Six years since the invention of the blockchain, more people are beginning to see the powerful political implications that this technology brings. People from diverse backgrounds have been weighing in on its disruptive potential. While libertarians embrace the potential of cryptocurrencies to break up monopolies of the ‘too big to fail’ banking and payment companies, the rise of this technology was met with skepticism by many socialists. Activists who call for economic equality and oppose governments harsh austerity go further to say Bitcoin will become another tool for neoliberalism. So what is the disruptive force inherent in this technology? Is it tied to a specific political ideology?
Critics from the left primarily come from observations of particular events surrounding decentralized digital currency. On the surface, the trend of speculators trading Bitcoin and manipulation of exchange rates can resemble gambling, and some see Bitcoin as recapitulating the existing Wall Street casino-style derivative economy. This investment friendly image is strengthened when economists chime in to depict Bitcoin’s fixed monetary supply (a total of 21M bitcoin is created) as a currency mimicking assets like gold and criticize it as having a deflationary monetary design that would incentivize hoarding and increase wealth inequality.
Contrary to these perceptions, Bitcoin was never meant as a get-rich-quick scheme. While it possesses gold-like characteristics, it is also radically different, as it is highly portable and divisible (Bitcoin can be divided into 8 decimal points and more if consensus is reached). This is a new monetary design that has never existed before.
Competition vs. Cooperation
Bitcoin creates a currency with unprecedented flow. It melts borders and artificial barriers of ideological differences. It resists any stagnation of thought that tries to mold it to carry certain special interests. Careful examination reveals how it is an architecture that embodies innate human nature and is designed to uphold our internal governing structures.
From Socrates’ dictum of know thyself to the modern age of reason, throughout history people have tried to understand the internal laws that constitute man. Naturalist Charles Darwin, upon observation of biological phenomena, identified and defined this internal law as an evolutionary force that guides all species.
In his first work, The Origin of Species, he brought the theory of natural selection and random variation. The notion of survival of the fittest, first coined by English philosopher Herbert Spencer to describe his economic theory and later taken up by Darwin, promoted a view of man as not much more than claws and teeth. This became a prevailing ideology behind the rise of social Darwinism and was used to justify European colonialism and modern predatory capitalism that was spawned in the late 19th century.
Yet, this narrative of fierce competition for life was only half the story. Russian philosopher Peter Kropotkin wrote a response to the predominant Darwinian interpretation of natural hierarchy. In his book Mutual Aid: A Factor of Evolution, he argued for the feeling of solidarity, empathy and cooperation as the ground for human evolution.
This alternative view was held also by Darwin himself. Psychologist and system scientist David Loey in Darwin’s Lost Theory of Love debunked the narrow reductionist interpretation of Neo-Darwinians that emphasized the notion of the selfish genes. He argued how most had buried a major contribution Darwin made when he moved beyond pre-human evolution to examine man’s moral sensibilities. Loey pointed to how Darwin, in his second work The Descent of Man, had recognized that nurturing, expressed as sympathy for the weak was a primary evolutionary force that drives humans to develop higher agency with the principle of mutuality.
The seemingly unbridgeable ideological divide between socialism and capitalism can be looked at as an expression of a contradiction that existed between Darwin’s earlier and later works. It is experienced as two forces constantly battling within us. On one hand, we have a drive for individual pursuits and independence and on the other aspirations for altruism and a deeper connection with others.
In current civilization, the tendency toward personal gain and competitive drive has been overriding the principles of cooperation. What has now become apparent is that the greed of a small minority in a ‘race to the top’ has subverted a broader evolutionary force, holding people hostage in a brutal animal-like kingdom of kleptocracy. The survival of the species in modern times has turned into a game of survival of the crudest and most rapacious corporations and bankers. This has now escalated into an arms race to the bottom, creating resource wars, economic apartheid and environmental catastrophe, likely leading to planetary crisis.
The imagination that infused the blockchain technology intervenes in the course of human evolution that has been heading down this destructive path. Decentralized consensus at the core of this innovation gives us a platform to reconcile seemingly opposing forces manifested as this ideological divide and brings a creative solution to global problems outside of electoral politics.
Bitcoin is like one big organism that regulates itself through algorithm. With no company, CEO or individuals in control, it maintains a ledger transparent to all. Its ecosystem evolves to manifest a vision encoded in its DNA, through stimulus and active interaction with its environment.
The core of this technology is algorithmic consensus that enables digital scarcity; a way to make an object in the digital world scarce without central control. This solves the problem of the double-spend. Cryptographer Adam Back, whose invention of Hashcash contributed to the creation of Bitcoin’s digital scarcity, noted how Bitcoin “constructs a computational irrevocability from proof-of-work and consensus”. This makes permissionless transaction and innovation possible, as well as removing monopolistic control of the production and transfer of money. But more fundamentally, this scarcity offers a key to open society to move beyond the current oligarchical rule of the neo-Darwinian dog-eat-dog world that has now turned into the lions eating the lambs.
The market logic that governs the existing extractive system is that of central control. As a hallmark of the industrial era, capitalism bases its foundation on the idea of land ownership. This places production and distribution into private hands. Scarcity was created through monopolistic control of resources and energy (such as the oil spigot), which has mostly been done in secrecy.
What became the ‘owner class’ began setting rules for the rest of the population through their undue influence on governments. This controlled market slowly destroyed healthy price discovery processes by manipulating currency and creating monopolies. Government giveaways in the form of corporate welfare stifles true entrepreneurship and innovation. Forces of privatization have been swallowing the commons. With scarce access to resources and jobs, people are pitted against one another, engaging in a rigged game that just keeps enriching the richest.
