether to trust them.
Many Ming dynasty merchants would follow the river and Grand Canal economy between trading ports and China’s big inland cities. Traveling on the river boats made them vulnerable to thieves and swindlers, as a scammer or criminal could commit a crime then step off the boat and disappear.
The presenter Kaiser Kuo points out how the title of the Chinese Epic, the Sui Hu Zhuan, became a byword for the sorts of dangerous situations one might get into during any era when traveling along the country’s watery arteries. In this sense, the notion of ‘Shui Hu Zhuan’ could mean simply the “world beyond one’s village or home,” and the trope of a gullible villager being duped by a more urbane character is prominent here as in folk traditions around the world. Kuo compares the mood of the late Ming dynasty and the danger of scams to the contemporary “Hype” around cryptocurrencies, a wildfire mood which did cause many a traveler on China’s digital highway to fall prey to strategies like “Cutting Leeks” [割韭菜].
This “leeks” phrase is one of many new Mandarin combinations expressing an aspect of crypto, in this case the deliberate boosting up of a token’s value, with the help of credible amateur investors, before “dumping” it once the price is suitably inflated. As in the late Ming, modern China has seen a lot of convulsion, with “muddy waters making it easy to catch fish”.
What about the original sense of ‘Shui Hu Zhuan’? The tale of 101 warriors living like Robin Hood in the wilderness has appealed to me since I began to pick up tidbits about the Chinese epic canon, of which the novel is one member. The more I thought about it the more similarities between the culture around blockchain and cryptocurrencies and the world of Wu Song and his friends presented themselves. Here they are, then.
1. Macho and Wily
The Shui Hu Zhuan presents a troop of irregular outlaws that defy authority by the mere fact of their existence. The drive to make an alternative currency or defy the Internet giants certainly shows bravado and plenty of cunning has been in evidence in the course of the past decade. As in the Epic story, the blockchain world has been observed to be dominated by masculinity. It is worth paying attention to exceptions [just don’t call them “Token” women!]
2. Every Man for Himself, yet Solidarity Emerges
The question of who should be mistrusted recurs in the Water Margin world, as well as the possibility of equality between rebels. One famous title after all, declares that “all Men are Brothers.” The world of blockchain also shows a curious mixture of rivalry and solidarity, self-interest and collectivism.
3. Delirious, Heightened Mood
Film adaptations of the ‘Water Margin’ epic usually start with a banging fight and then continue in an exultation of curses, shouts, screams of pain and so on as the outlaws make their way through their adventures. Sometimes the scene jumps from the marshes of Mount Liang to the Imperial court of the Huizhong Emperor, where the atmosphere is one of quiet plotting and luxury. The volatility and rapid pace of blockchain, the hype and the undeniable fortunes made by some in so short a time, created (and continue, amidst a crash) to create a cacophony.
4. Who to Trust?
The hero Lu Junyi has a strange career in the Shui Hu Zhuan. Despite being “over nine Li tall, with the countenance of a deity,” he gets tricked multiple times throughout the epic: first he is co-opted into joining the rebels through a complicated ruse involving a Taoist priest disguise and shenanigans instigated by a disloyal servant.
In the end, after the rebels have been brought under the command of the emperor, Lu is poisoned by a rival at the imperial capital, and drowns while trying to make it home. All in all, is betrayed at every key stage. While the Liangshan outlaws trick him out of a desire to headhunt him for their company, once he receives imperial favor he finds himself in greatest danger.
For some diehard proponents of decentralization, the lesson might be one about blockchain cosying up too much to the big powers — regulatory, monopolistic, “centralized”, or “siloed”, whatever you want to call them. Which leads to the final point.
5. The Rebels are Co-opted by the Powers that Be in the End
Great epics tend to contain a lot of symmetry. Think of how Odysseus is shipwrecked again and again, each time into stranger circumstances, until he can finally make a triumphant return home. The seductive witch Circe, who presides over an orgy of transformed swine, mirrors the scene he finds in his home, where his wife is surrounded by piggish suitors whom he spikes with arrows.
Think of Wu Song, who once he shows strength enough to dispatch a tiger with his fists, gets immediately invited to join the police. Then remember how the Emperor Huizhong finally brings the outlaws into his service, co-opting them the way they co-opted warriors like Lu Junyi. How many upstart blockchain projects around the world will finally weather the volatility of the markets by coming into the service of governments or privately held corporations, joining the many that were conceived that way in the first place?
