I’m writing this review in the middle of the criminal trial of Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange. Bankman-Fried is one of many players in the crypto bubble of 2020-22 to face serious fraud allegations, along with crypto hedge fund Three Arrows Capital, the Terra blockchain network and the pseudo-bank Celsius. This wave of collapses and allegations has for many, particularly liberals and leftists, been confirmation of a widely- (if lightly-) held conviction: that cryptocurrency itself is a scam, full stop.
But Joshua Dávila, in Blockchain Radicals, argues that such dismissals of cryptocurrency have been not just ill-informed but politically misguided. An avowed leftist and long-time blockchain professional, Dávila argues that bias against cryptocurrency among leftists and liberals has often come from accepting the claims of its most shameless capitalist ‘shills’ at face value. This includes taking FTX and its ilk as synonymous with cryptocurrency, instead of as parasitical on it. Similarly, Dávila argues that viewing crypto as an inherently right-wing libertarian tool, because it gives individuals more financial autonomy, is mistaking the ideological sizzle for the more complex and flexible technological steak.
The crypto question
Dávila argues that wearing blinders on the crypto question amounts to a tactical error for anyone committed to progressive politics, in at least three ways.
First, he suggests that there is a kind of moral abdication in the refusal to engage with blockchain technology’s implications: accepting widespread claims that blockchain is inherently a right-wing or libertarian technology actually helps make those claims true. A parallel example might have been if leftists in the 1920s refused to actively engage with the growth of the automobile system because they believed it led to social atomisation: they would have been correct in their analysis, but badly wrong in their tactics.
Even more than most technological innovations, crypto is something we have to deal with whether we like it or not. It can get lost in discussions of scams and volatility, but the simple fact is that blockchain technology is currently in widespread use by perhaps millions of people worldwide. Over the past year, with speculative trading markets in the doldrums, bitcoin has facilitated roughly $20 billion in transactions around the world per day. That adds up to a surprising $1.8 trillion per quarter, or roughly half the volume handled by Visa.
Dávila accepts that technology has a historical impact, and argues that working to understand such systems is a more productive political project than simply denouncing them
Despite repeated propaganda efforts, evidence is strong that more of that is for legitimate commerce than can be claimed about conventional banking. If anything, the establishment media’s repeated insistence that crypto is only good for crime and terrorism funding should perhaps be the most obvious sign for leftists to look into it. Most recently, the Wall Street Journal dramatically inflated estimates of Hamas’s financing through crypto, a clear instance of anti-crypto propaganda speaking to deeper motives.
One can debate whether the existence of an uncensorable global payments network such as bitcoin is good or not, but the system certainly exists, it’s being used on a fairly huge scale – and, in part because crypto is so resistant to state intervention, it will have inevitable political implications. Dávila (like Marx!) accepts that technology has a historical impact, and argues that working to understand such systems, in all their imperfection, is a more productive political project than simply denouncing them.
Dávila spends substantial time on a second, simpler point. Some of the uncritical rejection of cryptocurrency by liberals, he argues, is a reaction formation based on their continued commitment to institutions and norms that they refuse to accept are failing. One interesting example is the relentless critique of cryptocurrency’s energy use, which Dávila argues has often been based on badly flawed statistics.
More importantly, as he sharply observes, the critique of energy consumption, much like the efforts of oil companies to individualise carbon footprints, is fundamentally displaced: ‘Anger would be better directed at the institutions that have been delaying the transition away from fossil fuels for half a century, rather than artists exploring NFTs [blockchain collectibles] for their artistic practice.’
No need for nostalgia
Here and elsewhere, cryptocurrency has become a stand-in for institutions, such as major oil firms, that have proven completely immune to the discourses and norms on which liberal reformists base their tactics. Leftists, of course, should feel no such nostalgia for the wizened postwar consensus, and Dávila offers two examples that should shake them out of their mimetic obeisance to the mainstream on the topic of cryptocurrency: those of Wikileaks, and Alexandra Elbakyan’s Sci Hub.
