On Crypto (2021)

In 2013, in the wake of the boom of the canonical “BitCoin,” using some of the same technological principles but tapping into contemporary internet-meme culture, “DogeCoin” was born. Despite its origins as a joke, on 5 May 2021 it reached a market capitalization of US$85,314,347,523, thanks in part to the boosting of people like billionaire capitalist Elon Musk.

On 14 July 2021 the creator of “DogeCoin,” Jackson Palmer, took to Twitter to say the following:

After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight and artificially enforced scarcity.

Despite claims of “decentralization,” the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.

The cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like “get rich quick” funnel designed to extract new money from the financially desperate and naive.

Financial exploitation undoubtedly existed before cryptocurrency, but cryptocurrency is almost purpose built to make the funnel of profiteering more efficient for those at the top and less safeguarded for the vulnerable.

Cryptocurrency is like taking the worst parts of today’s capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) which serve as protections or safety nets for the average person. ^[1]

I had written a short note on this subject early May 2021, trying to give the widespread existing critiques of crypto a Marxist “twist,” but thought I’d learn a little more about the subject first. Given this latest drama, I’ve decided to release it as it is.

Capitalists tend to develop a vicious hatred of workers precisely because they are ultimately dependent on them, much in the way a vampire might hate humans because they resent having to feed on “lesser beings” to survive. Consequently, capitalists are constantly trying to find ways to mask or break this dependency. The phenomenon of masking it is well understood — reconceptualizing exploitation as “job creation,” etc. Can the dependency be broken, though?

Capitalists commodify and automate tasks with the primary goal of making workers less specialized, thus more interchangeable, thus less powerful as bargaining individuals, thus cheaper. The social contribution of capitalists consists in employing their intellect and rapacity and callousness in service of identifying real material barriers to capital accumulation, directing resources towards wearing said barriers down, and erecting artificial moats and legal fictions to protect the resulting profit-making enterprises. In the resulting society, masses of workers — from ‘gig economy’ couriers to young scientists to ‘content creators’ on social media — are directly confronted with the reality that entrepreneurs and publishing house cartels take a preposterous cut out of transactions. Even “coordinating” contributions from entrepreneurs and capitalists have been commodified and subcontracted to professional assistants, supply-chain managers, and logisticians. In order to protect this unjust state of affairs, laws are deliberately written to bind workers and protect rent-seekers.

This is an unstable system. Workers inexorably grow every day closer to being able to supply their entire societies without any “directing” contribution whatsoever, and they also grow every day more aware of that fact. And this means the supply not only of basic essentials like food and shelter, but also cutting-edge medical research and blockbuster-tier entertainment productions.

In this context, I see the rise of cryptocurrencies as fueled by a semi-conscious and futile attempt on the part of capitalists to escape this dilemma. I say semi-conscious because crypto-capitalists do actually have practical goals, such as tax evasion, and futile because workers are still very much involved via chip manufacture and power plant operations. However, the crypto marketing pitch usually takes the form of the promise of capital unsullied by human intervention, free from human “interference,” both in its generation and in its regulation. I suspect this is part of why it resonates so much with a certain people: capitalists who despise workers and self-hating workers that desperately want to become capitalists. More philosophically, it is a dream of capital unchained, of wealth based purely on math, elegant and abstract, cutting pesky humanity out of the equation.

The result is catastrophic: multiple glorified variants of a furnace which directly consumes natural resources to generate heat and imaginary good boy points. No production of any use to anybody. Capitalism in one of its most suicidal modes.

I want to acknowledge here some of the arguments in favor of crypto that have been put forth by pro-social advocates. The relationship between energetic waste and the use and development of renewable sources is interesting; energy transmission normally places constraints on infrastructure, but mining encourages development in remote regions for its own sake. ^[2] There is also a struggle within the crypto community to move away from energy-intensive “Proof of work” to even more abstracted “Proof of stake” consensus mechanisms. This constitutes an interesting field of research, but might actually worsen endemic “rich get richer” issues. ^[3] Additionally, technologies such as China’s Digital Yuan and Venezuela’s Petro aim to allow commercial entities to circumvent the SWIFT system, which undermines the ability of the US empire to levy crushing sanctions. ^[4]

Until the day these ambitions are realized, this is all I’ll say about crypto, because the get-rich-quick “crypto” that currently exists does not deserve to have more written about it than this.