After a pandemic year in which a craze for all things cryptocurrency spread over a housebound U.S. population, political battle lines are now being drawn over the issue. At a Senate hearing in June, Senator Elizabeth Warren (D-Mass.) fired what seemed to be an early warning shot on the issue on behalf of many progressives skeptical of the phenomenon. Bluntly describing crypto as a tool to “scam investors, assist criminals and worsen the climate crisis,” Warren called for federal regulators to take steps to help “drive out bogus digital private money.” It was a sentiment that likely resonated with supporters of the liberal senator, many of whom have already been beating the drum about a technology they view as a source of pure speculation and waste.
On most issues, my political sympathies in the U.S. fall left of center. I’m in favor of treating quality healthcare and transit as a public good, urgent action to combat climate change, a fair system of taxation and peaceful cooperation with nations abroad. But I’ve realized that I’m a bit of an outlier when it comes to the subject of crypto: I don’t hate it. To push it further than that, the more I learn about the technology, the more I can envision cryptocurrencies and blockchain being applied as tools to restrain corrupt institutions and loosen the grip of an incumbent elite that constantly lies, fails and abuses its power, and yet never seems to face real accountability for its actions.
Consider the role of bitcoin, the first and most famous cryptocurrency, which today is somewhere near the level of global public adoption that the internet reached in the year 1997 when it had roughly 200 million users. Bitcoin was conceived as a form of permissionless money, recorded on a decentralized ledger known as a blockchain. Transactions on the blockchain ledger are immutable and transparent, and they can't be censored. The wealthiest users can’t change the rules of the system in their favor, nor can they block the poorest users from having access to it. The only technology anyone on Earth needs to take part on equal terms in the network is a phone with internet access.
The energy expenditure of Bitcoin, which Warren criticized in her Senate hearing for being frivolous, is designed to protect the ledger from malicious attack by raising the resource requirements for attacking it. Contrary to popular belief, the blockchain ledger is not a black box impervious to surveillance. But in a manner similar to encrypted messaging platforms, the system is designed in a way where targeted surveillance of individual users may be possible with enough effort, but mass surveillance of everyone is not.
How attractive such a system sounds to you is likely to be a function of how repressive you believe that society can be and how satisfied you are with the current global financial system.
After more than a decade spent documenting the domestic and foreign impacts of the U.S. global war on terror, my own opinion is that our society has the capacity to be extremely repressive and the financial system, as presently constructed, is frequently used as a weapon in the hands of unaccountable elites.
The U.S. government for its part has used the dollar and its control of global financial infrastructure like SWIFT to wage economic warfare on entire countries to devastating effect. It has surveilled, blacklisted and shut down legitimate businesses and aid organizations across the world that have had the misfortune of falling on the wrong side of Washington D.C.’s political divides. For millions of innocent people whose lives have been ruined by this global dragnet, as well as those living under undemocratic regimes subject to their own unaccountable domestic monetary regimes, there’s often no question of justice, let alone compensation, when they find themselves blacklisted and the value of their labor frozen or confiscated.
Bitcoin is not a silver bullet against such abuses. But it’s certainly a start. The tech entrepreneur Naval Ravikant once referred to it as “a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme," a statement that speaks well to the feelings it arouses among both casual investors and ideological supporters. Bitcoin’s existence also looks like it is going to become much more important in the years to come, as global finance develops into something even more powerful and overbearing than it is today.
Overlooked in Liz Warren’s widely reported June 9 statement attacking Bitcoin were her accompanying remarks endorsing the creation of a digital version of the U.S. dollar. Warren was right to mention that there are potential merits to state-run digital currencies, including increased access to financial services for unbanked people and easier implementation of monetary policy. But a future world of such currencies, in which bitcoin has been regulated out of existence by righteous progressives, will also be a world in which mass surveillance and social control is possible on a scale unprecedented in human history.
A future U.S. Treasury Department wielding the digital dollar would have the ability to monitor and block transactions of disfavored people and organizations at the push of a button, even confiscating or force-spending their money if so desired. In China, a digital yuan with programmable capacities is already being promoted for use within and beyond the country’s borders, without the slightest pretense that the Chinese Communist Party will respect quaint notions like human rights when push comes to shove. It would not be an exaggeration to say that in such a future, a fully independent, online decentralized currency would be the only safe haven for individuals fleeing the threat of economic coercion by the two great superpowers of our time. For some, it already is.
Bitcoin is neither perfect nor above criticism. In my view, it’s not impossible that it could even be replaced by another cryptocurrency with superior scaling, design and function. But rather than offering constructive criticism of Bitcoin or possible alternatives for people threatened by the emerging state-backed digital currency order, the scorched-earth response from progressives like Warren functions as a defense of it. The only reassurance they offer is a dubious bet on the permanent goodwill of government authorities, something that has been in short evidence in the past.
For progressives, many of whom, including Warren, I believe to be motivated by a genuine desire to protect the innocent from harm and restrain the excesses of the state, it’s worth keeping an open mind about new technologies rather than trying to immediately regulate them into oblivion. Decentralized currency technologies like Bitcoin, cryptographically based forms of organizations like DAOs and the use of decentralized blockchain record keeping for property and identity documents could all play an important role in defending human rights at home and abroad. There’s nothing stopping people with left-leaning politics from designing cryptocurrencies and tokens that reflect their own values and incentivize the types of behavior and cooperation that they’d like to see in the world.
Getting to that point will require discarding the technophobia that is in fashion today, as well as the (rather ironic for self-identified progressives) nostalgic longing for social and political forms that existed in the 20th century.
Warren was right on one count when she described cryptocurrency as a “Wild West.” Like the old West, crypto at the moment has more than its share of outlaws and opportunists. But whoever finally tames this new frontier is going to find themselves wielding great power in the decades to come. For progressives willing to step outside of their comfort zone and explore the possibilities offered by this new technology, that’s something worth considering.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.