The cryptocurrency movement may be a mainstream media story but confusion about it is widespread. It evokes deeply polarized opinion, what with daily stories of scams, speculative booms, crypto billionaires, and government bans amid tall claims about how cryptocurrencies (and blockchain) are about to transform life and society as we know it. I call it a ‘movement’ because its acolytes imagine it as a totally disruptive force for economics, politics, governance, the Internet, and much more, even though there is little empirical evidence yet to ground that imagination.
The cryptocurrency (aka crypto) movement is exciting—full of brainy people, venture capital, heady innovation, and high hopes. It behooves us to more clearly understand the animating ideology of the crypto movement. Should it ever succeed, where might it fit into our political economy and what might be its effects on society? And finally, just how likely is it to succeed?
The Ideology of Crypto
As I see it, the crypto movement, which gathered pace with bitcoin after 2009, is driven by a confluence of three types of instincts:
(1) Anarchistic instincts, often left-leaning, that despise the State for its coercive authority, legalized corruption, misuse of taxes for war, power to censor and spy. Such instincts seek to weaken the State to make room for a Stateless, decentralized society of sovereign, self-organizing individuals. Cryptocurrencies, by using encrypted transactions and decentralized data storage, enable censorship resistance, anonymity, and tax evasion. Crypto-anarchists also hate Central and corporate banks (cryptocurrencies bypass them) and hope to rescue the Internet from the dominance of big corporations (like FAANG), towards a more open and decentralized Web 3.0. Satoshi Nakamoto, the mysterious creator of bitcoin, had strong anarchist leanings, as does Vitalik Buterin, 24, who founded Ethereum at 19 and wants ‘more open, free, egalitarian and efficient systems for human cooperation, including improving or replacing present-day corporations and governments’.
(2) Capitalistic instincts, close to libertarian, that want true capitalism with a genuinely free market, instead of the one we have now: hampered by regulations seen as rigged, onerous, or inefficient, and dominated by monopolies and crony capitalists in cahoots with the State. Such instincts value the radical freedom that cryptocurrencies grant to a market-maker to issue his own coin, set his own transparent market rules, regulations, and monetary policy, with incentives from game theory driving the right market behavior, where people choose the value of goods and services that they freely exchange with others via smart contracts and without middlemen, preferably anonymously and beyond government interference and taxation. This vision also implies privatizing all State services, and sees markets, or algorithmic cost-benefit decisioning, penetrating more and more areas of our lives. Both Nakamoto and Buterin display strong free-market leanings.