This opinion editorial was written by Sterlin Lujan (Current Risk Officer at Cryptospace). Jacobin Podcast Episode “Dig Cryptocurrency with Edward Ongweso Jr. & Jacob Silverman” discusses “cryptocurrency and NFTs, Elon Musk’s metaverse, meme stock, techno-utopianism, and the crushing reality of our current neoliberal hellscape.”
Cryptocurrency has become a mainstream technology. It has been integrated into culture, finance, and social life over the past decade. It is fundamentally changing how we view money, economics and human action. Some people are skeptical about cryptocurrency, especially those on the left. Many people hate cryptocurrency, no matter how beneficial it may have been to them.
Daniel Pinchbeck is a thought leader, author and psychedelic visionary. He suggested that I listen to the Jacobin podcast and address their concerns and claims.
This is something I wouldn’t normally do, but Daniel is keen to continue the discussion about crypto. A review and critique of the material is also something I believe will be beneficial to others, since I have been actively involved in the industry for six years. I hope that this detailed response will lead to an evolutionary and open-minded discussion about the potential benefits, capabilities, fears, and rewards of crypto.
Notes: I will refer to podcast guests and speakers as “Podcasters” in order to keep things simple. Their arguments are bolded and numbered. I immediately respond to each argument. Sometimes, I separate the use of “crypto” and “bitcoin” in my responses. I might use crypto to refer generally to the ecosystem and bitcoin to address a particular point they made. This will clarify the context and the argument I am making. Many links have been provided for further research as well as factual evidence.
“Crypto advocates believe these digital tokens have some value.”
Podcasters believe that “cryptocurrency” cannot have or doesn’t have value. They try to discredit cryptocurrency by saying it isn’t a currency but “digital tokens” and digital faberge eggs.
These “digital tokens”, as they are called, have real value. These “digital tokens” have real value, as shown by their market capitalizations and trading activity on exchanges. The podcasters even refer to the trillion-dollar value of crypto markets throughout, undermining their own claims.
Their perspective leads them down a rabbit hole that believes crypto isn’t money or currency. They use semantics to try to devalue cryptocurrency, dismissing its impact or ignoring it. However, their criticism misses the reality that’s going on in the world.
“Bitcoin and other cryptos are not “currency” because they cannot be exchanged for goods or services.
This claim is patently false. With a quick Google search, we can ascertain that roughly 15,000 businesses currently support accepting bitcoin for payment. This is a significant amount. It is likely that the number of crypto-accepting businesses is underestimated, as many retailers accept different alt-coins. Anecdote: I have exchanged crypto for goods, services and other items…directly and multiple times. What’s the point of this anecdote then? Without having to use too many brain cells, you can prove the claims of the podcaster. Simply go to overstock.com and place items in your cart. Then, pay with crypto.
Another important point. You can not only purchase services and goods for crypto directly but you can also use intermediaries to buy goods. You can use purse.io to purchase your goods from Amazon. You can also use Dash cryptocurrency to download the purse.io app and buy gift cards. Then you can shop at a discounted price in a variety stores.
These options and innovations are listed to show that podcasters don’t know how to buy goods and services using crypto. Or, they lie to support anti-crypto policies. I believe it is the former.
“Crypto’s volatility is too high to support major use cases.”
The market swings and volatility that cryptocurrency experiences can be quite violent. The podcasters didn’t find the solution. Crypto is a great example of innovation. It is not hindered by slow banking regulators or inefficient bureaucracies. The stablecoin is here. It was created to reduce market volatility.
Many people object to stablecoins because they are only pegged to US dollars. While it is true that many stable tokens are tied to the US dollar, the good news is that stablecoins can be pegged at any other currency. Silver, gold, oil and leprechauns are all possible with programmable tokens. Stablecoins eliminate volatility and allow crypto to transform into a stable unit when needed.
Some people don’t see the volatility of crypto and bitcoin as a problem. There is a lot of volatility in FX and fiat markets. Capital controls and other government interference can mask a lot volatility. Nature is not stable. There are waves, troughs, tops and bottoms, sine waves. The Satoshi Nakamoto Institute published a piece titled “I love Bitcoin’s Volatility” by Daniel Krawisz, an early crypto thinker. Daniel spoke out poignantly about the volatility problem.
“To complain that nobody will use Bitcoin is like saying, “Bitcoin’s adoption is so amazingly fast that I will never be able cook with it!” It’s also like saying, “This novel is so exciting that nobody will ever read it!”
There is no evidence that Bitcoin volatility is hurting it. Every indication that Bitcoin’s adoption rate is high will indicate this. How can volatility cause problems? Would Bitcoin have a faster adoption rate if it were less volatile? It is absurd because Bitcoin’s value has to rise as more people use it. If it is volatile, it will also have a faster adoption rate.
