What Bitcoin and Crypto Are For

At first glance, cryptocurrency seems to be the living embodiment of everything that I hate. The gauche pursuit of wealth, limitless self-congratulation, bad art, and hypocritical insider corruption are basically a shortlist of all the things I loathe most about our contemporary culture and economy. The recent Lehman Brothers-but-dumber implosion of FTX and its Sam Bankman-Fried is just the latest debacle for an industry which, lured by the prospect of easy money and a regulatory environment even less constricted than Wall Street, seems to have attracted some of the worst people that our society has to offer. The fact that Mr. Bankman-Fried, himself a migrant from Wall Street, was reportedly running a polycule with his top executives while gambling away client funds is just the glazing on the donut. I look forward to the inevitable Michael Lewis movie, although I pray that it tastefully cuts away at the critical scene.

Believe it or not, though, I don’t hate cryptocurrency. To be a bit more precise, I may hate the unregulated bubble-monster that that represents the “cryptocurrency industry”, but I find that the underlying technology of Bitcoin and a few other serious cryptocurrencies is something not just good, but even necessary to have around in some capacity. I’m not going to give another stereotypical millennial crybaby story about how much I was radicalized by the 2003 U.S. invasion of Iraq and the 2008 financial crisis and how I still can’t get over it and see everything in the world through that lens. I have enough self-awareness to recognize that the world changes, and that we need to change with it, and also I’m sure that any Gen Z readers may not even know what these things are. That said, I have had a lingering experience originating from that time, which has stuck with me, and I continue to find relevant to the ongoing utility of blockchain and cryptocurrency as a technology if not an industry.

In the years after the September 11th atrocity, people who were Muslim really got a taste of what it was like to feel like the entire system was seizing up against you. Little did we know but the U.S. government had created and deployed a globe-spanning warrantless surveillance apparatus that could track down and cut off any individual, or even entire countries, from access to basic services or economic activity. (These surveillance powers could also be used for a lot worse, and frequently were.) A lot of violence in the world is actually indirect, what you could even call “financial violence.” That can mean economic sanctions, asset seizures, and denial of access to personal accounts or critical infrastructure. What the War on Terror revealed, jarringly, is that a small group of people, mostly white, mostly in the United States, controlled pretty much all the hidden levers that were required to participate in the global economy. They could cut off entire countries from the ability to do basic transactions, with no security justification given or recourse offered,. They could do it just because they felt like it, and they did.

My family is spread out across the West, South Asia, the Middle East, and East Africa. It’s very hard to send money to people in a lot of the last three places, partly because they have to navigate a complex web of financial sanctions that are blindly tossed around by people in Washington D.C., usually for purely domestic political reasons. These sanctions impact the lives of innocent people who had committed no crime and have no avenue of appeal. Even when there are not specific sanctions barring one from making transactions, there are powerful financial intermediaries who control the movement of money and whom you have to deal with. These intermediaries, usually multinational financial institutions, frequently cut people off or refuse to do business for entirely arbitrary reasons that they usually decline to even inform you about. It’s just too much of a risk and too little reward to run even the tiny chance of antagonizing a powerful U.S. regulator just so some guy in Palestine can receive a small amount of money for his diabetes medicine. Conservatively speaking, hundreds of millions of people live like this. If you haven’t checked recently, take a look what’s been happening to Afghans.

One of the worst aspects of oppression is that after awhile people can really get used to it. At some point, when the treatment is consistent enough, a person becomes accustomed to sitting lower on a hierarchy, and just expects to be treated worse than others as a matter of procedure. I think I got used to this when it came to trying to move money around like any other person. I’m far from the only one. A few years ago, though, I had a little experience that briefly gave me a taste of what the world could be like if things were simply fair. In the early months of the pandemic, I needed to send some money across borders to a family member in a country that is subject to financial controls and has an underdeveloped banking sector. Usually, this is an exhausting and costly chore of figuring out who is soon going to be traveling there or to a nearby country and is willing to take cash with them, or seeing whether the recipient themselves can travel outside and receive a wire transfer. It’s expensive, cumbersome, and insulting to the dignity of innocent people who have done nothing to deserve this level of suspicion.

This time though it went differently. I’m a wordcel and am usually aloof from tech, but this person (smarter than me) walked me through how to send them Bitcoin, which, they assured me, would mean something to them and could be converted to a local currency upon receipt. After messing around with it for about half an hour, I figured out how to buy Bitcoin and clicked send to transfer it to their wallet. And it worked, the money moved. They got it and were happy. No big deal. This may sound like nothing to you, but after an entire lifetime of watching good people treated as presumptive criminals by the global financial system it was practically revolutionary. Since then I’ve been able to pay people for work in cryptocurrency, who I likely would’ve been able to hire or do business with otherwise. It’s just basic fairness: Payment for labor without discrimination, and the ability to transact without opaque intermediaries or callous and indifferent governments giving you a hard time for no reason. That’s all I want, they want, or anyone should want. I don’t want to give that up for no reason.

There really is a problem with the cryptocurrency industry, and a lot of that is due to the fact that the people now running it are the same villains that Bitcoin was originally created to combat. Sam Bankman-Fried came from Wall Street to crypto apparently in order to become an even worse version of himself and give rage to his lowest desires, up to and including the notorious executive sex cult (As you can tell, I can’t get over this cinematic detail). Like any other sensible person, I find it disgusting and criminal. It has to be regulated and the authority of the law reasserted. In the rush to rope in these criminals, however, I hope people will not forget that the existing global financial system represents a completely unfair status quo. We really need ways to move money without discrimination and intermediaries. In some humble way, I cannot help but share that cryptocurrency has contributed to helping ameliorate that problem. At the very least, it’s made an effort and gotten some traction. If it’s all done to death without an alternative being offered, it’s going to leave a lot of people out in the cold and at the mercy of a system, controlled by a small handful of powerbrokers, that is unjust and unfair to most people in the world.

In their book “The Narrow Corridor” by Daron Acemoglu and James Robinson, they describe a free, democratic society as being the product of a particular balance between the powers of society and the powers of the state. When it comes to tech surveillance, the state is gaining power and using blockchain as a means of doing it irrespective of whatever frivolous Dogecoin-related frenzy the masses are descending into. The U.S. government, along with China, India, and many others, are already starting to role out their own digital currencies, called CBDCs. By nature of being directly run by the government these currencies, basically state-backed crypto, are going to have coercive capacity beyond anything we’ve ever seen: the ability to freeze assets directly by government officials, force spending of targeted accounts, and impose Panopticon-level financial surveillance on ordinary people that would put anything in the Snowden documents to shame. Since Bitcoin is not run by anyone its a relative safe harbor from that type of abuse. I wouldn’t be in a rush to get rid of it and the reserve of latent citizen power that it represents simply based on a promise that nothing really bad will ever happen and that we should have just believe in the forebearance of our elected government officials. Trust me, very bad things can happen to completely innocent people, and they have within recent memory.

If ninety percent of people working on cryptocurrency technology are frauds and scam artists, I will look with interest at the other ten percent. I suspect they are doing something that at least offers the prospect of solving problems that we would otherwise be stuck with. It’s sad that Matt Damon and Larry David telling people to invest in their money in speculative dog and ape-based assets became the popular idea of this technology, but I suppose that is the inevitable outcome human nature maddened by the mere scent of easy wealth. In any case, as long as its around (which I suspect will be as long as the internet itself survives) I’m going to keep using cryptocurrency for a few humble yet vital tasks. I hope people keep an open and mind and don’t toss the baby with the bathwater. To phrase it more topically based on recent events, “please don’t toss the remittance money out with the gorilla drawings.”