Cryptocurrencies and Corpocracies

Cryptocurrencies are not libertarian. To be sure, aspects of cryptocurrencies, and the blockchain technology on which they are built, resonate profoundly with the libertarian ideal, but the resonance of one’s soul with an idea does not engender the resonance of theory with reality.

When I wrote my essay, “Cryptocurrencies are not Libertarian” (I’m not very good with names), I made three arguments: 

1. While the value of a cryptocurrency, and its issuance, are not controlled by the state, this is not dissimilar to how ‘traditional,’ currencies already work. The value of floating currencies is already determined by markets, while issuance is partly the result of fiat money mechanisms. Furthermore, this infrastructure minimises the role of any individual. 
2. Cryptocurrencies are not as anonymous as cash, for any transaction is recoded on a publicly viewable ledger. Further, the benefit of anonymity in terms of data protection and preserving freedom of choice are better achieved by the existence of a legislative body that can exercise power over bad actors and protect individuals. As such, anonymity is a false prophet telling a bad story. 
3. Where anonymity may be valuable is in protecting those who are performing illegal acts, or acts deemed damaging to authority. Yet, in such scenarios, cryptocurrencies serve only as tools to facilitate activities, and the real libertarian debate is around the prohibiting of activities. We should not conflate cryptocurrencies as tools with the political question of the legal authority of states.

I maintain cryptocurrencies are not libertarian. But the belief, which I might call myth, that they are is not only dangerous insofar as it captures the minds of those of a particular political persuasion in the same way gold does doomsday preppers. More subtle dangers exist; dangers which, to be sure, exist whenever new technology grabs hold of enough people’s imaginations. The danger is appropriation.

Appropriation

Reading Evgeny Morozov’s The Net Delusion, one could be mistaken for thinking the whole point of the book is to attack the foreign policies of (Bill and Hillary) Clinton, Bush and Obama. At times a slog, the premise of the book is rather simple: the power of the internet could be utilised by the bad guys as much as it could by the good.

For Morozov, the West’s reliance on the idea that the internet would supercharge the voices of dissidents and freedom fighters is folly, and almost predictably so. Dictators and totalitarian governments possess the raw force and infrastructure to assert their authority on the ground and invest in building up their authority online. While journalists and activists are given a platform to share their ideas, and while this surely annoys those they are attacking, the impact can be minimised – if not eliminated – by an army of bots, entertainment content and surveillance strategies. While the internet gives everyone a platform to speak, it is still hard and soft power which determines who is heard.

Might cryptocurrencies suffer the same, appropriated fate? I think so.

Now, the possibility of cryptocurrencies becoming dominated by states, totalitarian or otherwise, is not enough to support the claim cryptocurrencies are not libertarian. Equally, and by the same logic, the possibility of cryptocurrencies, either presently or sometime in the future, being libertarian is not enough to argue that they are. The internet, on paper, is a wonderful tool for the liberation of oppressed peoples, and for some it will be. But every opportunity to liberate is another opportunity to oppress, and oftentimes this is the case.

Cryptocurrencies may be – relaxing some arguments – a tool for liberation from various economic systems (if this is the argument you want to make, I will not stop you. My comment here is still, however, rather critical. Most people who make this argument seek only to re-forge the present economic system, rather than engaging in the more interesting question of how the technology can radically design the way we do things), but they may also be tools for the crystallisation of economic systems.

We do not know what will happen, because – as many in the cryptocurrency community are wont to tell disparagers – the technology is so new and dynamic. But let’s take a lesson from the internet, and indulge some fortune telling.

In my essay, “A Modest Proposal for aNew Social Media,” (again, I’m bad with names, and not being self-referential, apparently) I argued the future of social media will be one that integrates cryptocurrencies. This was to be a solution to an agency problem arising from the semi-unilateral harvesting and profiting off of data (semi-unilateral because a) it is necessary to provide data to use the site, and thus consent becomes a dubious thing, and b) your individual data appears meaningless when combined with millions of others’, but it is the uniqueness which gives the data value).