“Market speculation is the main use case of cryptocurrency.”
This claim was refuted earlier when I addressed the notion that crypto does not have a use case for a currency. One could argue that the main use of crypto is speculation. This argument seems to be primarily a red herring or diversion.
Speculation is not a useful use case. It is simply an outcome of emerging technology. It’s like saying that cryptocurrency’s primary purpose is speculation. This is exactly what happened during the dotcom bubble. Speculation is investor activity regardless of its merits and faults.
Although cryptocurrency, especially blockchain, has many uses, the primary one is money. This was originally the purpose of bitcoin after Satoshi Nakamoto solved the double-spend issue. Utility tokens can be used to serve a governance function in crypto/blockchain. They can also be used as stablecoins, as a currency that powers prediction markets and as reward tokens for lending platforms. There are many uses for cryptocurrency, and no one is out of touch with them.
This link provides additional information on all real-world crypto token/blockchain use cases.
“There is no productive value in cryptocurrency. It is not a currency. It’s for speculators. It facilitates the transfer of funds from one account to another. Pump-up self-dealing assets (AKA rug pull).”
Podcasters keep repeating the notion that crypto is not “productive value” except for its ability to facilitate scams, pump-and-dump schemes, and other misinformation.
Although I have already presented a lot of value and uses cases in my previous rebuttals I would like to address the idea that crypto is primarily used for pump-and dumps.
Podcasters are concerned about rug pulling and other pump-and dump schemes. These have happened enough to tarnish the crypto brand in certain circles.
This problem is not a permanent problem in the ecosystem. It is partly due to ignorance and new technology. Newbies are often lured into the scammers’ web because they don’t know how to educate themselves. They are lured into a Ponzi scheme or rug pull by the hype. Once enough time passes, most of the scammers will disappear.
Many cryptocurrency companies are now warning users to not invest in crypto tokens that they don’t fully understand. They also advise them to learn as much as possible before investing. This education mentality is becoming a problem in the industry because, contrary to popular belief, many industry players care about customers and users. As the ecosystem matures, we will see this trend continue to grow.
Last but not least, I want you to remember that crypto has huge “productive value”. For example, the bitcoin cash community created an “Eat BCH” program to help the hungry in Venezuela and South Sudan. The BCH advocates have already fed thousands of Venezuelans. Because fiat currency in South Sudan and Venezuela is used as toilet paper because of runaway hyperinflation, it makes sense that people in the crypto sector would organize such charitable initiatives.
The “Eat BCH Initiative” is what I refer to as “productive value”, and it’s these “selfish capitalismist crypto bros” who are involved in it.
“Currency must be tied to the state, or some form of political governance.”
Jacobin’s podcasters made the most absurd argument that private money is dangerous, and that money should be tied with a state or political governance.
The existence of currency that is controlled by politicians and despots has led to immense suffering. Governments can control the money supply and can print as much as they like to finance endless wars, enrich themselves at the expense of the people, or inflate it away. In effect, government-monopolized, centrally controlled money is the harbinger of death and destruction. This is not exaggerated. You can read more about the dangers and pitfalls associated with fiat currency by Saifedean Ammous in The Fiat Standard.
Podcasters claim that they want currency linked to a government. This effectively means they want to enslave all mankind to an inflationary, debt-servitude life.
The 2009 financial crash was followed by the invention of Bitcoin. It was created as a solution to reckless government spending, bank bailouts and systemic corruption. I believe that if people, particularly those on the left, were educated about financial matters, they would be more open to accepting “private money” without having to fear what they might do to them. Nothing has proven more destructive or unproductive than a monopolized government system monopolizing money. Currency should not be tied to any state or organization of violence.
All of the above problems are solved by Bitcoin. It is impregnable against hyperinflation and peer-to-peer. Bitcoin also has enough decentralization to avoid monetary censorship.
This message is why the genesis block for the bitcoin blockchain has this message.
Banks on the brink of a second bailout by the Chancellor
“The currency side of blockchain is neither emancipatory nor economically liberating.”
Podcasters deny that cryptocurrency is “currency” and believe it can’t be emancipatory, or economically liberating.
Their “argument” is falsehood and error. It’s a comedy of mistakes. This is not only because podcasters are wrong but also because they ignore potential economic salvation. They also mislead others about crypto’s liberatory potential.
Let’s take Africa as an example. Nigeria’s unemployment rate hovers around 27%,, and many people struggle to make ends meets. Many people were able to trade bitcoins when it became popular in 2017,. Their foray into crypto markets enabled them to escape poverty. They were able to see the financial benefits of Bitcoin in their lives. They may even have been spared from the agony of poverty. This Coindesk article contains facts and anecdotes about bitcoin in Africa. Similar crypto-fueled emancipations took place in Colombia, Sudan, Venezuela, and Sudan.
