Bitcoin and the domination of the material


Whether as a quietist retreat or a gnostic retreat, the political appeal of cryptocurrencies doesn’t seem to stand up to the harsh forces of reality.

A decade ago, I briefly dated a woman who had dreams of ending the nation state. She drank Prosecco first thing in the morning and smoked two packs a day. Even more enticingly, she had built and sold her own “strategic communications” consultancy, which included NATO. Her phone was full of selfies with various Kalashnikov-wielding rebels in places like Libya. All this without a college degree. This girl was Cool.

Meanwhile, I racked up debt to attend second-grade law school, weighed down by the Iranian immigrant’s dreams and childhood commitments. One day “Sarah” (let’s call her) suggested I buy something called “Bitcoin”. It’s a kind of internet currency, she explained, that would appreciate enormously given the insane wastefulness of central banks in response to the financial crisis. More than that, she prophesied, this Matter would usher in a new era of radical decentralization and freedom.

I didn’t buy any bitcoins. And years later, I told that episode as a prime example of what a financial jerk I was and still am. Because regardless of the current bloodbath in the crypto markets, if I had followed Sarah’s advice (and had real liquidity at the time), I could have become bitcoin rich. But even then, I could see that Bitcoin wasn’t primarily about profits for Sarah, who had already achieved a significant degree of financial independence.

No, for her and for other crypto enthusiasts I’ve met since, digital currencies are ultimately a political project – or rather, a antipolitical Project. Cryptoism is just an expression of the age-old yearning to transcend the concrete boundaries and uncomfortable ties of obligation in which we find ourselves entangled and sometimes trapped. Crypto is about escaping political community and political responsibility.

The vision Sarah outlined to me went something like this (you must trust me to articulate it as sensibly as I can): Government as such tends toward tyranny. The modern nation-state has already clearly expressed this tyrannical tendency. Its boundaries are arbitrary. It wages stupid and bloody wars. And even in a liberal-democratic form, it restricts human freedom. And this happens above all through the control of the medium of exchange: money.

Wouldn’t it be better, then, if everyone could choose which political communities he or she would like to join, regardless of the randomness of geography and history? Assuming such a world is desirable, the best way to achieve it is to lift the yoke of central banks from humanity’s neck. If there were a medium of exchange that was not centrally governed by a few Goldman alumni but by free-thinking technologists and investors, whole new “nations” could emerge, free nations in which decisions about social and economic policies would be made by radical consensus.

Well, this is where things got a little fuzzy for me, and I have to admit that the passage of time hasn’t clarified anything: how would these emerging communities interact with actual governments, with their park rangers and nuclear arsenals, their welfare regimes? and agricultural subsidies? Presumably, nation-states will not simply die away, even if that were desirable (which is not the case). And what would become of people who were too lowbrow or illiquid to participate in the radically consensus-oriented world?

If Sarah had sensible answers to these problems, then they dissolved in the frenzy of those days. But more recently, I’ve been introduced (remotely) to one of the crypto world’s foremost theorists. Like Sarah, he’s super smart, the guy who makes and loses my entire year’s salary in minutes through portfolio swings. About once a year he calls me to make his pitch not as an investment proposal but as a political proposal.

He understands that I am a social conservative. And he also understands my skepticism about market liberalism. In fact, he shares some of my beliefs. However, he argues that radical decentralization achieved through cryptocurrencies offers a far more realistic path than ordinary local or national politics. Again, the idea is voluntary communities that are somehow detached from the centrally controlled medium of exchange. The liberal state, he told me, cannot get your money with crypto because the algorithmic blockchain password cannot be cracked.

Or so. Let me reiterate the power of this technology and the value of crypto as an investment: however, from a political perspective, it’s never entirely clear to me whether these men and women envision themselves leaving their physical communities and starting new ones using cryptocurrencies as the medium of exchange form, or if the idea is that they stay where they are but progressively detach from the dollar, sterling, etc.

The former option strikes me as just a techno-Benedict option, as vulnerable to the Waco treatment as any monastic ski jump. The latter option – staying in place but pulling the plug – amounts to a pseudo-Gnostic nod to the decision to invest in an unregulated financial asset. There is also a market for level 54 caster armor World of Warcraftand you can choose to do business in that market and tell yourself that you are building an alternative, stateless world where the medium of exchange is not hampered by the pesky entitlements of the poor and vulnerable.

But if the last few years have shown anything, it’s the centrality of material Politics, and I mean that quite literally: oil, gas, food, tanks, howitzers, housing, these are the things that will decide the success or failure of political projects in the 21st and 20th centuries. When smart folks in the West chase the virtual thrill of assets worth about as much as World of Warcraft Article, they and we are in for a rude awakening.

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