The relatively recent rise of cryptocurrency, championed by Bitcoin, is intimately bound to the alluring promise that one may conduct investment without the manipulation of banks. The main selling point is therefore: divest from governmental control and place your future in your hands. Against a backdrop of currency inflation, central bank interventions, and careless government spending, this promise can easily start to make a lot of sense.
‘Thou shalt not regulate’ – The Libertarian paradox
A core reason why the promise of cryptocurrency is effective is that it picks on a particular paradox of the free market and assures us of a way out. The paradox is that a free market is supposed to generate the biggest amount of wealth with the least amount of intrusion, but then, as soon as the capital-generating machine is organized, the system will require regulation in order to preserve the status quo of that same machine.
Our society and its structures are built on the ideology of capital: the banks and stock markets which make the running of the current system possible have thus become so vital that we proactively legislate to protect them and even bail them out when they crash. Unwilling to accept this paradox, libertarians blame the eventual economic fallouts on the regulations and refuse to recognise their symptomatic origin. In other words, regulations are also the inevitable product of the monopolizing quality of the ‘alpha-capitalists’ that triumph in the free market meaning that if the market is not regulated by governments, it will become regulated by the corporations.
The perfect compromise, by which libertarians would not have to admit this paradox, would therefore be a free market that is regulated by unwritten rules, that is, by rules which we all pretend not to be there but which nonetheless are in force. In this sense, libertarians constantly seek to deny the symptom by ‘revolutionising’ the economy and, in a moral language, restore the lost freedoms. And the latest freedom-restoring invention is none other than cryptocurrency.
And, I claim here, they miss one crucial point: Your wealth is still far from being safely and immutably in your hands.
1. Liberty depends on a collective fetish
The absence of a central bank that determines the value of the currency leads many to the hasty conclusion that the currency’s value is free from manipulation and is therefore somewhat intrinsically grounded. Cryptocurrency is in this sense presented as the Kantian Thing-in-Itself: that which exists independently of us and which we have to try and get to study and know with our limited subjectivity. It is thought to have a life – and therefore a value – of its own.
What this attitude tries to hide is that cryptocurrencies are still – as their name humbly admits – currencies. In other words, any value that they have still depends on a social construct. It still involves a commodity fetishism by which something only has value in as far as we act as if it has an agency of its own (we simply buy and sell it). What if next time, instead of Coca Cola, another Ronaldo or Musk-like influencer decides to throw away Bitcoins on TV, just because he has convictions against it? Soon after we would be reminded that our future is in fact also in the hands of those who can influence what people want to buy and sell.
Therefore, it is no wonder why proponents of Bitcoin spend so much time and energy trying to bring us to an economical salvation with a quasi-religious messianic passion. I always end up telling myself, how kind of them it is to make it their personal mission to save our financial souls before the economic rapture unfolds, and invite us to hop onto the ark of crypto-currency that will save us from the flood. But the reason behind this is that this ark, like any object that has no intrinsic life of its own, must be given animation, fetishized, with nothing more than our collective beliefs. We thus discover that we have to save ourselves – or more precisely, our pockets (but what’s the difference now anyway?) – by regulating and coordinating our beliefs.
The freedoms of the individual require a collective fetish and the prophets of freedom are thus exposed as pastors of an ideological sect.
2. Liberty is the prize of a gamble
Cryptocurrency is anything but revolutionary as it is built on exactly the same capitalist logic that currencies and commodity exchange have been applying for centuries: the promise of a surplus wealth that would be earned following speculation on supply and demand. In other words, the surplus value of trade is not meant to be the result of tangible added value (e.g. adding material, knowledge, craftsmanship) but the result of selling back the same thing that was previously bought at a lower price due to changes in market behaviours.
My point here is not to advocate controlled economies or market restrictions, but to build on the previous point that cryptocurrencies are economic fetishes which have an intrinsic economic value only as much as the statues in churches have a divine essence.
Think of the stereotypical low-income individuals who employ their knowledge on sports to bet on the outcomes of football matches; or the more literate middle-class men who employ their knowledge of the market to bet on cryptocurrencies. In both cases, the individuals find the confidence to place their bid and act as if they have total knowledge by filling the knowledge gaps with the assumptions of social convention. In other words, the football-punter hopes that the there is no match-fixture that would skew the result he predicted, and the stockbroker hopes that no cultural or political event will disrupt the projected value of the commodity they are betting on. They both believe that the social contract will be respected by all and that a status quo will be maintained, when in fact, they both depend on the whims of what Ronaldo does, in the match and after.