For years, after being cut off from conventional payments systems like PayPal, Wikileaks was able to continue operating because of donations sent via bitcoin. Similarly, if lower-profile, Elbakyan has made it her life’s work to freely distribute scientific research that has been systematically walled off from the public commons that, in most cases, funded it. She, too, has come to rely on bitcoin donations to support her thoroughly illegal download site, Sci Hub. Both are worthy reminders that neither law nor state are necessarily your friend, and that effective means of opposing them shouldn’t be dismissed lightly.
Dávila’s third argument for taking blockchains seriously goes further still: he claims they can provide specific tools for reimagining or actively reshaping economics and society. Specifically, because they can be used to build entirely transparent, shared, and immutable data, he argues blockchains can be incredibly useful for coordinating the activity of groups.
The strongest case Dávila makes is for blockchains as a new and better set of tools for building what scholar Nathan Schneider calls ‘platform cooperatives’. It was Schneider who in 2016 argued that Twitter should be owned by its users, an argument that is even more compelling now that it’s owned by a maniacal billionaire. More broadly, Schneider has argued that two-sided marketplaces like Uber are effectively parasitical on their users and should be collectivised.
But Dávila says that the ‘highly complex legal apparatus’ to make something like that happen is too costly under current standards. That’s why one of the most truly radical potentials arising from blockchain technology is that it drastically simplifies the creation of collective ownership, decisionmaking, and accounting structures. These tools have been brought together under the term ‘DAO,’ or ‘decentralised autonomous organisation’, and Dávila runs down several currently-functioning DAOs that offer an alternative to hierarchical corporatism.
Social progress, not scammers
I am less convinced, at least so far, by another major crypto and blockchain concept, ‘regenerative finance’. Dávila is absolutely correct to push back against many leftists’ disdain for finance as such, describing it more neutrally as ‘a system of resource allocation in the aggregate’. But even the best ‘regenerative finance’ projects look like not much more than voluntary taxation or charitable giving, transplanted to the blockchain.
There are possible advantages to transferring charitable giving and certain other activities to the blockchain, in part thanks to one of its most counterintuitive features: though Bitcoin was described in the earliest reporting as ‘anonymous’, this has turned out to be nearly the opposite of reality. While it’s true that individual identities aren’t attached to blockchain addresses, all transactions on most blockchains are publicly viewable in the shared database, making tracking user activity a cinch, and triangulating identities only slightly harder.
Groups like Hamas have actually discouraged the use of blockchain networks for funding because this traceability puts donors at risk. But for more socially sanctioned activities, including charity, government and perhaps even corporate spending, that kind of transparency could have radical impacts, such as reducing corruption.
While I have very few critiques of Dávila’s work here, this is a small one: he doesn’t entirely close the circle to argue that, in a true socialist utopia, all governments and institutions would be held to the standard of transparency embodied and enabled by blockchain tech.
These and other potentials have been overshadowed by scammers and con-men like Sam Bankman-Fried. As Dávila points out, there’s a huge irony in this: these scammers succeed, as far as they do, exactly by tricking the public into thinking they are synonymous with cryptocurrency as a whole.
It’s becoming ever clearer in the course of his trial that this was Bankman-Fried’s goal: to attract victims’ money to his exchange by being as high-profile as possible, up to and including spending hundreds of millions of stolen dollars buying political influence and American football-star friends.
Bankman-Fried, in particular, was widely understood to have little actual interest in the social or technological underpinnings and implications of cryptocurrency. At least in his public story, he simply saw an opportunity to make money and, based on the deeply flawed tenets of ‘effective altruism’, believed he could do massive good for the world by directing that money to good causes.
Even in the most generous versions of events, his big plan blew up in his face largely because he never bothered truly understanding the strange, complex underlying reality of the stuff he was trading. While the left’s goal is social progress rather than trading profits, it would seem wise to avoid mimicking Bankman-Fried’s fatal blind spot.