Doing Business Pseudonymously
Social media and Crypto have created a weird new phenomenon that I want to discuss here called Pseudonymity. This is defined as “the near-anonymous state in which a user has a consistent identifier that is not their real name: a pseudonym”. Let me break it down. Someone sets up a social media account, usually on Twitter. They then post under an assumed name on that account and interact with an audience under that name.
Some of these characters are great follows on Twitter. I’m a big fan of Bored Elon Musk. He started the Twitter account in 2013 and now has 1.7MM followers. The initial idea behind the account was to talk about things the real Elon Musk might think about in his spare time. He posts wacky, funny stuff like “Vacuum-enabled fingernail clippers that prevent discarded pieces from flying across the room” and “Calendar app that uses your computer’s microphone to detect how much you’re drinking during the day (coffee, water, etc.) and schedules bathroom breaks in-between meetings accordingly.” These were just in the last few days, the list of ideas from Bored Elon is seemingly endless. Punk 6529 is known by his profile picture tied to the Cryptopunk he owns, which has a cool hoodie and sunglasses. He has 283K followers and most talks about NFTs and the Metaverse. There are many more out there, some are really fun.
As they grow in popularity, these Pseudonymous individuals want to go further than just running a social media account. Before Crypto, this was a big problem if they wanted to maintain their anonymity. They could try to open an LLC and find a way to hide behind a corporate entity, but even this eventually requires sharing your identity with at least a banker. No one is opening a bank account without a driver’s license in the U.S. They might be only revealing their identity in limited places, but that is enough to get you doxxed. Someone is considered “doxxed” when their identity is revealed against their wishes on the internet.
Now with the emergence of Crypto, these Pseudonymous individuals can simply open a Crypto wallet and interact with the financial system. They can start businesses, accept payments, make investments, and more. And wow, does this ever lead to some crazy situations. Let’s review a few.
With their very large followings, Pseudonymous individuals have become hot to add to cap tables of web3 startups. Bored Elon Musk and others are joining funding rounds. My understanding is they are funding these via their Crypto wallets. I’ve got no clue what their signed documents say, but I’d love to learn more. How does a startup accept money from someone without knowing their real name or location? I’m not sure, I’m no lawyer. But this is happening somehow.
I have heard of other situations where Pseudonymous individuals are running startups. Major venture firms are funding companies with non-doxxed leadership. Maybe they are signing crazy scary NDAs and getting the info on who the heck the founder is, maybe not. Pretty tough to complete due diligence when all you have to go on is a Twitter handle and maybe some guest appearances on a podcast. I saw the Inventing Anna miniseries recently, you can do a lot with a voice modulator phone app these days.
Pseudonymous individuals have built some of the biggest DAOs and NFT projects out there. Olympus DAO is a crazy finance entity where people buy their Crypto token, stake it, and earn insanely high yields. It’s probably a Ponzi scheme, but it got hot for a few weeks. It is run by a Pseudonymous individual that goes by the handle Zeus on Twitter. There was a big uproar last month when the news site Buzzfeed doxxed the founders of Bored Ape Yacht Club. Twitter went after the writer with a fury, as BAYC is probably the most popular NFT community right now.
Bored Elon Musk describes his virtual identity as just as important as his real-world identity. He has spent nearly a decade building his online reputation. His 1.7MM Twitter followers are a big asset. If he does something with his fans that crushes his reputation, it is all gone in a minute. You can listen to him on this podcast to hear more of his perspective on this topic.
Could you see yourself doing business with someone that maintains their Pseudonymity? Could you invest in a company with a Pseudonymous founder? Would you buy an NFT with a Pseudonymous team? This may seem nuts right now, but I expect this will get more common in the coming months. If the Metaverse ever delivers on the promise of a truly virtual world, it could get normal quickly. Stay tuned for more on the topic of Pseudonymity from me.
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