The idea was as follows: the social media site has a cryptocurrency, and each user receives a small payment in this cryptocurrency for engaging in content with the platform, such as liking a post, commenting, status updating, and providing basic personal information. The site would have basic currency sinks to regulate the economy of the coin (like selling personalised emojis, banners etc.), but would also have a shop where users could buy discount codes used for real-world purchases. For the provider of these codes, they would receive invaluable user data; the social media site would receive a share of the transaction when the code is used; and the user would receive payment for the ‘sale,’ of their data. (For the record, I think this would be a cynical way of fixing social media and our relationship with data, but I also believe this is a very doable and – somewhat lamentably – appealing idea to both regulators and Silicon Valley bosses)

Is this a realistic prediction of the future of cryptocurrencies? I am confident when I say this prediction will be inaccurate in several areas; there will be a revenue stream missing from the concept, or a transaction stage, or something inane like that. But is this prediction wholly unlikely? I think not.

We already know, for example, Facebook is planning to launch a cryptocurrency, possibly as early as this year. Amazon already has a token of sorts with Amazon Coins, and for sites like YouTube a cryptocurrency payments system could be an effective way of encouraging content creators without relying on advertisement revenue. Services such as Uber and AirBnB could surely leverage the advantages of cryptocurrencies too, and for many investors in the technology, this is very much something they hope will happen. But for libertarians, is any of this good?

Metallurgy or Alchemy?

In Adam Smith’s the Wealth of Nations, the process of coinage is discussed a lot. It’s an important discussion, because for Smith – whose book concerns wealth – knowing what money is, where it comes from and why it means anything are vital questions. Many libertarians like cryptocurrencies because they don’t come from a central bank or government; the price is determined by the market, of which they are a part; and the supply is limited to the amount that has been ‘mined,’ at any one time. Ultimately, when considering libertarian ideas as a nexus of power, no single authority has absolute control over a cryptocurrency.

Of course, ‘traditional,’ money used to have a similar laisse faire approach. When coinage was as much about weight and purity of metal as it was about the ability to transact with it, anyone with a sufficient quantity of silver or gold could produce their own money, and this would be essentially as valuable and useful as money produced by a central authority. And they did.

The economic problem – or benefit, if you are of the libertarian persuasion – with this, of course, is power. The person that owns a lot of gold has a tremendous amount of power over the state apparatus, and if many gold-owners get together, they can completely diminish the power of the state. For the state, it is better to use its authority to outlaw the private manufacturing of money and purchase raw materials for coinage. In effect, the state assumes the monopoly of coin minting, and all the economic power that comes with it. (For the gold-owners, it should be said, they benefit too, by – for example – having a state apparatus that guarantees the value of the money in their pockets and saves them the effort of turning all their gold into coins, before convincing others their coins are worth using as currency. In effect, the state can make markets through its perceived legitimacy which individuals cannot – again, this is a key reason why cryptocurrencies aren’t all that libertarian)

Importantly, what’s being described above is the process of monopoly formation that can arise in any unregulated market. The emphasis on money, rather than any other, ‘good,’ is that money is present in every market. The authority to issue money, therefore, extends to the authority to enable the formation of markets in other areas.

The word corpocracy is often the reserve of science-fiction writers. It refers to a system of government where a person’s rights and liberties are a function of their wealth and ownership; rather than one person, one vote, it’s one share, one vote. The natural rise of companies to supranational size invokes, at least for me, imbues thoughts of corpocracy. Likewise, Leigh Phillips and Michael Rozworski’s book the People’s Republic of Walmart emphasises how modern corporations now rival states in terms of power and resources (and, they argue, this undermines the free market idea that centrally planned economies cannot work).

Quite what the libertarian view on corpocracy is unknown to me – modern libertarianism often seems more about doing what one likes but presently cannot do than it is about critiquing whole systems of power which its anarchist cousin does excellently. My gut instinct, though, would be opposition; the rule one share, one vote, necessarily deprives those with no shares of any right to vote, which is wholly non-libertarian. Maybe we mandate everyone has a single, unsaleable share, but isn’t the mandate of unsalability itself non-libertarian? Quickly, one ends up walking around in circles, so let’s return to cryptocurrencies.

The hypothetical social media site has a monopoly on their cryptocurrency, and by extension determines the value of all data, and all things in their marketplace. Imagine if we decide 1 like is worth 1 unit of our cryptocurrency. Why? Who says our likes are worth that much? And if so, why is sharing something worth, say, 2 units, or a comment worth 3? And why is the discount code I so desperately want worth 1,000?

