When Bitcoin first began to be talked about in the libertarian communities in the very early 2010’s, the idea was that it would allow for a viable alternative to fiat currencies. In addition to being a political movement against central banking and fiat currencies, the idea behind Bitcoin was to have an automated ledger system and provide proof of the ability to pay before transactions were made. All in all, cryptocurrencies in their infancy sought to decentralize currencies, provide tangible value to the monetary system, and automate a great deal of the processes typically carried about by central banks, commercial banks, and financial services. As we’ve seen this field evolve and mature over time, its defaulted increasingly on more and more of the fundamentals that led to the adoption of these fake internet coins in the first place. While cryptocurrency’s use as an actual currency never truly caught on, its use as a speculative asset has taken the world by storm, allowing pioneers and market manipulators to rake in billions from naive people. Cryptocurrency, in the years since its humble origins, has transitioned from a form of fiat currency backed by nothing to a form of fake capital, backed by its perceived value in state fiat currencies, kept afloat by the investors who buy into the endless hype. Since FTX’s collapse earlier this month, followed by the proposal by Binance to create what is essentially a central bank in the cryptocurrency world to insulate projects and exchanges from market shocks, we’ve seen what was once a libertarian movement steer more towards replicating the same functions that the authoritarian institutions it sought to replace still continually carry out. In addition to this, with the emergence of Central Bank Digital Currencies, in which digital currency minted by the state can allow for unparalleled amounts of monitoring on the activities of citizens, we’ve seen cryptocurrency come close to completely defaulting on any purpose it once held, while empowering the very evils it tried to circumvent. In this article, we’re going to talk about a very tiny sliver of all that went wrong in the world of cryptocurrencies.
On the surface, when Bitcoin was first launched, the minting of coins was so easy and so frequent that it allowed for the coin to be actually used as a currency. Examples of people buying items, such as two pizzas being bought for 10,000 bitcoins in 2010, abound and while we might call some of these earlier purchasers fools today, at the time they were simply using the currency for its intended purpose. Cryptocurrency, when it was simply used as a currency in its early days, was more of a thought experiment for most people than anything else. As mining slowed down and public awareness of the subsequent raising in value of Bitcoin increased, we began to see the cryptocurrency take on the form of an asset more and more. Transaction fees, which were at one point relatively affordable for the newfangled technology, increased in tandem with the price of the coin automatically over the years, until using Bitcoin to buy a coffee could cost someone hundreds of dollars at the peak of its value. While Bitcoin may have started off as a true currency in one way or another, due to the increasingly slow mining times, the higher energy expenses to mine the coin, the more sophisticated equipment needed to mint the coins, and the skyrocketing transaction fees, Bitcoin was doomed to become an asset. In time, following the success of Bitcoin as an asset, more and more cryptocurrencies were created with the intention of enriching their developers through pump-and-dump schemes. More and more, crypto whales engaged in market manipulation in order to ensure that their assets continued to rise in price, with celebrities, social media influencers, and other entities capable of shaping public opinion being enlisted to hype up the coins that these whales held huge percentages of. In the years since the birth of cryptocurrencies, we’ve seen the establishment of a crypto aristocracy that has delved into the field of fake money full time, trying to increase the amount of fiat currencies that their holdings of even faker internet money could command. In a world where most people work fake jobs, broadcast fake beliefs, and eat fake food, cryptocurrency just seemed like any other fake and immaterial trend in modern capitalism that could provide more value to those who seized on it before it became mainstream.
While cryptocurrency as a whole might’ve devolved into what is essentially the largest Ponzi scheme the world has ever seen (outside perhaps the Chinese housing bubble), that doesn’t mean that it ends with the general devaluation of the market. No matter what happens to Bitcoin or Dogecoin or any other monopoly dollar that internet users can think up, the fact of the matter is that the state’s continued interest in studying and implementing its own form of cryptocurrency will have far broader implications for people than these speculative assets ever did. The problem that Central Bank Digital Currencies (CBDCs) pose to proletarians are innumerable, as the state in its current form is already puppeted by corporations and special interest groups intent on cementing their rule over us and extracting every last cent that they can. Creating CBDCs would eventually make dissent and revolution meaningless, in a world where the government gave platform to whatever existed and could track transactions across the entire economy. While disarming the population works well in controlling a population, the creation of CBDCs could very well make the question of whether or not to seize firearms meaningless in a world where the government always held final say over bank accounts, services like communication channels, and so on. When we look at who’s bank accounts typically get frozen, it’s the government’s enemies. When we look at which websites are usually delisted or banned, it’s the government’s enemies. When we look at who gets fired from their jobs for expressing their opinions, it’s the government’s enemies. When we look at the criteria for what counts as an enemy in the eyes of the government, it ranges from dictators like Gadhafi to websites like Facebook being pressured by the Federal government to remove content on its behalf to workers like James Damore. While Gadhafi ran afoul of the IMF and Facebook has always attracted anti-government dialogue in some groups, people like James Damore simply didn’t agree with the progressive propaganda pushed by the state-corporate complex in America. In these cases, the US government had to typically go through middlemen to deplatform those that disagreed with it or simply let its puppeteers go through with the deplatforming themselves. With the creation of CBDCs, the US government becomes the platform for the entire economy in several different ways, and as such a corrupt and degenerate organization, that possibility should scare you.
The problem with CBDCs is that, unlike their cash relatives, a CBDC is by its nature an electronic token and that gives the minter of such a currency far more control over its uses and users than the minter of a physical currency could ever dream of. When we consider that electrical utilities can disconnect and reconnect customers’ service based on payment, it should be considered that with CBDCs, governments could do the same as well based on political reasons. If Hitler had access to the information that CBDCs could convey, how many Jews could have hidden or fled from Nazi Germany? The answer is that the holocaust could’ve been far worse, due to the enormous amounts of information that CBDCs gather about people and due to the enormous amount of power that this technology can give to states able to process that information. While the technology has its merits and in an impartial and truly socialist society could empower the state to make far better decisions based on far more in-depth data, the truth of the matter is that in the dying empire we call America, where revolution seems more likely by the year as the inefficiencies, artificial division, and graft continues to mount, proletarians can’t afford to let CBDCs happen. Surveillance states, in the hands of capitalists, just serve to cement bourgeois rule and root out any individuals brave enough and class conscious enough to take a stand against the tyranny and artificial scarcities of such a system. While crypto may have started as a libertarian fantasy, the technologies that were used to make it might find themselves employed by totalitarian neoliberals more than anyone else. Crypto, despite its good intentions, may become so tragically ironic in the years to come that its truly terrifying for any genuine socialists willing to implement change.