It is due to this, that we can be sure that cryptocurrencies will, at the end of the day, also demand a status quo in markets, society and politics. We can thus classify them as another form of pseudo-revolution.
Their highly-praised features of de-regulation and de-centralisation, which are supposed to liberate you, in fact provide no additional freedom from the whims of an unpredictable society. In this case, the libertarian will start perceiving the threat to freedom, not in trade regulations, but in society itself.
The paradox of an unregulated free market is what the libertarian does not grasp, for they see the market as an inherently benevolent and a Thing-in-Itself. For this reason, their obsession on de-regulation easily trickles into the social sphere which, ideologically-speaking becomes a new form of regulation of beliefs and norms. In other words, as soon as we realise that the market cannot liberate us, we will try and modify our conception of freedom in order for it to fit the intrinsic value of the market. The actions and beliefs of some individuals start to also be considered as a threat to our freedoms and the liberty paradox unfolds further.
Let us assume that – being the freedom-loving creatures they are – libertarians will not resort to restricting social behaviour. In other words, let us assume that they will not try to patch things up once again. Then it becomes obvious that cryptocurrency offers no additional freedom in the form of security, to private wealth, for the value of what we own will remain contingent to what an influential few decide. This is made clear once we consider the waning power of governments when compared to corporations and media influence which can now single-handedly bring the stock exchange to its knees.
Hence, far from being a revolution, cryptocurrencies are in fact nothing more than the symptom of the transfer of power that Western governance is undergoing. Power is neither being devolved nor decentralised, which means that the individual is not receiving any additional liberties. At worst, liberty in the form of a cryptocurrency will result in the regulation of social life. At best, it is simply an ideological tool to explain this shift in power, so that the economic system can in fact keep on running.
3. Liberty varies with climate
It goes without saying, that one would be tempted to argue that the government’s charismatic force (or lack thereof) is being transferred to the human face of influencers on media whereas its bureaucratic machinery is being occupied by stockbrokers and entrepreneurs. Yet the claim that we are moving towards an unstoppable transfer of power away from the traditional government has its limitations.
As tempting as it might be to declare this shift, the observation would definitely be Western-centric. The argument would assume a point of view that ignores the rapid centralisation that is happening in rising authoritarian powers in the east, particularly in China. In other words, the financial choices we are ‘free’ to make are also determined by global trade.
For example, it is worth noting that the West has a trade deficit with such a giant as China. This means that our choice of currency does not depend only on the decisions made by the domestic governments which we are trying to be free from, but also by those of such powers as China. In other words, if China refuses to sell us its cheap electronics in exchange for crypto, we will have to keep on believing in whatever currency China demands, and buy with that.
Given the doubts on whether China, in its centralising and hegemonic efforts, will even carry on regarding the US petrodollar as a main reserve currency, one can hardly imagine it recognizing the currency of the “free” people (i.e. cryptocurrency).
In this light we can understand better why an influential multi-billionaire such as the Alibaba founder Jack Ma had to be politically quashed by the Chinese government and why we can expect to see the same government repeat these restrictions upon other tech giants. The Chinese government will not allow a culture of influencers and economic giants take the control away from it.
While the contingencies of global politics are hard to predict, what still comes out of the above observation is that the belief in crypto currency remains dependent on the belief in personal liberties (including the freedom from the government), whose interpretation may very well change according to security needs – including those of Western countries.
It might be that Western governments will crack down on cryptocurrencies in order to give strength to their currencies against the digital Yuan; or it might be (although less likely to happen) that central banks lose so much of their clout that Western governments embrace crypto currencies to make of them the symbol of the free world (thus ironically embracing the Chinese fantasy that economic freedom is equal to political freedom). Yet in any of these two scenarios – or perhaps a third will unfold – the developments will be framed as the natural choice respecting “freedom”, which will act as a moral anchor point for the war that is to come in one form or another.
