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Anyone who wasn’t living under a rock for the last decade has heard of Bitcoin at least once and has maybe even also has heard about the sovereign-libertarian aesthetic that is often associated with it. From carnivorous Bitcoin maximalists to DeFi projects to freshly minted NFTs, there is no denying something is happening here. And, as we can tell from the swarms of venture capitalists and “XRP speculators”, the real question is what is happening?

Before we go down that rabbit hole, one ought to first investigate what even is crypto and what the significance of it is before considering how it fits into our society. While crypto does have its financial denotations, it’s really just one application of blockchain which is, in an expression, a distributed immutable store of data that can be verified by individual participants of that network. To expand:

With this definition of a blockchain, it doesn’t take too much that to see there isn’t anything inherently technically novel and that these features are already covered by, say, a SQL database. You can find that it is able to be distributed (master/slave nodes), immutable (simply don’t make an UPDATE or REMOVE call), and the author of a given application can make assumptions related to cryptography for self-verification (ie checking hashed passwords). Regarding the Byzantine generals problem, it’s really an application of the CAP theorem and, on the matter of smart contracts, type systems and programmability with tables have existed for decades.

With there being nothing inventive in the underlying technology, the remaining noteworthy attributes for crypto are distribution and valuation. Since a given project isn’t an enterprise software with SLAs or defined deliverables, both of these things are just market driven behaviors therefore, in a social context, crypto is nothing more than ideology obligatory Zizek sniff

It’s important that we come to a consensus (pun intended) on this so, if the technological argument isn’t enough or convincing, then look no further than a given token being some storage of value and, as a result of being purely digital, is nothing more than a social phenomena and, once again, makes some token/protocol an ideology to the people recognizing it.

Of course, it may be remarked that focusing on the foundation/protocols “misses the point” about crypto and that the real revolution comes as a result of DeFi or apps built on top of this starting layer. This simply affirms the assertion that it’s all social and ideological! Back in 2018 when ICOs were all the rage, one of the ‘big questions’ in the space was figuring out how to give crypto validity to the public (if it’s all a sham that only means something to neckbeard programmer types, it would quickly dissolve and fall apart). The popular stab at it was to mimic what Silicon Valley founders did with internet startups in the start of the 21st century, where you’d take something offline and bring it online (Uber brought taxis online, Flexport brought freight shipping online, rapt.fm brought rap battles online) hence the push toward oracles or other bridges to “real world data”. However, this performatively implies that crypto has no substance on its own and needs to piggyback off something ‘real’. While the attitude has changed today with people not upholding the idea of linking to the real world as much, this is shaping out to have crypto end up in an entirely self-contained ecosystem. Which, funny enough, rings almost exactly the same tone as standard money where it iteratively gains value from itself and only has value in the first place because we’ve assigned it to do so.

There is undoubtedly enthusiasm in the pursuit for something dramatically new. Rather than drone over the problems or faults of today’s systems, what if we could return control to the “citizens” and maybe even play with different structures of governance entirely. With things in crypto existing in this self-contained setup, it would seem that this gives more potential for positive outcomes. Yet, this should only be seen as more of a warning sign for how out of control and bad things could get. With no binding to the “real world” or any sort of discreteness or scarcity, the world of crypto would be more likely to end up in a flywheel and succumb to existing patterns like inflation or Gresham’s law and so on.

Another immediate consequence of crypto being nothing more than ideology is that it becomes a game of inertia (for the projects that have already been established as legitimate) or it becomes a circlejerk of making the best propaganda to lift one off the ground. This can be seen with Bitcoin and its community despite not having Turing complete smart contracts or with the long list of contenders in the DeFi rat race. This is also akin to European religions as some (ie Catholicism) have existed by tradition/inertia whereas others (ie some of the denominations that sprung out of the Reformation) had scrambled to capture a large enough following to remain relevant in future generations.

As a way of connecting to recent events, there is an awful number of people recently decrying crypto due to the amount of energy Proof-of-Work mining consumes and saying this pollution makes it inherently bad. But, why does this argument matter so much to people? There’s a slight irony in this rhetoric because, if they really cared about the environment, wouldn’t they be converting to veganism or stop driving a personal vehicle? The explanation for this is simple. In today’s world, people recognize that they consume quite a bit and, in order to balance it out, should “give back” in some way like through charity or communally beneficial decisions. The modern (or postmodern if you will) exemplification of this is when you are able to both consume and counteract that consumption with a single transaction (what Zizek dubs cultural capitalism). One common example being buying coffee from Starbucks where a portion of all their profits go back to farms and so on; like shot and chaser. In the case of crypto, there is an act of consuming when acquiring some token and there’s an additional act of individual benefit when you make money off your investment (whether from yields or just holding onto it for long enough). Therefore, it’s an act of double consumption with no way to smoothly counteract this and tips people in the antagonistic direction mentioned.

To be fair, Bitcoin and other tokens using proof of work do take up a decent amount of energy as it stands today and this is a valid comment. However, the fault in this critique is that it’s rather first degree thinking. If we take a gander at technology, there are many examples where the immediate consequences of some thing were negative but then, in the cascading events that followed, turned out to be a net positive. We don’t look at the invention of agricultural tools as a detriment on society for taking away the need to be active and exercise (running after prey is an intense activity), we recognize it as helpful for civilization because it allows individuals to have more time to work on other endeavors. On the contemporary topic of automation and robots, sure the talking point is that it will take away all our jobs but, really, there will be new jobs created for maintaining/deploying these machines and this will only open the door for people to create new technologies/jobs afterward. In the case of crypto, the challenges faced have, in its immediate consequences, led to a sizable energy consumption but, in the cascading effects, crypto’s led to exciting research and advancements in fields like cryptography.

Retracting a bit back to money, an adjacent topic is the matter of accelerationism. The recursive quirk of accelerationism is that it’s about capitalism moving toward some inevitable end where, in the process of defining what you mean by “capitalism”, you’re really just defining this accelerating process. When you look at some token as a storage of value and different tokens acting in their own simulations, it’s as though the space of crypto is a collection of concurrent capitalist systems taking place and accelerating in their own ways. With it all being capitalism and nothing more, it leads us to a circumstance of “capitalist realism” (a la Mark Fisher). The conclusion of this being that we should seek to re-politicize things (ie we now recognize mental illness is nothing more than some different configuration of neurotransmitters but it begets the question of why particular individuals would experience it and not others) which fits very nicely with the current story unfolding where people remark that certain chains or projects posses strong narratives or why some will win/lose over another due to some principles about the given project.

On money and things with acceleration and growth, there is something of an open secret in tech where the majority of software startups are rather overvalued (the realization being that many products could be replaced by a spreadsheet). There is similarly an overvaluation for a good number of businesses in crypto since there are no ‘secrets’ or ways to develop a proper moat; everything from the ledger to the transactions to the smart contracts themselves are open source and can easily be forked to siphon your audience (ie Uniswap/Sushiswap). That’s not to say there aren’t any possible benefits to a world ‘powered by crypto’, especially when considering the economic and monetary effects that could come of it. With the current direction of the crypto space, people are seeing what was seen in the internet in the 90s, a boon where there seems to be no cap to what can be accomplished. Unlike the real world where there is a finite number of resources and such, all it takes to make a new ‘thing’ is to just flip a bit somewhere. To wrap up on a more positive note, this would indicate that playing the game right is a matter of politics and power play so, like with AI companies, it only takes a bit of wiring together the right things together followed by a romanticization of what you’ve built in order to capture a decent enough distribution (AI bringing optimization to an already efficient world, NFTs bringing public ownership to a world where we already accept centralized services as standards).