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Written by Dr. Leon Tressell
On 3 January 2009 the genesis block of the Bitcoin blockchain was mined. Satoshi Nakmoto, the creator of Bitcoin, coded a message within the genesis block. It contained a headline from the Times newspaper, “Chancellor on brink of second bail out for banks’’.
This new digital currency represented a rejection of the failed capitalist system that in 2008 brought the world to the brink of complete financial meltdown. Since then, Bitcoin has grown to be a trillion dollar asset with countries adopting it as legal tender.
A massive crypto ecosystem, with hundreds of millions of users has developed since 2009, which represents a rejection of the traditional financial system. Since 2009 massive wealth inequalities have only got much bigger as governments and central banks have pumped trillions into the global financial system.
The growth of Bitcoin and the cryptocurrency ecosystem is rapidly growing and should not be ignored as it seeks to develop an alternative vision of how the world could be better organised.
Over the last decade US imperialism has used its domination of the financial system to try and cripple nations it opposes such as Iran and to undermine groups such as WikiLeaks. More recently, we have seen the Canadian state use tyrannical powers to try and prevent public support for the Canadian truckers. In all of these cases embargoed countries and groups are getting round financial sanctions imposed by Western governments and the traditional financial system through the use of cryptocurrencies.
In a spirit of open dialogue about this new technology I have interviewed a blogger called The Blockchain Socialist to learn more about the cryptoverse and what opportunities it might present ordinary people.
LT: Over the course of the last 21 months central banks across the world have printed trillions in an effort to deal with the deflationary impacts of lock down’s caused by the covid pandemic. By the end of December 2020 the US together with the China, Japan, the Eurozone and eight other Developed economies had printed over $14 trillion worth of new money. This unprecedented increase in the money supply is the key factor why the world is now experiencing sustained inflation which looks set to continue well into this year. This has led to a massive growth in the price of assets held by the 1% such as stocks and bonds. It is responsible one of the greatest wealth transfers in history which has seen the wealth of the global billionaire class grew by over $10 trillion.
Globally important central bank such as the ECB, the Bank of Japan, the Bank of England and the US Federal reserve are continuing with their quantitative easing programs that the inflate prices of assets held by the billionaire class. Take for example the US Fed which is still pumping billions a month into financial markets through its purchase of fixed-income assets. Meanwhile, hundreds of millions of people across the planet have seen their living standards decline or stagnate. Indeed, in most countries poverty rates have skyrocketed.
Against this background of continued money printing and historically low interest rates the global economy is showing signs of decelerating economic growth. Meanwhile, we have seen the exponential growth in the adoption of crypto currencies. By early February 2022 it is estimated over 300 million people own some crypto. Do crypto currencies offer ordinary people economic empowerment or are they merely get rich quick schemes for speculators?
TBS: I guess it depends on the perspective you’re looking at it from. For the most part cryptocurrencies are viewed as investments and in an inflationary economy, it makes sense to have your money invested rather than in cash. So for those who have the means, they are able to put their money in speculative assets to protect their portfolios from inflation, or really to take advantage of inflation. This is standard behaviour under capitalism. So in the short term and at the largest level, that’s likely what cryptocurrencies will be useful for. It also makes the deflationary story around a lot of cryptocurrency projects more compelling. I wouldn’t necessarily call it a get rich quick scheme but that the institutions that currently govern our lives are utterly failing to fix these issues that affecting people’s material conditions and this in turn only makes certain aspects of cryptocurrency more attractive, even if it isn’t the solution. Everyone buying cryptocurrency in the hopes the price goes up is obviously not going to fix these deeply systemic issues. However, this is still not getting close to the aspects about this space that I find interesting even though it may be the most spectacular part and the part that the media likes to talk about the most.
LT: Taking all of these macro factors into account: why should ordinary people take an interest in cryptocurrencies?
