Commentary. Some hold up cryptocurrencies as a panacea to the world’s evils. In reality, Bitcoin and others like it only replace old masters with new, automated ones.

The voluntary servitude of cryptography

At the root of all the best-known cryptocurrencies, including Bitcoin, is the encryption technology of the blockchain.

Cryptocurrencies are digital currencies that supposedly “level the playing field,” meaning they have been developed outside the state, and they assign economic values to objects and services based on criteria that differ from conventional currency. Encryption is a technique that’s not easy to use and requires a medium-high level of technical competence. And that’s the first obstacle to the currencies’ proliferation; as a specialized form of knowledge and power, it favors the development of hierarchies of experts, encouraging the growth of implicit technocracies.

The other problematic issue related to cryptography is that it’s based on the limitless growth principle: As computing power and the speed of the IT networks increase, the cryptographic systems must become more and more powerful as the old “locks” placed to safeguard the cryptocurrencies become obsolete. More power and speed create the need for more power and speed. It’s a growth-obsolescence mechanism similar to an arms race.

In that sense, encryption is a useful exercise, but it’s sustainable when it’s the exception, not the rule — that is when it’s circumscribed to politically suited purposes, such as oppressed minorities under dictatorial regimes. Otherwise, in the present context, it slips easily into the mass of other consumer products on the market, losing any transformative ability to break up power.

There are several types of blockchains aimed at registering the transactions of the various encrypted digital currencies. But beyond the specific differences, this technology’s usefulness seems to be, most of all, that it sustains private property without any guarantee by the state or other institutions: That’s the part where any self-respecting anarcho-capitalist’s dream becomes reality.

Organizing society without a central authority can make sense only if you accept the fact that freedom is a building process that passes through the formation of personalities, identities and communities, a process that is cultural, ethical and aesthetic at the same time. If freedom coincides with the delegation to an automated system it becomes a sad, repetitive compulsion.

There is also another aspect we must critically consider: The glorification of complementary and/or substitutive currencies, especially digital ones, as a possible solution against widespread impoverishment is misplaced and, most of all, exaggerated.

In general, it simply shifts the boundaries of exploitation. Instead of eliminating the banks, we create our own banks at home on our computers. Instead of bringing down the employers, we become our own employers. Instead of bringing down slavery, we become slaves to every new “innovation.” Instead of caring about the quality of relationships and of free choice, we automate them with smart contracts. In other words, we are facing a “quantification” of living, a horizon filling with purpose and legitimacy the techno-digital practices enacted by the new forms of capitalism.

In these complementary currencies, as well as in the substitutive ones (crypto or not), the trend is to identify each thing with a business model. Social relations — the creation and function of societies themselves — are solved on the market. We implicitly accept that everything is for sale, inside or outside of the body, including interpersonal relationships.

In the case of Bitcoin, the way the digital coins are issued reminds us that those who arrived first have the advantage, because as the number of units increases, so does the difficulty of producing them. The blockchain becomes bigger with each transaction (at the start of 2017, it was 70 gigabytes of cryptographed data) and requires more and more powerful computers handle the costly activity of “mining” new bitcoins, or to verify the transactions made by other members of the network. There’s talk about Bitcoin as a platform of equals, but over time the difference between those who mine Bitcoin and simple users becomes a more asymmetric, hierarchic relationship. To become miners, you need more and more powerful machines, so the consumption of resources increases.

But why involve so many users? Maybe to test how a distributed system can work without people trusting each other and without trust in a central authority (central banks in this case). But the creation of a community is based on the trust among people, not on faith in the accuracy of an algorithmic procedure, the blockchain. What happens frequently online in relation to cryptocurrencies resembles a large-scale economic and social experiment developed by over-zealous students from the Chicago School.

Another element worth highlighting is that the blockchain system is based on compensation mechanisms for those verification operations necessary to guarantee its effective functioning: operations carried out by miners or by specifically created intermediaries (verification of the blocks, verification of the transaction, wallet management). These are compensation mechanisms that are fundamental for these decentralized security systems without a central authority. But it doesn’t have much to do with the relationships among equals brandished by would-be promoters of the peer-to-peer system — and much less to do with solidarity and with mutual assistance.

The blockchains currently in existence weren’t designed and planned to create social change, simply because they do not call into question any existing social arrangements. The system is guaranteed by the delegation of trust to the blockchain, which works because of the rewards bestowed, rather than by the guarantee represented by a central authority. The whole system is based on encryption technology.

It can be fun to play and experiment with it. It can be useful in some circumstances, but we have to understand that we’ve lived for a long time within a utilitarian culture in which companies function based on profit. To believe that our problems can be managed and resolved by a computer technology means naively underestimating the power of big capital to take advantage of any technological advancement, beginning with the industrial revolution.

It means to rely on techno-political management tools without understanding that political life is the exercise itself on which any autonomy and any self-management is based. It would also mean not having understood the fact that the relationships between equals are based on building reciprocal trust, on acknowledging and valorizing personal differences and those of others. The necessary reference is to what is written in the eighth and ninth books of Aristotle’s Nicomachean Ethics, the pages dedicated to friendship. This is the only way in which a radical social transformation can happen. Not by delegating it to a technical automatism.

The rule of capital is exercised as an epistemic violence where the ideological code and the computer code are connected among themselves. As soon as you scratch the surface of the words of those who hold up cryptography as a panacea, even to solve the economic crisis, it reveals an anarcho-capitalist rhetoric aimed at sustaining the presumed irreducibility of private property. It’s a substantialist speech aimed at regulating the typical (but not always) white male’s selfish desire by brandishing its gun. Therefore, demolishing this toxic narrative becomes the priority. Evidently, to say these simple things today means to go to the root of the problem, or to be radicals.