Bitcoin's Politics

Sat Sep 24, 2016

I admit to certain vices. I’ve been on the internet for a very long time. I read science fiction, and not just for my academic work. I was reading usenet in the early 90s, often using a VAX cluster. So many of the stupendous concepts of 2016, ranging from “meme magic” to transhumanism, I’ve seen develop in slow-motion: one shitpost at a time. Probably the purest manifestation of cyberlibertarianism, however, is cryptocurrency. I see little reason to separate political libertarianism from the hard right; anyone with doubts about this should read Murray Rothbard or the egregious Hans-Hermann Hoppe. Softer versions of libertarianism that emphasize legal pot at market prices are loss leaders at best. In The Politics of Bitcoin: Software as Right-Wing Extremism, David Golumbia argues that bitcoin and other cryptocurrencies arose from ideas about currency associated with the conspiratorial (and libertarian) right.

Despite my immersion in digital culture, I haven’t paid much attention to bitcoin until recently. Andrew O’Hagan’s immense LRB article caught my attention, and I’ve yet to read a convincing demonstration of why Craig Wright’s* demonstration to Gavin Andresen described there wasn’t conclusive. The forums devoted to bitcoin and other cryptocurrencies are, as O’Hagen describes, frustrating to read:

The press coverage of Wright and Wright himself had something in common: they succeeded in making him seem less plausible than he actually was, and, to me, that is a general truth about computer geeks. They are content to know what they know and not to explain it. They will answer a straightforward slur with an algorithm, or fail to claim credit for something big then spend all night trying to claim credit for something small. Many of the accusations of lying that were thrown at Wright last December were thrown by other coders. And that’s what they’re like – see Reddit, or any of the bitcoin forums. Much of what these people do they do in the dark, beyond scrutiny, and, just as it’s against their nature to incriminate themselves, it is equally unnatural for them, even under pressure, to de-incriminate themselves. They just shrug.

Throughout the article, O’Hagan admits that he does not understand the technical details of bitcoin. That’s one of the reasons why it is so readable, as the details are as abstruse as the personalities involved are fascinating (the principles, I mean. Not the commentariat, per O’Hagan’s description above.) The essential idea of bitcoin and other cryptocurrencies relies on a mining metaphor: to create new wealth requires an ever-increasing amount of computational work. Once the blocks are secured, there is a cryptographically signed record of their acquisition (and of any subsequent transactions). The original paper, written by “Satoshi Nakamoto,” defines its motivation as “what is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” It does not take much effort to realize that anonymity and freedom from seizure are the main motivating goals here. The “crypto” in cryptocurrency refers as much to the desire to keep transactions hidden as it does to underlying mechanism. The Silk Road, for example, a “dark net” marketplace for illegal drugs and other services, conducted its transactions via bitcoin.

It’s not the case, of course, that bitcoin is only used to buy contraband. A restaurant near the Harry Ransom Center accepts bitcoin; no one could accuse it of impropriety. Golumbia’s first chapter concludes with two questions he asks of anyone who disagrees about bitcoin being a tool of right-wing political ideas: 1) how does it serve the left? and 2) how does it embody the economic ideas of the left? (17) He concludes that there have been no adequate answers to these questions. I guess the question to pursue there would be if there is such a thing as left-wing monetarism. Or, perhaps, if Keynesian stimulus could use cryptocurrencies as its medium, possibly harnessing the vast computational power of the NSA. I’m not well equipped to explore these issues in detail, sadly enough. I could imagine that some might question Golumbia’s framing. Perhaps bitcoin is beyond the right and left, etc.

Those of us who have wasted our days with the intellectual history of modernism know that Ezra Pound was led to fascism through his obsessive ideas about money. Pound makes one of the strongest materialist claims I’ve ever encountered at one point, when he writes that he can deduce the prevailing interest rates from a painting’s aesthetic qualities. Eustace Mullins, a visitor of Pound’s at St. Elizabeth’s, provides the connection to bitcoin. Mullins wrote conspiratorial tracts about the Federal Reserve that drew on existing anti-semitic notions. What does this have to do with bitcoin? For Golumbia, the justifying literature of bitcoin attacks central banking and the Federal Reserve using the same tropes. That interest rates are manipulated by a small circle of elites for their own purposes rather than in response to economic indicators, for example.

A reason that so many conspiracy theories center on currency is that it’s hard to understand. Why is money valuable? Because people believe it is. The idea of a gold standard offers some tangibility to what is a mysterious concept that eludes many people’s understanding. I taught David Graeber’s Debt in a seminar focused on modernism and finance several years ago. We examined the background of Pound’s ideas then. Graeber’s concept of the universal debt owed to parents and community was useful to compare to Pound’s ideas about patronage and the economic substrate of art. I can’t remember spending much time on cryptocurrencies, as I had not thought about them much at the time, but they are clearly a great example of the logical conclusion of postmodern finance.

I’ve been thinking of some places where I disagree with Golumbia’s argument. I don’t know enough about the history of bitcoin to dispute any of his details, nor do I see any particular reason to. The general association of “computationalism,” a triumphant valorization of the computer-as-mind metaphor, with specific software projects like bitcoin is perhaps one place where I’d disagree. At one point Golumbia quotes Chomsky, whom he strongly associates with the computationalist worldview, as an “anti-government” thinker who still manages to be critical of libertarianism as a mechanism of private tyranny. I see less contradiction in the political philosophies here than I think Golumbia does, but perhaps this would best be the subject of another post.

The book is in a series of shorter monographs from the University of Minnesota Press that have inexpensive digital editions. I bought the digital edition, and it required a few more hoops to jump through than would have been ideal, as it relies on the Adobe Digital Editions software for access. I know that providing a free pdf is not necessarily the business model for everyone, but I’m sure that it would have encouraged wider circulation of Golumbia’s argument among the bitcoin community, who perhaps have stronger-than-usual open access commitments. (The relation of open-access scholarly publishing to the general cyberlibertarian viewpoint is another topic worth exploring at some point.)

*Wright claimed credit for inventing bitcoin. The true circumstances are mysterious, as O’Hagan’s article describes in bewildering detail.