TBS: Because it’s not going away. Pandora’s box has been opened on that one. The sooner that is understood the better. There are two main ways we can then respond to this development as socialists. We can either sit on our high horse and critique everything we find wrong about it or choose to engage and bend it to our will. The first option is easy and perhaps continues the status quo of the current state of the left. There will be a limitless amount of content to make about this space to show the bad examples because it is inherently a permission less system and there’s a lot of money to be made. This combo makes it an endless content cow. I prefer to take the second approach personally.
LT: The economic crisis currently affecting global capitalism is accompanied by a growth in the disillusionment of ordinary people with the political systems in their respective countries. Voter fraud and other electoral malpractices are rife in many countries across the world. This lack of democratic accountability also extends to trade unions, NGOs and other social organisations in many countries. Do crypto block chains and structures such as decentralised autonomous organisations (DAOs) offer a way of democratising voting systems and social institutions across society?
TBS: Most of the time when we interact with digital technologies, it comes from centralized companies and their walled gardens so our mental model is usually one that is very anti-democratic actually, we just follow the rules dictated by these companies and if not we get banned. This type of model has been intentionally forced on us by these big tech giants but it is not the only model for technology to be used in our lives.
You can think of blockchains as a shared substrate in which many people can come together and create their own resilient institutions as they want. The process for that can be as democratic or undemocratic as you want it to be, this is actually more a social problem than a technological one. However, you can facilitate very democratic structures by imbuing democratic values in the design of technology, which is relatively easy to do with blockchains. I think where blockchains come in handy in the short term has less to do with national elections because I think that will take a very long time to fix and will likely have a lot of bad examples along the way, but making democracy the norm when interacting with certain institutions. What is interesting to see is the keen interest in cooperatives by people who are also involved in DAOs and what are cooperative but democratically run businesses. Having this model and expectation of ownership and democracy is a very powerful thing I think.
LT: Over the course of the last year there’s been an explosion in the NFT non-fungible token sector. This has now become a billion-dollar industry in its own right. Many in the mainstream media just dismiss NFT’s as another expression of the speculative fervour gripping the crypto sphere or as a bandwagon for corporations to improve the marketing of their products. Having said this, there is an alternative view of NFT’s which merits consideration. Can you explain what NFT’s are and the long term potential of NFT’s to have a positive impact on economies and wider society?
TBS: The biggest issue I see in the way people use NFTs (non-fungible tokens) is that they keep conflating it with crypto art. I can’t stress this enough, NFTs are not crypto art or just memes, jpegs, gifs, videos, etc. When the word token is used, you need to think of the term in the most abstract sense possible. Usually when we think of tokens, we think of something that contains some sort of financial value in it, but that is not what a token is. A token is an abstract thing that represents some type of value based on the context in which it exists in. So an NFT is just a type of token that is unique on its own and there are varying levels in which you can express this uniqueness.
One thing that may make people uncomfortable is that NFTs are not particularly new in certain respects. A URL name could be seen as one of the first NFTs ever and have similar dynamics. In fact the most popular NFT in crypto is actually ENS (ethereum name service) which has nothing to do with art and is just a domain name for the ethereum blockchain so that people don’t have to remember long random public keys.
In the longer term, NFTs on blockchain do have a lot of very interesting potential if designed right. Of course the issue is that the current good examples are really never shown in the media or ones that reach exorbitant price evaluations so they don’t get the attention. I currently use NFTs on my own website to paywall content that I also share on my Patreon for patrons to provide an alternative that doesn’t rely on a centralized company using the Unlock Protocol. Instead of being a patron, people can purchase an NFT that gives them access to patron-exclusive episodes. There is no speculation involved, no bad art, and it solves a real problem. If a day comes that Patreon disappears or I am banned from it, there is a back up to that. I do not need to rely on them.
