In Green Left Weekly #1172, Peter Robson launches a boots-and-all attack on bitcoin.
It is used by criminals, invented by computer nerds, supported by libertarians, is environmentally unfriendly, deflationary, mostly owned by rich people, facilitates purchase of drugs and child pornography, not used in many shops, causes real people to lose their savings, creates wealth for criminals, and in the words of the accompanying caption is “More like shitcoin”.
Amid this torrent of abuse, what is missing is an analysis of bitcoin and whether it is different to currencies such as the dollar, euro or yuan. In the absence of such an analysis, the article implies that these currencies are better than bitcoin.
There are many ways to approach bitcoin to understand its social potential and impact. For example, one can examine the expectations of bitcoin users and work out whether assumptions such as anonymity are real. (Not really.)
Or one can look at claims regarding remittance payments to determine whether bitcoin can address the theft of a significant proportion of value that workers in foreign countries return to their communities (in theory, but not yet in practice).
Any such discussion quickly becomes a study in how currencies function. The use of the US dollar anywhere in the world, for example, subjects the user to United States regulation. This has significant implications for any economic activity with parties sanctioned by the US. Whether these are criminals or not often depends on one’s political perspective.
An important example of the US flexing its power in the use of currency was its attack on donations to WikiLeaks. As described on the WikiLeaks website: “Since 7th December 2010 an arbitrary and unlawful financial blockade has been imposed by Bank of America, VISA, MasterCard, PayPal and Western Union. The attack has destroyed 95% of our revenue.”
Bitcoin does not have a dependency on the mechanisms that achieved this blockade and could therefore not be controlled in this way.
Such a currency could be helpful to a country facing a blockade, such as Venezuela. Robson quotes an anti-Venezuelan blog that makes points similar to other unsubstantiated claims about bitcoin use in Venezuela.
Along with bitcoin we have blockchain. Bitcoin is the most extensive use of the blockchain technology. Blockchain enables trusted communication between untrusting parties across the internet and is the first technology to do so. This is an important achievement.
For the preservation of records, which could otherwise be altered, blockchain provides an enormously valuable service in the era of fake news and the rewriting of history.
The article is unfortunately dismissive of information technology workers, suggesting that “basement-dwelling” “computer nerds” are not “real people”. While a disproportionately high number of information technology workers are on the spectrum and exhibit poor social skills, the relationship between technologists and society is complex and cannot be addressed in a flippant comment.
While the decentralised character of blockchain, and bitcoin, lends itself to libertarian rhetoric that is often very conservative, blockchain’s distributed architecture opens a discussion on methods of achieving social control over resources. Social oversight of a distributed resource may be more feasible than social oversight of a centralised resource or organisation.
Bitcoin currently has some significant limitations, including its “proof of work” that encourages high power usage, and its slow transaction rates. If it is to survive then these need to be addressed.
On the other hand, the existence of an international currency whose use is not dependent on a single existing major government or group of governments should be welcomed by those who would like to see a more equitable world.
[Greg Adamson is chief risk officer for ArtChain Global, a blockchain-based company.]