While many will agree that bitcoin is a way to liberate people in third world countries, what about the U.S. People are more wealthy and have better access to financial services. But, crypto-related investments have made it possible for people to live better lives in the US. Here’s a personal story:
Before bitcoin, I worked as a Walmart salaried manager. I made 38k per year (less taxes included) and spent hours at work. To live in the city, I was effectively selling my labor. It was exhausting. It was a horrible experience. Then, I discovered crypto and bitcoin. I was then introduced to emerging tokenized platforms such as Steemit.
Steemit offers crypto rewards for content publishing. I was an early adopter and posted my thoughts with enthusiasm. Steem tokens were my reward. When bitcoin was $1200 per currency, I exchanged what I had earned for bitcoin. This helped me get out of the 9-5 grind and reduced my debt. Steemit’s unique feature is that I was working for the community. I didn’t have an employer or an “evil capitalist” hovering over me like a whip. I was able to live a more strenuous lifestyle without the help of blockchain and crypto.
Although the Steem platform is still available, it went through some community drama before becoming a Chinese platform. You can still see my posts here.
My story isn’t unique. Many of the early adopters of crypto in the US didn’t come from privileged backgrounds. They were just able to do it faster than everyone else. This has led to one the greatest transfers of wealth history has ever seen, and it’s amazing.
Cryptocurrency is still a controversial topic for leftists, syndicalists and communists. Many hate it. It is seen as an oppressive form “money” with only a few exceptions. As I demonstrated, cryptocurrency can be used to help people escape poverty and make a living. Some even went on to become wealthy. Crypto technology has enabled more economic equality and opportunities than any other technology. Leftists mistakenly view this technology as a powerful tool to combat oppression. It’s a strange thing, but it’s because leftists don’t want to work, invent, or create a path to financial prosperity. They would rather have others than take; they would rather steal bread than make it. They’d rather take from others than bake bread.
“Crypto people use utopian rhetoric.”
Podcasters claim that many crypto supporters use “Utopian rhetoric” to discuss the technology’s benefits. They claim this is to downgrade or dismiss the technology’s paradigm-shifting potential. It is a way to lower the utility, benefit and power of crypto. People who are fully involved in crypto see it as a way of benefiting the world and helping to equalize the playing fields, and ultimately stopping tyrants lording the money supply. This “rhetoric”, while not utopian, is the language of disruption, decentralization, and disintermediation. The concept of “Utopian,” however, implies a society that is perfect or a social order in its entirety. Crypto doesn’t claim to be able to make society perfect or eliminate anthropocentric problems and pitfalls. There will always be issues, but crypto is proven to make society better.
“Crypto cannot be overcome.” It is deeply embedded in finalization. The majority of these cases are used to promote esoteric forms commoditization. There are many ways to launder money. There are more ways to speculate. It’s impossible for Leftists to roll it back. It’s time to get rid of it all.
There’s a lot to be unpacked, but the podcasters make the main point clear: crypto is here for the long-term. Pandora’s Box is empty. Or, as Max Borders stated, the djinn have escaped from the lamp.
However, the podcasters inject fear into crypto. They talk about how crypto will be embedded in “esoteric forms commoditization,” which simply means that it will be used to trade or manipulate other assets, I.E wrapped tokens and governance tokens.
These fears are false, however…unless you are one of the new elites: the nerds living in grandma’s basement or the average Joe who lives in your apartment.
It’s happening because ordinary people are learning to trade crypto and leverage decentralized finance networks (defi), as well as playing around in different markets. They are part of an ecosystem that was previously managed and controlled by financial elite gatekeepers. Everyone can now play, frolic and dance in “high finance” without having to have privileges or the resources to engage.
Let’s face it, the burning question is why leftists (or anyone else) would want to “liberate the world” from crypto. This would be worse than “rolling down” the internet. It’s impossible and it’s a petty notion that is infused with Luddism.
Podcasters voiced concern about crypto allowing more money laundering. These are the same arguments that were used to justify the creation of the internet. They claimed it would be used only by criminals, thieves and pederasts.
These arguments are not only wrong but they also conveniently ignore other facts. The naysayers ignore the fact that crypto is used to commit financial crimes. This is significantly more than crypto. There’s a darker side to this story. The elite can use the fiat system to make money, hyperinflate currency, control credit supply, and even type their balance into bank accounts.
The detractors don’t condemn crypto for criminal purposes if it serves their agenda. The podcasters don’t have much to worry. We know the extent to which crypto transactionality has been used for criminal and illicit purposes. A Chainalysis study in 2019, crime activity found that only a small amount of crypto transactions were involved. The study was summarized in a Forbes article:
Most cryptocurrency isn’t used for criminal activities. An excerpt from Chainalysis’ 2021 Report shows that criminal activity in 2019, accounted for 2.1% of all cryptocurrency transactions volume (roughly $21.4 Billion worth of transfers). The criminal share of cryptocurrency activity in 2020, was just 0. 34% ($10.0 billion in transaction volume).