Facebook will never pay users in pounds or dollars for their likes and shares, because that places the value of the data they want into a medium they do not control, and it is control that is the true value of the cryptocurrency, and indeed, of money generally. Similarly, Facebook will never allow you to sell your tokens for real-world money, for that would imply an exchange value and produce the same problem. They may, however, allow you to buy their token for real-world money (this may also imply an exchange price, but here Facebook controls the supply of the token; previously they do not) or trade your token for other tokens, say Amazon’s token. Such partnerships seem likely, firstly as a way of avoiding anti-trust laws, and secondly as a way of leveraging advantage: Facebook doesn’t know anything about the logistics which would be involved in a storefront, just as Amazon doesn’t know anything about social media; together they would be an extremely powerful online entity. (For the record, in my original essay, I specify some user-specific algorithm would be used to determine the value of a given person’s like, so that they could only ‘game,’ the system in a way that is beneficial to the site. For example, if I like 100 things, the value of my like falls, but it falls less if I have 1,000 friends rather than 10, and so on)

Do cryptocurrencies lead corpocracy? That question has two answers. As above, the future of cryptocurrencies is undetermined, but the myth of cryptocurrencies being libertarian and transformative may lead to us blindly allowing the appropriation of cryptocurrencies in ways that are wholly non-libertarian. This doesn’t have to happen, but early signs suggest it is.

The second answer is no, but corpocracy does necessarily require control of the means of exchange. The one share, one vote definitional slogan can be extended to a great many other things, including rights, and when the power of a share is elevated so much, it seems natural that shares become the means of exchange. In the sci-fi corpocracy, shares are essentially cryptocurrencies, but cryptocurrencies go one step beyond shares. Shares represent ownership, and so for shares to be used as a means of exchange, owners must necessarily reduce their ownership to supply liquidity. Cryptocurrencies, with no ties to ownership, demand no such thing from shareholders.

My fear of writing a dystopian nightmare

For a corpocracy to genuinely form, monopolies must be allowed to form, and a means of co-opting the means of exchange must exist. I do not believe corpocracy is our future, but just as democracy moves through shades of freedom, so too will corpocracy move through shades of reality (if not capitalism).

A problem with economic ideas is they often become characters in stories; capitalism is the tentacular plague that seeks to dominate people’s lives; OR communism is the tentacular plague that also seeks to dominate people’s lives. Neither capitalism nor communism are conspiratorial characters, and likewise, the motives of the powerful in any society are not quite so explicit as we might imagine them to be from a distance. The rise of corpocracy will not be a conspiracy to undermine democratic liberty and entrench the abstract concept of power in fewer and fewer hands; but corpocracy does highlight the ever-present tension between capitalism (or perhaps scarcity) and democracy.

For those invested in cryptocurrency (literally and ideologically), there is not enough criticality of what the technology will evolve into. Instead, there is simply the belief that evolution is always good. Equally, I think, for those who disparage cryptocurrencies, too often too few people ask the question, “but what if what I think doesn’t matter?” Cryptocurrencies, like the internet, and like many transformative technologies, will reveal societal tension which will demand a deft hand to navigate. The myth of libertarianism will leave this role vacated and old authorities will appropriate the benefits of the technology for their own means, just as the myth of liberation left many dissidents out in the cold while totalitarians appropriated the internet for their own advantage.

The point of this piece isn’t to attack cryptocurrencies, or the people involved with them, nor is it – as the subtitle suggests – to write a dystopian nightmare. Really, it’s to ask a question: if cryptocurrencies aren’t libertarian, what are they?

Cryptocurrencies are not Libertarian

Introduction

Beyond all those discussions which confuse or concern the financier and bemuse or excite the speculator, the prevalence of opinion that cryptocurrencies are a vehicle for the libertarian’s dream seems to be a point of great consensus. However, I contend, with little abstraction beyond ordinary observation and the same liberal thinking that should be familiar to my adversaries on this account, that the belief that cryptocurrencies are libertarian is in fact a myth; the victim of a miasma of technological optimism and general ignorance that accompanies any assessment of that which is new and unknown.

My arguments, and the structure of this piece, follow in what I believe to be the most logical order. I will begin by addressing the most common point of contention: that cryptocurrencies, being decentralised and anonymised, embody and facilitate libertarian values significantly more than traditional currencies might. I dispel this first argument by pointing to the benefits of cash.

