Cryptocurrencies have politics

But not the ones you might expect...

The title is a shout-out to Langdon Winner’s Do Artifacts Have Politics?

A common assumption among many cryptocurrency true-believers in the West: blockchain technologies will inevitably shift in power away from states, or at least away from states as they are today. Even among well-informed skeptics, the popular conception of cryptocurrencies is that they all embed a right-libertarian politics.1

Here’s a counterexample: the Chinese Communist Party’s state-backed blockchain infrastructure.2 The CCP quite explicitly wants to use this infrastructure to build a digital currency that the People’s Bank of China (PBOC) can control.3 4

In general, new technologies create new power vectors for the usual suspects. If the PBOC does make a digital currency, they’ll probably run it themselves, perhaps in conjunction with a select group of trusted partners. (That’s precisely what Facebook initially wanted to do with its Libra currency).5

Central banking isn’t the only use-case for national blockchains, either. Governments of all types may end up managing legislative processes, court proceedings, property records, and more on blockchains—purely for practical reasons: someday, maybe already, they’ll be cheaper to maintain and easier to secure. Estonia has already begun that project.6

Radically non-geographic citizenship…

If I had to, I’d guess that the future of citizenship won’t be so tightly coupled with geographic territory. Structures like decentralized autonomous organizations (DAOs)7 can replicate states’ bookkeeping roles; ensure particular legislative or voting procedures occur; provide processes to modify those procedures; etc. They can manage taxation and benefits. They could perform functions similar to those of states and need not be mutually exclusive with traditional state citizenship.

…but run by the usual suspects.

DAOs may replace state functions, but they may not replace state power—or even today’s national identities. Unless some broader social movement starts actively using DAOs right now, I assume they won’t. States will project their power on the blockchain just like states project their influence on today’s Internet. Estonia’s already on its way.

A final note

Proof-of-work chains (like Bitcoin and Ethereum) have a disastrous impact on the environment. That includes most NFTs,8 which typically run on Ethereum. Proof-of-stake chains have radically lower energy requirements, and they’re very much here today: Cosmos, Oasis, Mina, Akash, and many others.