Unlike the managed scarcity of centrally controlled markets, Bitcoin’s digital scarcity is created through voluntary agreement of its participants. Its open source protocol grants users power to choose what kind of network they wish to create or be a part of, as codes can be modified by anyone. Combined with game theory that enforces fairness, this scarcity creates a new form of capital, one that is open source and distributed. This brings a radical departure from the current vulture capitalism that promotes cheating and wealth without work by means of usury, rent-seeking and QE (taxation through inflation).
While central banks use fiat currency as a force of coercion, Bitcoin currency is a token of value that provides an incentive to generate productivity and efficiency of the workers (miners). This pays for the labor required to build a whole new global financial system. In a sense, each Bitcoin mining pool is like a worker-owned cooperative that requires members to both work together and also compete within the network to perform the issuing of monetary units and clearing of transactions. Solidarity generated through collective hashing power maintains the ethos of decentralized consensus.
Perceived deflationary characteristics touted as Bitcoin’s flaw is actually a vital incentive structure that bootstraps the whole venture to build a new infrastructure in this time of transition from a massive teetering debt economy. This networked scarcity encourages the funding of start-ups and fueling of innovation on the edges. All around, new projects are emerging, ones that could fulfill the aspirations and needs of various communities, fostering a new network effect of altruism. Crowd-funding platforms like StartJoin and Bitcoin Capital are good examples of this.
Bitcoin’s self-organizing is not easily understood from outside looking in. It is like a caterpillar in the cocoon before turning into a butterfly. Market manipulation and outright theft within exchanges like Mt. Gox appear to confirm the view of man as selfishly driven. Yet, this is occurring in centralized offshoots and simply a reflection of the greed rampant in the existing system.
If we dig a little deeper into this ecosystem, what is happening within the mining process also appears to affirm the theory of natural selection, where those with powerful computer chips and hashing power can increase the chance of winning the game. Indeed, mining equipment is now highly specialized and is becoming more like a kind of survival of the fittest (where ordinary computers can no longer participate in mining). This brings concern about the potential centralization of mining. Yet, just as Darwin’s first work does not complete his full picture of evolution, the mining was also designed to be subservient to the imagination that infused this innovation.
The fierce mining competition fosters efficiency, helping make the relative capacity of the Bitcoin ecosystem significantly less energy intensive than the existing financial system and the most ecological one when fully utilized at a global scale. This also helps create a solid foundation upon which a social contract of a truly democratic society can be built.
The creator of this technology, Satoshi Nakamoto found a way to secure the system from the risks of concentrated greed and destructive seeds within our ‘selfish genes’. This was done through implementing a particular consensus algorithm that enforces people to show the proof of their work. Rewards here function as a mechanism to keep everyone honest and the equilibrium of supply and demand distributes accountability as a form of self-regulation taken up by those who participate in the mining.
All this has become an engine to build a system that is impervious to internal or external attacks. The mining rings that have now achieved global level security perform a kind of safeguard of real democracy, through which spontaneous forces of We the People can be unleashed. With its feature of infinite divisibility, value created through a peer-to-peer exchange of autonomy and reciprocity can become an abundant flow that nurtures all people, especially those who are made weak and vulnerable by current Western exploitation.
This even makes it possible for the other six billion, the unbanked and under-banked, especially in the Global South to participate in the world economy on their own terms. This is already starting to happen as investment and interest in transforming the massive remittance market is increasing, while charity and tipping is the fastest growing usage of Bitcoin in the West.
Paving the Way for Altruism
Many of us wish to evolve; to act more freely and extend kindness and compassion to others, but our actions are restricted and controlled by oppressive governments, religious fundamentalism and de-facto corporate dictatorship. As commercial-led globalization expands, the entire globe is shackled to the tyrannical logic of extreme capitalism and cowboy banksters’ autocratic control over the flow of money. People with good hearts are forced to adapt to the harsh environment of austerity and rule by the rich. They have to make hard decisions; either to be kind to others or suppress that innate nature of altruism just to survive.
The blockchain removes these obstacles, allowing us to align ourselves with internal forces of evolution. The built-in incentive structure of this game-changing innovation offers humanity a path to divest from the military-industrial complex, war economies, sweat shops and debt slavery as well as Stasi-like surveillance. Instead of supporting oligarchs that print money at will to buy missiles and tanks, people can independently invest in mining gear and channel the selfish and aggressive parts of humanity to serve the larger whole.
Artificial scarcity in centrally planned economies fuels destructive competition among people, dividing all through fear into separated nations, religions and ideologies, and justifies wars and hatred. Now the competitive drive that has been cut off and stagnated can be brought back to its origin of creative power and transformed into one that encourages each to strive for their best in service to all.
With decentralized cryptocurrencies, we can move away from the deterministic future imposed by central banks and divisive political ideologues and build a society that represents who we really are. Those who are ready and want it will find a way to chart a new path. Those in power can choose not to evolve, but they can no longer take the rest of us down with them.
Humans it seems are being degraded into killer apes. As the ideals of distributed consensus enshrined in mathematics are fully developed, they become the killer apps that can help humanity redeem itself. In this new world entered through the blockchain, we can now move beyond struggles for existence and ascend as a species capable of love.
Photo credit – Silhouette of a fibreglass spinosaurus at Blackpool zoo in Lancashire, UK and a ‘con’ trail by Simon Harrod.