To its loyal supporters, Bitcoin represents decentralized power to the people.
By Sam Yang - Get similar updates here
I think it was either through Noam Chomsky or Howard Zinn that I first heard the term libertarian socialist. And when I first heard it, I thought it was an oxymoron. And, most people probably still do. But perhaps what both socialists and libertarians want are one and the same. And perhaps this conclusion was ahead of its time; there wasn't a way to reveal they had the same desires: for a pure democracy.
Since I first got online, I have had an interest in understanding all of internet culture. Some of it is funny, some of it scary, but most of it is uninteresting. Then came Bitcoin, and it was as different as the internet itself. I don't mean this in the financial way, or that you should buy some, or that it will replace money. It's what Bitcoin represents, the path to libertarian socialism.
After years of reading message boards and crypto Slack groups, I realized the two main types of personalities interested in Bitcoin were libertarian and socialist ideologues. But why? At first, no one knew this thing would be a thing (or even make money)—people who got into it were believers of an ideal, of decentralized power to the people. (And those that didn't believe bailed before they could reap any benefits.)
Both libertarians and socialists acknowledged that a pure democracy could never rely on mutual trust alone. Though the two ideologies ultimately have the same aim, they disagreed on the method. The socialist answer was to leave it to a disinterested third party to administer equality, this would be the natural extension of civilization. Libertarians rightly feared that this third party would become authoritarian. The libertarian answer was to rely on competition and free markets, modeling itself after evolution. However, the socialists rightly feared that this would allow power to accumulate in the hands of a few, which would allow for the few to out compete everyone else and thus become an authoritarian regime. (One could argue that at the dawn of man we were all libertarians, and since that time, every system of order has competed for dominion in the free market of governance. The paradox has been those who call themselves "libertarian" by identity not by ideology, who don't necessarily believe in evolution, yet espouse the virtues of "survival of the fittest"—not realizing it comes from evolution.)
It took time for technology to catch up to these idealists, and with Bitcoin (blockchains), we perhaps got the technology a hundred years too early. (Just as some believe we got the idea of socialism too early, it should have come after capitalism.) We weren't ready for Bitcoin, but here it is. And whether Bitcoin lives or dies, the idea of decentralized power given to the people is now out there in the ether (pun intended).
If you're completely new to this, you might be asking, what is Bitcoin? You can think of Bitcoin as the brand name for the first successful blockchain. Blockchain existed in theory but did not become reality until a person (or a group) named Satoshi Nakamoto released it to the world. But without Satoshi Nakamoto, it might have taken the rest of the world decades, or perhaps a hundred years to come up with Bitcoin on their own. Unlike other inventions like the telephone, there was no one else coming close. And once it was here, everyone copied the technology—as if it were a relic left behind by someone from the future.
In a closer comparison of similarities, the two groups to surge after Occupy Wallstreet were the socialists and the libertarians. They were the Occupy Movement. They both hated the bailouts, they both wanted the central banks broken up, they both wanted more attention back home, and both felt all the symbolic issues were distractions from the real material problems. And right after the 2009 financial crisis, Satoshi Nakamoto created Bitcoin. As a reaction to all the problems he (she or they) saw with our governance. With Bitcoin came consensus, general agreement not by leaders but by the people, handled digitally in a trustless transparent blockchain.
So what's a blockchain? A blockchain is a decentralized and distributed digital network. (Comparing this to gold minimizes its capacity.) So unlike other systems we are used to, you not only use the system, you are also the system—this is the parallel to democracy (except in this case it would be a global democracy). With blockchains there are no localities, no nations, and no centralized government or central authorities. Period. These things only exist to overcome the problem of trust. If you had a possession of property, you need a central authority to prove to everyone else that the possession is yours, so that no one else can take it. You also need a central authority to sell it. With blockchain, no central authority (nor a disinterested third party) is needed. It's all counter party verified—because we are all connected on the network. Think of the film The Matrix, where the humans supply the power to the matrix system. But unlike the movie where humans are unwitting slaves, there is no illusory world with the blockchain; we become active participants in the system we are powering. Rather than slavery, it becomes a co-op, where each participant is also an owner. In theory, you don't need mutual trust as everyone is each other's keeper. (The blockchain acts as the public escrow between two distrusting parties. Everyone can see it and no one can tamper with it.) The market still dictates but everyone has power, and everyone has a say. (Imagine what this could mean for impoverished and corrupt countries? Countries who neither have stable governments or currency? Or with the coming automation, a universal basic income powered by the people themselves.) This sounds a lot like the beginning of the internet, a global singularity. There used to be no difference between a libertarian socialist and an anarchist, until now. The blockchain is that difference.
(There is some irony, as there are some misguided nationalists who are also interested in Bitcoin. They cry online about globalists, yet do not realize with their use of the internet and Bitcoin, they are the ultimate globalists. They are sowing the seeds of their own destruction. Nationalism, along with religion, are the natural enemies of socialists and libertarians—not each other. To clarify, there are no borders when people of the world unite, and there are no borders when you want free trade. Furthermore, religion competes with evolution, and religion competes with the free will of the masses. But religion can add to nationalism.)
But will Bitcoin be successful in creating decentralized power? Probably not. There are already issues (with power accumulation). Will some version of blockchain technology be able to create decentralized power? I don't know. But since the focus has mostly been on Bitcoin's increase in value and how much it is worth today (this is a distraction), we miss the real point: that decentralized power is attractive to lots and lots of people and we might have a technology to get us there. (Perhaps blockchain technology is why there is no money or borders in Star Trek. Or it's the precursor to the world of Mad Max.) This is why it scares those who are already in power (and why it also emboldens those who seek it).
But here's a better question, let's say we got to a true 100% democracy through decentralization: Who is to say that would make for a better world? And what happens when blockchain merges with artificial intelligence? If utopia were possible, it would no longer be a utopia, it would be reality—and a utopia would have to be something better than reality. This is why it is unattainable.
In Democracy in America, French political thinker and historian Alexis de Tocqueville writes:
To add to Tocqueville, I would go one step further: That one's own utopia is always someone else's nightmare.
Whatever the case may be, perhaps the way politics is defined today is outdated. It is no longer just left and right, and its many variations. (And it probably never was, it's just that dualism is more attractive to the mainstream than democracy.) There is another group out there, and they want a decentralized world, and they now see the technological path to get there. (Which is why some are warning that Bitcoin is more dangerous than a nuclear bomb.) Whether we like it or not, technology evolves politics. Sometimes politics realizes too late.
Lastly... should you buy Bitcoin or any other digital currency? (The wrong person to ask is a financial advisor.) Here is my advice, buy it ONLY if you believe in this system of governance (because everyone else will try to tear it down and only believers will be able to stomach the ride).
(If you enjoyed this article and hate FOMO, I have the perfect thing for you. It's called Don't FOMO, it's my perspective on all things crypto, blockchains, and general financial literacy.)
Useful Companions (Improve Your Education and This Site by Buying a Book):
- Journalists Paul Vigna and Michael J. Casey demystify the world of cryptocurrency for the laymen in The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order
- To understand the potential and disruptive power of blockchain technology and how it can globalize the world, read Blockchain: Blueprint for a New Economy by Melanie Swan
- If you're interested in the history of Bitcoin, read Digital Gold by New York Times reporter Nathaniel Popper
- Government in the Future by Noam Chomsky is from a talk Chomsky gave in 1970 as what he perceived as the natural extension of government, which looks a lot like what blockchain technology is doing
- Democracy in America by Alexis de Tocqueville is an outside observer's view of the early days of the American democratic experiment