Bitcoin in an era of institutional distrust — why hasn't it caught on with the left?
The following article will be my best attempt at trying to explain Bitcoin, its advantages, the left's backlash against the concept of centralized institutions holding an uneven amount of power, and an explanation as to why it should be embraced by the herds of popular doctrines as such. That being said, I am by no means a disciple of politics or ideologically motivated in any way, shape, or form. It is also why I make general assumptions labelling "the left" as one group while I understand that there are a plethora of beliefs within the system. When addressing the left, I am mainly talking about American Social Liberalism and avoiding most to do with European Socialism. I will do my best attempt at taking a holistic, philosophical approach to the concept of Bitcoin and politics. Perhaps this topic is far fetched, overly simplified, and byzantine for a 7 minute read. However, I believe that by writing this article I will hopefully be able to clear my own thoughts on the subject matter and let the audience learn something as well.
What is Bitcoin?
For those of you who haven't been curious enough to google Bitcoin in the last year, Bitcoin is an anonymous peer-to-peer electronic cash system that eliminates the third party out of transactions. It is fully decentralized thanks to the Blockchain, the consensus mechanism that verifies transactions through nodes — computers who agree that a transaction is valid.
Here are some defining characteristics of Bitcoin:
- 21 million Bitcoin will only ever exist in the world
- 1 bitcoin is divisible into 100 million Satoshi's (just like 1 Dollar is divisible into 100 pennies)
- Solution to the double spend problem
- Created in 2009 by Pseudonymous founder Satoshi Nakamoto
- Bitcoin is brought into the world by miners, they solve hard math problems every 10 minutes and get Bitcoin as a reward
- Around every 4 years, the Bitcoin reward is halved
- Bitcoin is a disinflationary asset — meaning the inflation rate decreases over time as the supply inflow decreases
- Bitcoin is the world's largest cryptocurrency by market cap.
Bitcoin is often duped to be capitalistic, speculative, or libertarian. It must be said that all of these narratives have been true at some point in the cryptocurrency’s 11 year history. Although its founder who goes by the pseudonym, Satoshi Nakamoto, was politically neutral in their historic White Paper for obvious reasons, mainstream media has tried to shape a political narrative around the crypto-asset. And while giving it a narrative isn't inherently a wrongdoing, it is boxing a transformative technology into something it shouldn't be boxed into in the first place. It is as ridiculous as calling the inventors of the internet technocratic communists seeking to control the outflow of information into the world.
Mainstream media takes defining features of Bitcoin and shapes them into provoking political narratives. Take for example, the blockchain — the distributed ledger that records all the transactions ever made in the Bitcoin network. The blockchain isn't a separate invention from Bitcoin, rather it was a defining feature of the technology which people have extracted to build new technologies with, although the below article claims otherwise. Without going into too much detail about the contents of the article, below is an example of a provocative article that claims Bitcoin is a tool invented by extreme libertarian technologists seeking to dominate the world with anarcho-capitalism.
The article takes Bitcoin's key features and propagates them to extreme proportions to make a case for an unusual stance in a political minority. Although many more examples can be found online, this article demonstrates how a non-political innovation can be shaped into a narrative it does not fit and harm the possible adoption for an incredible technological revolution.
Debunking features of Bitcoin that are highly politicized
- Pseudonymity — Right wing idea (less government control over what you buy)
In the Bitcoin network, everyone is identified by a random chain of numbers and letters. One of the core features of Bitcoin is that it doesn't discriminate. Pseudonymity has no race, skin color, religion, or nationality. It is by far the most fair and transparent financial system to ever exist. This shouldn't shape a political narrative, it is simply a feature that allows anyone to trade seamlessly without facing discrimination.
- Owning your keys — Libertarian idea (being your own bank)
By owning the key to your Bitcoin wallet, you can be the true owner of your money (similar to owning the underlying asset of Gold instead of owning the paper claim to it). Many argue that this is a libertarian ideal because you get to be your own bank and hold the keys to your crypto instead of a financial institution holding your capital for you. This feature gives the power back to the people, a feature I think most would be in favor of.
- Speculation and volatility — Capitalistic idea (people getting rich quickly)
Lastly, many outsiders view Bitcoin as just another speculative asset rich people with extra cash gamble on. While this may be true in some cases, it should be said that Bitcoin has a different narrative for anyone who adopts it. Anyone in the world who has an internet connection can become a member of the Bitcoin network. People in Venezuela, Nigeria, and Zimbabwe have found Bitcoin to be an incredible savings technology. Citizens living in economically troubling countries with hyper-inflationary currencies are finally able to escape poverty cycles that have lasted generations because of this decentralized digital money system that appreciates as worldwide adoption grows. Politicizing money as a concept is perhaps a little far fetched?
The Bitcoin subreddit is one of the most popular pages on the platform with over 2.7 million members. It hosts important discussions about the crypto-asset and its user growth actually has an extremely strong correlation to the price of Bitcoin.
Responses in the thread commonly cited giving power back to the people by letting them be their own bank, as well as the decentralization of power being two core arguments for the left. Several individuals replied to the thread saying that Bitcoin is a neutral technology, likening the invention to a car or a bicycle and that the politicization of Bitcoin is far-fetched.
Another group of users, whom claim to be European, discuss socialism's intent as relying on the authorities to enforce equality. This is apparent in Nordic countries, however these are also ranked the most capitalistic countries in the world and have fully embraced the rapid wave of cryptocurrencies. Perhaps the amalgamation of capitalism and socialism create a friendly environment for Bitcoin to thrive and create both wealth and social equality? I certainly don't have the answer to such a complex question, but it's worth exploring.
'Eat the rich' — why hasn't the left caught on?
"Eat the rich" is an anti-capitalist proverb originally coined by Jean-Jacques Rousseau in the mid 1700’s in Paris. While his circumstances were certainly different, the phrase has outlived its author and gained popularity during the 21st century and been used to battle income inequality all over the world. While the original intention of the statement was seeking to tax the rich, the disdain towards financial institutions has as much to do with the movement. In fact, without these billion dollar institutions, there would be no infrastructure for the 1% to accelerate their wealth in. In 2020, we saw the lingering dubiety towards perennial establishments transcend the world of finance and fall in to the fields of political justice and government, rightly so. With the killing of George Floyd and the rise of the Black Lives Matter movement, "dismantle the system" has become a household adage. It seems that we've reached the peak of institutional distrust, so what options do people have to revolt? One option is by adopting Bitcoin. By being one's own bank (owning Bitcoin instead of Fiat currency), people could avoid any and all contact with the government and large financial institutions. It is the ultimate middle finger to legacy systems controlled by the 1%. It can also create a roadmap to financial freedom for a large number of people struggling to save in an inflationary economy due to arbitrary monetary policy. Seeing as Bitcoin is still very early in its days and the state of the Dollar is fairly uncertain, Bitcoin may just be the double whammy that people have been looking for to battle against unbearably large systems.
If the left really want to threaten institutions, it will probably be best executed with action, not with verbal protests and cardboard signs. Revolt is most effective when the herd goes to war, not when they threaten to go to war.