“Crypto is concentrated in a few accounts. Wealth inequality is the greatest. “Gestures toward egalitarianism can be either joking or wrong.”
There will always be investors and early adopters in any market, even technology. This means that there will always be people who are “luckier” because of their financial knowledge and future-scoping skills. There will always be late adopters and laggards, as well as those who are ignorant or inaction. This is the technology adoption lifecycle. It’s usually plotted on a bell curve, with early adopters and late adopters making up a small portion of the total population.
This is why crypto adoption has led to some people becoming wealthier, particularly those who have been in the technology lifecycle. Natural inequality is a result of entrepreneurial or investor skills. It’s not wrong or immoral for some people to have more than others. It is a function how the market developed, congealed and settled. Although it is true that some previously wealthy people and entities bought into the market later on, this is not a problem for the space. It’s actually a benefit. The “network effect” of people buying into the market benefits the ecosystem.
Definition: A network effect is when a community or network gains value because more people use it, and more money goes into it. The greater the network effect, more people will benefit from it. Crypto is a net-positive because more people and capital can enter the network. This means that even those who are less fortunate can gain more value from their holdings.
Inequality is a natural function that the market produces, but pointing out inequalities in crypto is a red herring. As I have argued, even if a few people own more crypto than others, that does not negate the fact that crypto has helped to lift people out of poverty and improve their quality of living. Why should we worry about inequality when crypto has already helped so many? Crypto actually levels the playing field, so why should we worry about inequalities? I find the argument against inequality to be a tired and distorted bromide. It is largely based upon an envy mentality. It doesn’t have anything to do with the facts, particularly in crypto where many people can feel the benefits.
“Any notion of decentralization is a figment.”
Podcasters argue that wealth is so centralized in the crypto economy, that decentralization is almost a myth.
Their concern is that they use “decentralization” incorrectly. Decentralization doesn’t mean wealth distribution or distribution. Crypto wealth does not automatically mean that you have control over the ecosystem. The governance model and the technological architecture of a blockchain are key factors in determining control over it.
Decentralization refers to the fact that the blockchain networks are distributed so they can resist an attack and don’t have one point of failure. This means that they are not vulnerable to attacks by bad actors. One side effect of decentralization, is resistance to censorship.
One person can send cryptocurrency from their wallet to another person without worrying about the funds being rerouted or stolen, frozen, or any other “censorship.” A properly decentralized system, however, is also resistant to censorship.
However, not all blockchain infrastructures can be described as equal. Some are scams, and others lack decentralization. The beauty of crypto is that you can choose to opt in or out of any blockchains that interest you. It is a voluntary ecosystem thanks to the wonderful innovation of computerized centralization.
“Crypto functions like an MLM.”
Many people claim that bitcoin is an MLM scheme. This argument is absurd at best and ignorant at worst. This claim was also made by the podcasters.
Multi-level marketing schemes are known as MLMs. An MLM is a pyramid structure in which a business or enterprise gains revenue by having its goods sold by a non-salaried workforce. They typically receive a commission when they sell these products. They can also make money by recruiting other people into their organization. These MLMs can be fraudulent and not legitimate businesses or organizations.
It is true that some cryptos have been pyramid schemes, as I have previously admitted. They were, however, detrimental to crypto’s ecosystem and have damaged its reputation.
Many crypto skeptics want to dismiss the entire ecosystem and label it an MLM. Some even refer to bitcoin as an MLM.
This claim is clearly false. Bitcoin is not an “organization” or “business.” It doesn’t require recruiters. It is digital money, or digital gold depending on whom you ask. It is a result of network effects, which are the contributions of visionaries, developers, entrepreneurs and visionaries to the community, allocating capital and generating value in the ecosystem. This entrepreneurial activity does not depend on any type of recruitment or similar claims being made by any entity. There is no business organization, so it’s not a pyramid. The network is peer-to-peer, network-driven and decentralized.
Arguments against bitcoin are often made by people who don’t have enough research or haven’t fully grasp the technology. It almost seems like an attempt to smear an innovation that has made great strides into mainstream economics.
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Bitcoin, Crypto and Digital Currencies, Edward Ongweso Jr., Jacob Silverman. Jacobin Podcast Review.
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Sterlin Lujan works as a journalist and editor. She also speaks, is an anarchist, and is an essayist.
Since 2012., he has been actively involved in cryptocurrency and Bitcoin. Sterlin is particularly interested in the intersection between psychology and cryptography. He is a writer on behavioral economics and innovative technology. He was also the first to discuss the new field of cryptopsychology at bitcoin.com.
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