The problem that 'crypto' actually solves
From ‘Cryptocurrency Titan Coinbase Providing “Geo Tracking Data” to ICE’, The Intercept, June 30, 2022:
Coinbase, the largest cryptocurrency exchange in the United States, is selling Immigrations and Customs Enforcement a suite of features used to track and identify cryptocurrency users, according to contract documents shared with The Intercept. … a new contract document obtained by Jack Poulson, director of the watchdog group Tech Inquiry, and shared with The Intercept, shows ICE now has access to a variety of forensic features provided through Coinbase Tracer, the company’s intelligence-gathering tool (formerly known as Coinbase Analytics).
Coinbase Tracer allows clients, in both government and the private sector, to trace transactions through the blockchain, a distributed ledger of transactions integral to cryptocurrency use. While blockchain ledgers are typically public, the enormous volume of data stored therein can make following the money from spender to recipient beyond difficult, if not impossible, without the aid of software tools. Coinbase markets Tracer for use in both corporate compliance and law enforcement investigations, touting its ability to “investigate illicit activities including money laundering and terrorist financing” and “connect [cryptocurrency] addresses to real world entities.”
Every “cryptocurrency is broken” story these days has a predictable theme: the real world caught up because the real world never went away. The fundamental impetus for cryptocurrencies is the belief of a bunch of people that they can’t trust their money with governments and banks – imagined as authoritarian entities that have centralised decision-making power over private property, including money – and who thus invented a technological alternative that would execute the same solutions the governments and banks did, but sans centralisation, sans trust.
Even more fundamentally, cryptocurrencies embody neither the pursuit to ensure the people’s control of money nor to liberate art-trading from the clutch of racism. Instead, they symbolise the abdication of the responsibility to reform banking and finance – a far more arduous process that is also more constitutive and equitable. They symbolise the thin line between democracy and majoritarianism: they claimed to have placed the tools to validate financial transactions in the hands of the ‘people’ but fail to grasp that these tools will still be used in the same world that apparently created the need for cryptocurrencies. In this context, I highly recommend this essay on the history of the socio-financial forces that inevitably led to the popularity of cryptocurrencies.
These (pseudo)currencies have often been rightly described as a solution looking for a problem, because the fact remains that the ‘problem’ they do solve is public non-participation in governance. Its proponents just don’t like to admit it. Who would?
The identity of cryptocurrencies may once have been limited to technological marvels and the play-things of mathematicians and financial analysts, but their foundational premise bears a deeper, more dispiriting implication. As the value of one virtual currency after the next comes crashing down, after cryptocurrency-based trading and financing schemes come a cropper, and after their promises to be untraceable, decentralised and uncontrollable have been successively falsified, the whole idea ought to be revealed for what it is: a cynical social engineering exercise to pump even more money from the ‘bottom’ of the pyramid to the ‘top’. Yet, the implication: cryptocurrencies will persist because they are vehicles of the libertarian ideologies of their proponents. To attempt to ‘stop’ them is to attempt to stop the ideologues themselves.