This, of course, invokes retort in lieu of financialization and an increasingly cashless society. In such a world, I confess, there may be benefits to cryptocurrency; but only insofar as anonymity is concerned, and not as regards centralisation. Here, I argue, the general ledger system of cryptocurrency is simply a parallel of online paper trails which may be generated via online financial systems and offers little new to the individual. Further, I contend, the lack of transparency that may be associated with the creator of a cryptocurrency, compared with levels of transparency that may be found in a company or a government, serves as a further libertarian deficiency of cryptocurrency.

Finally, I address the silver bullet that is anonymity. Whilst I will not attempt to refute the claims of anonymity in this piece, I will argue that the libertarian’s placing of importance on the matter of anonymity demonstrate their misplaced concerns, with the regulation and legality of that which any currency might purchase, rather than the currency itself, being the correct target for libertarian efforts.

It is my sincere hope that the logical progression of my arguments might be ascertained from the above; certainly, it is my hope that by the end of this piece, irrespective of one’s opinion on the validity of my arguments, the process of these arguments’ development is clear.

Groupthink on Value

The state is the easiest enemy of the libertarian to identify. This, of course, is a simplification – if not an error – with entities such as the state being used to supplement more abstract ideas in layperson discussions. Yet, with the state more often than not cast as the enemy in libertarian discussions, it is the term I use here.

The libertarian benefit of cryptocurrency in the first degree is that the value and the issuance of units of value – namely the cryptocurrency – are not controlled and regulated by the state or similar financial institutions such as a central bank. Insofar as the things I have read and the discussions I have had, I have been left wondering why such a feature is exactly a benefit of cryptocurrency from the perspective of the libertarian; yet, given some thought, I propose two ideas.

The first is that a cryptocurrency not produced by the state, but rather legitimised via individual consent, may insofar as the philosophy of human value is concerned, better reflect the value of a given individual. Let me explain: irrespective of any labour theory of value, if the return to the worker in terms of a wage is denominated in a currency whose value is only acknowledged and guaranteed by the state, then the worker may feel like their value added due to their labour is detached from themselves. If the end product of labour is owned by the capitalist, and the return to worker is only valuable pending the approval of some entity other than the worker, what immediate role might the worker be said to have beyond being that of a puppet whose strings past from one set of hands to another?

The contention we might make in defence of the libertarian nature of cryptocurrency is that no entity such as the state or the central bank exists to give value to the cryptocurrency. Rather, the value of the cryptocurrency is determined – besides the costs of producing the currency – solely by the attributing of value by the holders of the currency. Our hypothetical worker, in a world where they may choose in what currency they received their wage, may be said to exhibit more liberty over their labour as it is their advocation of the value of the currency – much as they might advocate the value of their labour by pointing out the quality of their work – which gives the currency value.

The second, though only subtly different, argument that I suggest is that a cryptocurrency represents a choice on the part of the individual, rather than an imposition. In whatever country a citizen lives in, baring the rare exception, we citizens have never been consulted on what currency should be commonly used. We have not been asked what the currency should be called, what assets might back it, at what rate it should be exchangeable with another currency, and for what it should be exchanged and by who. This list is not exhaustive. Like a great many things that come to form the state – what we oft call institutions – we are born into them, with little individual power to really change them. Insofar as this might frustrate the libertarian, cryptocurrency perhaps offers a solution, if only for a small part of a larger structure, as they can choose almost all aspects of a cryptocurrency. An individual can be the creator, the central banker, the account manager, the publicist, etc. of a cryptocurrency, and regain some of that liberty that, if we are honest, was dubiously lost in the first place.

Yet I lament to say these supposed benefits offer little more than a perception of enhanced liberty, and, in actuality, demonstrate little difference between crypto- and traditional currencies. My primary point of refute on both charges is that the mechanism by which the state deems a currency to be valuable is identical – practically speaking – to how an individual deems a cryptocurrency valuable.

The question of what a state is is beyond the scope of this piece; it is sufficient enough here to say a state is an identity which a large enough number of people subscribe to such that – if this identity were to be challenged – the constituent parts could defend in one way or another their advocacy for that identity. The provision of defence is necessary for this point, for it is what we might call the weight or the clout of a state which allows the value of a currency to become accepted and maintained despite the objections of any given individual. Indeed, we need not consider a state, but simply two individuals, to understand this concept. The value that the owner of an item assigns to that item can be any value they choose. Yet if they desire to convert that item into another item of the same value, they must find other individuals who are in possession of the desired item, but who also acknowledge the value of the owned item.

