Cryptocurrency Is Not The Solution You Think It Is | Adam Limb

Bitcoin has had a tumultuous period lately, it hit an all-time high in November, and now in December it’s crashed quite significantly. Every time we experience the boom-and-bust seemingly inherent to crypto, I find no end of libertarians, anarchists, and other assorted morons looking on earnestly at the prospect of utilising cryptocurrency as a means of reducing, or even abolishing, the state. Fundamentally however, cryptocurrency will, like most technology, end up assisting in the expansion of the state, rather than its shrinkage.

Unlike many, I don’t believe Bitcoin is a bubble. It’s genuinely useful to have a currency that is not erected by any one authority. The trouble with cryptocurrency is the misguided belief that accessing and utilising crypto doesn’t rely upon a precarious infrastructure that can be exploited by the state six ways from Sunday.

Digital currencies are not really anything new. Countries such as Venezuela have had citizens using digital currencies ever since their governments de-stabilised their own currency via reckless printing and misguided policies. These digital currencies were not crypto-currencies, but instead digital currency in the form of ‘Gold Pieces’ in the online game Old School RuneScape (OSRS). Venezuelans often kill dragons, kill bosses, and do manual tasks that generate huge amounts of GP to sell to players in wealthier countries. These wealthier players often use the GP to fund a gambling addiction in the Duel Arena of OSRS.

Black market MMORPG economics aside, it’s self-evident that people wish to hold assets outside of fiat currency, which is linked to the dependability of the state. It naturally follows from this, that libertarians would be the first to take up cryptocurrency in their distrust of the state. Where this goes awry is in believing that cryptocurrencies could not, with ease, be stamped out by any state that was willing to do so.

Firstly, there is more than enough casus belli to destroy cryptocurrency from a state perspective, all that is lacking is the political will to want to destroy it. Most politicians (excluding Dominic Cummings) have no clue how Microsoft Excel works, let alone how the blockchain operates. For these people, it’s another weird Internet thing like ‘the Twitters’, ‘the MySpaces’ and ‘the Facebooks’. It is not the inability of the state that protects crypto, it’s ignorance. They understand that it’s a form of currency and can even be used by bad actors they are nominally meant to protect the public from. However, there’s a greater case for abolishing paper cash than for abolishing crypto when it comes to preventing crime. So, in the meantime, cash is king of the criminal world and bitcoin is at best, a lord of some minor domain. If this changes however, you can expect to see the following talking points:

Despite all being seriously flawed claims, they’re more than enough to pacify John Bull, who doesn’t have a single piece of cryptocurrency to his name. The state will, with ease, convince the public that separating you from your digital bounty is a necessary evil at worst, and a righteous act at best.

Secondly, Bitcoin is transferred over the internet, and the Internet (like all technology) is held together by duct-tape, sweat, saliva, and prayer. There are innumerable avenues of attack to prevent people from sending cryptocurrency packets over the internet and the state can easily do all of it. If the UK government says tomorrow, that all Internet Service Providers (ISP) must check the packets of information to check if they’re sending information to go to a blockchain, then that’s it – no more blockchain without getting a VPN. Internet Service Provides can and will capitulate to the state when this demand is given. Anyone who handles any form of networking knows this can be done, one of the main jobs you do when networking is configure packets to go to where they need to be depending on its content. If its content is cryptocurrency, then we’ll drop your packet, so it never reaches the blockchain.

However, we’ll be sure to scrape your IP address, get your address from the ISP (who, again, will capitulate) and send the bobbies over to your home. A VPN may enable you to gain access to the network for a time, and maybe even let you be a low-level user of crypto. But you will not be doing the vast majority of transactions outside of state-backed currency, and if you did – the state would come and investigate your finances directly, at which point you have more to worry about than accessing the blockchain. The government does not need to get access to your crypto wallet, it only needs to prevent you from accessing it. If you think the government cannot, if needed, hack your PC and phone, you’re wrong. At which point, you either access the wallet yourself, and you have now told them everything you need to know, or you never open the wallet again. In which case you’ve neutralised yourself.

Thirdly, this does not need to take down the blockchain outside of the UK. You may wish to use a VPN set up in a foreign country and gain access to the blockchain that way. But the average person will find the initial investment, the risk of prosecution, and the need to purchase and use a VPN to be too high a barrier for them to face. Not to mention that no forward-facing business in the UK will accept it, the moment they put a sign on the window reading “accepting VISA, Mastercard, and Bitcoin”, the police will knock and fine them more than they could ever make from any number of crypto transactions. At which point your crypto is only good in foreign countries, or on digital goods. Most transactions will be carried out by state-backed currencies by average normal people who don’t have a thought in their head so controversial as to necessitate using a cryptocurrency, nor do they have the backbone or energy to take a principled stand against the state.

Fourthly, if it ever did become necessary to prevent access to the legitimate blockchain outside of the UK, this can be done as well. IP addresses do not grow on trees, they’re assigned and routed by Réseaux IP Européens Network Coordination Centre (RIPE NCC), who (if the states are insistent enough) can just refuse to route IP addresses that are sending packets containing cryptocurrency transactions. In fact, it may very well be the case that we simply don’t have access to websites outside of the database RIPE NCC holds in the future. It is only out of economic and political convenience that we haven’t deliberately refused to route Chinese IP addresses from APNIC, the Asian equivalent of RIPE NCC. If there ever were to be a war between the West and China, this would be one of the first vectors of attack and it would mark the death of the Internet as you know it. If we cease to route IPs from those that send cryptocurrency packets, then you can bet the only people you will have access to on the blockchain will be state actors trawling for those using illegal cryptocurrencies.

Finally, in order to use cryptocurrency, you need access to the physical assets required for it. A phone, a computer, or some device that can reach the blockchain somehow. All of these physical assets can be, if necessary, taken from you. People have been banned from using computers for hacking. The FBI seized the physical servers that were anonymising users on The Onion Relay (also known as the ‘deep’ or ‘dark’ web,) and used it to identify those using the service.

There is always the temptation to hope that if ‘just enough people do it then there’ll be too much invested for governments to mess with it’, but the history of government is not on your side. Peasants had huge amounts invested in land held in common, and it was eventually privatised and sold off under the Enclosure Acts. Ultimately, libertarians will simply have to accept that property rights are never distinct from the political will from which they emerge. The state is merely the concrete form of that will, and consequently, property rights are always subject to being permitted to exist by the political will they rest atop of. Crypto right now is akin to a bunch of people down Brighton beach trading seashells, it’s a fun novelty. But when people start using non-taxable sea-shells to pay for goods and services, don’t be surprised when the men with guns come along to break up the little beach party and restore order.

Currently, the UK government is looking at making its own crypto, which will likely either be a public ledger – or one where only the UK government can view your transactions. It will also likely use ‘proof of stake’ over ‘proof of work’. Without explaining the difference between the two, understand that this will likely consolidate state control. The net result of cryptocurrency technology will be a greater encroachment of the state, not the retreat.

So what is cryptocurrency good for? Well, it’s good for helping people avoid payment processors. That’s about it, right now. This by no means is a small victory, however. It means content creators who otherwise would never be allowed to make money by Google, Apple, Amazon, Stripe, Visa, or Mastercard, can continue making content that genuinely aids in changing the states and governments that we live in. The state will always exist, but we do not have to keep existing like this. We can, through our own fervour, take control of the states we live under and make a world we would like to live in.

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