But there are countless other examples out there of more interesting uses of NFTs. I did an entire episode on NFTs on my podcast a while back if people want to check that out. LINK
LT: Bitcoin was created in 2009 as a response to the global financial crisis of 2008 that was created by the criminal activities of the too big to fail banks. Since its inception Bitcoin has been pronounced dead on thousands of occasions by governments politicians and media outlets across the world. The media narrative regarding Bitcoin and the wider crypto space has changed many times over the years. It has been dismissed as worthless, as a Ponzi scheme, a source of financing for organised crime and terrorists to being a threat to financial stability. Despite this tidal wave of negative propaganda directed at Bitcoin and the wider crypto space we have seen an exponential rate of adoption of bitcoin and other crypto currencies over the last four years. Over 300 million people own crypto across the globe. How would you explain this exponential rate of adoption of crypto currencies by ordinary people across the world? Why do governments and global financial bodies fear cryptocurrencies so much?
TBS: I think this can be mostly explained by the fact that governments and financial institutions have clearly failed at their ability to provide stability to people across the world. There is fear I think for multiple reasons that vary depending on the country’s specific position in the world pecking order. In general though there is a fear of some type of snowball effect that cryptocurrencies will become adopted more and therefore a more integral part of the economy which is significantly more difficult to regulate and has censorship resistance built in. Just look at the examples of WikiLeaks, Sci-hub, and countries like Iran and Venezuela who are under horrific economic sanction that use cryptocurrency for trade since they can’t access the international banking system. Control of the monetary system and US dollar hegemony is essential to American imperialism and it has an incredibly negative effect on millions of people. That isn’t to say that all attempts at using or massively adopting cryptocurrencies like in El Salvador are all inherently good, I’m pretty critical of what’s going on there and I don’t think bitcoin especially is a good monetary system. This then makes it difficult to explain that bitcoin is not an example to take to define all that is possible with the technology. Bitcoin is one of the least interesting projects for me.
LT: Can you tell us about the vision behind your own crypto project Breadchain?
TBS: Breadchain is a community of decentralized, cooperatives projects looking to leverage the technology in a more explicitly left-wing direction. It’s a place to forge solidarity through tech projects that help us build a truly cooperative, democratic economy. It came out of a lot of conversations in the crypto leftist community for the need for an explicit attempt at reshaping the narrative and the use of this technology.
What I fear when I think about the long term is many separate attempts at trying to do the same thing from the left but all of them failing due to having a lack of support network around them. Our strength on the left comes from numbers and the way we organize should reflect that. By creating this network of projects that align with the same principles we can create network effects through interdependence that help sustain each other. So we want to be a place for mentorship, funding, and any other type of support for others who are looking to do the same.
People can find more about the project from our website, follow us on Twitter, and as well we recently published a piece on Mirror about how we think blockchain can be and already is leveraged for Mutual Aid.
LT: Late stage capitalism is a financial system that is totally reliant on exponentially increasing amounts of debt both public and private. The super extractive, highly financialized nature of late stage capitalism deepens the many contradictions within the system that make it increasingly fragile and heading towards some kind of social economic and environmental collapse. Does the crypto verse and the cryptographic blockchains which underpin it offer any positive solutions for dealing with any of the myriad crises afflicting the capitalist system?
TBS: I wouldn’t see blockchain as being a solution at the core of the crises of capitalism but something that should be seen as a useful tool on the periphery where the social is prioritized. Tech won’t save us but it’s important in how we defend ourselves as well as attack the institutions of capitalism because the other side is already using it against us.
The Blockchain Socialist is a blog and podcast run pseudo-anonymously about the intersection of blockchain and left politics releasing content every Sunday on their website. You can find them on Twitter or in the r/cryptoleftists subreddit.
Quote from an article I read earlier.
“Several major Canadian CRYPTO EXCHANGES also acknowledged receiving the relevant guidance and the list from law enforcement.”
“Crypto Exchanges” = Money Changers = Bankers.
Crypto is a scam. A bait and switch that is nothing that it is advertised to be.