In other words, whilst the individual might desire and – in isolation – be able to prescribe a value to themselves, their work and their possessions, it is only through the acknowledgement of value in such things by others that gives those items any semblance of objective value.

In both benefits, whilst an individual may feel a sense of liberty from choosing to use a cryptocurrency over another unit of value, there is no legitimate claim to the individual giving it value. Instead, the individual must rely on others to recognise the value of the cryptocurrency in much the same way a state gains the legitimacy to guarantee a currency. I dismiss any arguments of subjective value: should an individual be able to survive based on their subjective valuation of things alone, then there is logically no need for a cryptocurrency, and thus no benefit to be gained, as that individual is already master of all that which they require, and may – it is hoped – always be able to strike a deal with oneself on the price of a good.

If these are the only benefits, insofar as libertarianism is concerned, that can be gained from the decentralised structure of cryptocurrency, then I must conclude presently that cryptocurrencies offer no libertarian benefit as they, as with traditional units of value, demand the acceptance of value from others. One might, I concede, gain benefit from the feeling of choice that cryptocurrencies allow – ignoring the lack of markets where cryptocurrencies may actually be used – yet I contend that few individuals would find such feelings satisfying when faced with the reality of a valueless asset.

Considerations of cash, credit and consent

We shall return to arguments of state and decentralisation. It is now I would like to turn -  having established the commonality of traditional currency and cryptocurrency in terms of value – to a discussion of anonymity and cash. This argument, I believe, is a very simply one.

Whilst I cannot deny the anonymous nature of cryptocurrency, I feel compelled to defend traditional currencies against the claims of the libertarian that traditional currencies may not be similar. Let us make one thing clear; insofar as there is any substance on the matter, my decision to enter a store and purchase an item with cash preserves my anonymity. Should such a purchase be performed on credit, this statement is disputable, yet I will address such a dispute shortly.

First, however, it might be argued that my statement is false as there are repercussions to my purchasing an item with cash that do in fact infringe my anonymity. Is it not the case, it might be supposed, that my anonymity is tarnished by those who see me entering the store; by the shop workers who facilitate my purchase; by the cameras that capture my image and store it for as long as interested parties desire? I cannot deny these activities as being necessary for any purchase to occur; but let us think rationally.

The concern over cameras, for example, is an issue of liberty, but it is not one that concerns the means by which I purchase an item. For the libertarian to take aim at the cash in my pocket, rather than the surveillance utilised by others, is to mark such a person as senseless in their priorities. Of course, there remain others who might identify me in the process of purchase; who might destroy my anonymity. To this point, I feel compelled to express sympathy to any person who imagines this to genuinely be a problem worthy of concern. Is not the alternative – again, irrespective of the currency used – to be a hermit, to hide away in self-imposed isolation such that some mystical notion of anonymity might be preserved? Is it not a foolish admittance of desperate anti-social behaviour to argue the witness of others threatens one’s anonymity, and thus strengthens the libertarian claims of cryptocurrency? I think so.

What might strengthen these claims, I do admit, is if such a purchase is done on credit. Before all else, it is necessary to explain why such a method may infringe my anonymity. To this point, I offer a discussion of consent. By virtue of it being necessary, I consent to the shop worker participating in any purchase I make from the store; further, in keeping with the values of individual liberty which any reasonable person will accept, I accept the reality of others seeing me when I make me way to and from the store; and I consent, as part of my obligations to purchasing an item from a store, to be photographed and recorded doing so. Even if questions of consent regarding these issues may still be raised, for the sake of our present discussion, let us allow for my consent on these things to be given actively and unquestionably.

To what activities do I consent to my credit card company doing with my purchase information? Let us be sensible: I consent to their handling of my money, requiring access to my financial information and knowledge of with whom I am transacting; I consent to their sending me billing information so that I might pay the costs of the service, and as such I consent to their having my address and again access to my purchasing information; and, by the act of being a customer, I consent to whatever fees are associated with their service.

I do not necessarily consent to a stranger, an individual at the credit card company, looking at, analysing or wantonly distributing my purchase information. Further, I do not consent to the company holding my data forever. These are valid points, and in establishing the boundaries of consent in any transaction, we might begin to see how cryptocurrency purchases may diminish the opportunity for our consent to be violated – for our liberty to be preserved. It stands to reason, therefore, that any libertarian benefit of cryptocurrencies must improve on the weaknesses of credit cards by – in my simple analysis – keeping my data private, even from the eyes of those who handle the data, and by keeping no record of my purchase, or at least a record which I control.