In short, the fetishized liberty that cryptocurrencies promise is intricately tied to the notion of sovereignty: The conundrum of sovereignty is , of course, that the boundary which separates us from our neighbour – and within which we are said to be sovereign – also requires the external recognition of that same neighbour. In other words, the financial sovereignty that many libertarians envision, remains dependent on the trading partners’ sharing that same belief.
Libertarians still have to confront the fact that they propose an oxymoronic dependent sovereignty, a determined liberty.
4. Liberty is a fantastic trap
Liberty in the form of fantasy is what in fact ends up, paradoxically, ensnaring us. Applying Lacanian psychoanalysis, we can identify the promised returns on investment as being both the object of desire and the object-cause of desire.
Think of the investor buying bitcoin. He or she is not performing one endeavour that secures their own future, but must further invest those returns in order to update them for the impending contingencies of social developments The investor does not buy bitcoin to secure their wealth, but, from the moment of committing to the purchase, they must thereafter remain on the lookout for any socially- or market-driven changes that will jeopardize that purchase.
In other words, profit is not a goal in itself, but a fantasy that is meant to reproduce itself ad infinitum in order for the investor to keep on ‘enjoying’ that desire by never reaching it, like a game which promises a final boss in some vague future update.
I therefore find it somewhat ironic that the freedom of investment-returns, requires you to commit to a perpetual securitisation of that freedom.
Am I advocating that you stick to Dollars, Euros or Yuans? Not really. There is nothing to advocate in this case. All that was said so far is simply a reminder of conventional wisdom that an object has two values, that which is promised (as part of a dream) and that which eventually materialises. And what there certainly is not, to the displeasure of most, is a value that exists in itself.
If one prefers to invest in cryptocurrencies over to other currencies or commodities, then that is a simple financial choice conducted in the same way that any other investments were made for centuries. But to call it a step towards liberty or security is nothing short of an ideological practice, a fetish that markets itself through a pseudo-revolution that purports to be widely-held (remember, the more people believe in it, the more its value becomes real).
Hence, the conclusion is, there is no ultimate bullion onto which you can anchor your liberty. The notion that liberty can be rooted in property remains the libertarian’s fantasy. Moreover, the notion that liberty must be further secured by means of control over social practices remains an authoritarian counter-fantasy. Both may turn out to be two sides of the same (Bit)coin.
Due to our dependency on fetishes, we can never be free from each other. Nor from our own fantasies.
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Addendum: Sacrificing the environment for an alchemy of liberty
There remains a further note that I had to make without disrupting the flow of the essay, for which reason I am placing it at the end. It concerns the relation of capital with the environment.
The social fantasy of cryptocurrency involves the taking away the ‘currency’ aspect (which concept is infamously shrouded by insecurity) and replace it with the promise of an intrinsically-valuable commodity. The lack of any revolutionary aspect is precisely in its commitment to a design that so religiously follows the logic of present capitalism.
In other words, cryptocurrency asks us to move from a currency bound to the extraction and trade of fossil fuels (such as the dollar), to a currency based on the ‘mining’ of virtual commodities that require a massive input of energy. It is hard to not see the fetishism behind a gamified virtual commodity by which we pretend to generate wealth. And, in order to make the pretension more real, we figured that we must waste vast amounts of energy and more of the earth’s resources.
Yet ironically, this is precisely why cryptocurrency entices libertarianism so much: the doctrine is concerned exclusively with the form of justice required for a transaction between two sovereign parties. Yet it typically refuses to acknowledge that there is a third stakeholder that has no choice but to participate, and has no negotiation power: Earth. It is as if we could not take cryptocurrency seriously if it did not require an actual waste of resources to solve the algorithms of the game.
Of course, this makes it convenient for those who, like most of us, would never exploit the earth’s resources (be it for moral or entrepreneurial reasons) but would willingly purchase them in the form of packaged commodities. And it is in this manner that cryptocurrencies can be accepted by the wider market: in an environment of rapid transactions, the morally-dubious act of extracting resources, is quickly laundered through a series of subsequent legitimate transactions by which the original exploiter is barred from view and the commodity is thereafter enjoyed by the rest nonetheless.
The success of any game, such as the crypto-rush, resides precisely in our attachment to fetishism. That is, we enjoy imagining the agency and power of inanimate objects, simply because in doing so, we do not have to reconsider our morals and what we value, because the object is said to have a value in and of itself.
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