Those who are familiar with blockchain technology must acknowledge, either partly or wholly, that cryptocurrencies do neither. Let us consider the latter point first. Blockchain technology records the transactions between parties of a particular cryptocurrency in an online, distributed ledger. It is not possible, and would certainly undermine the innovative thinking behind blockchain, if a transaction could be removed off the blockchain. Whilst my credit card purchase might eventually be deleted off the company’s system or diminished within a literal paper trail of historic transactions, the blockchain ledger remains. One might argue the anonymity of a posting to the blockchain invalidates this point – indeed, at this time I have no rebuttal which I would dare to call strong – but one also cannot deny this is a weak defence of the spirit of libertarianism, predicated only on the infallibility of online anonymity.

The spirit is weakened in another regard: the blockchain is publicly visible. This is a necessary part of maintaining the sanctity on blockchain transactions, one that promotes transparency and which I applaud. Yet, when compared to my credit card transaction which could only be seen by those who had access to such data at the company, the spirit of anonymity, or the spirit of individual privacy, seems to me so much more publicly exposed by cryptocurrencies than alternative technological methods. In actuality, this claim might be dubious; but in actuality, again, one must surely see that the two methods are more similar than they are alien. If one is a panacea to a libertarian crisis, then is the libertarian not twice cured? If one is not, surely the libertarian is still sick?

But, allow me to interject one final point before moving on. I have offered the state as the enemy of the libertarian, though I have done so acknowledging this is an over simplification. As such, let us now complicate it: are not the issues of consumer rights regarding credit cards, of data access and distribution and security and so on, are those concerns not countered by state legislation? Legislation which, less we forget, does not necessarily exist with cryptocurrencies. From the simplified perspective of libertarianism, I agree this makes cryptocurrencies more libertarian; but even the famed liberal John Stuart Mill, and a great many critics thereafter, acknowledge that some legislation and regulation may actually preserve and enhance liberty! Such laws as govern the treatment of consumers and their data give me confidence to use credit cards, allowing me – through such use – to exercise my liberty. It is not my contention, but it should not go unsaid, that concerns regarding the security of cryptocurrencies may infringe a person’s capacity to exercise their liberty.  Such a thought requires addressing by those advocates of this whole libertarian affair.

Returning to question of state

The above is perhaps a preamble as to what I would like to discuss now. Partly as an aside, but yet I hope soon obvious, is mention of the irony that so much surrounding cryptocurrency seems to be applicable to that old adage of two sides to every (bit)coin. We have seen it above, to various degrees, be it the similarities in value mechanisms between traditional and cryptocurrencies, or – as I would contend – the false positive claims of greater liberty through reduced regulation.

These debates, these positives and negatives and the ensuing tug of war for argumentative dominance are not surprising when we consider that questions of liberty are messy, if for no other reason than perspectives bend and break, switch and grow, and what one might consider perfectly acceptable, another considers abhorrent, and so on. Nothing is new here, though I remind the reader the state most often is the subject of many disparaging remarks in these debates. I speculate, if I might for a moment, that this is because – almost ironically – the state is the great unifier; the omnipresent other of which we all know intimately, and yet inevitable feel detached from. Perhaps, I suggest, even those individuals who find great strife with one another may unite against the state should it attempt to deny the warring peoples their strife.

Above, I offered the state a reprieve. I now offer it another. A strong, positive argument for the proliferation of cryptocurrency is improved transparency. Ignoring the distant laughs of tax authorities and criminal enterprises, the blockchain does seem – at least theoretically – to promote transparency of exchanges even if the exchangers remain anonymous. Compared to the great behemoths of the state, of central banks and the financial industry more widely, we should acknowledge the beauty of the blockchain idea.

It is necessary, however, before proceeding, to clarify why the question of transparency is crucial to the libertarian debate. First, liberty insofar as the natural sciences allow, and its denial, requires someone to deny said liberty. One can deny their own liberty but may just as easily reclaim it; it is only through the interaction with others that a person’s liberty may become diminished. Secondly, I would argue that any interaction with another in some way reduces a person’s liberty, be it through violence or obstacle or the then-established prejudices of another, the initiation and continuation of a dynamic with another reduces a person’s liberty (it may, of course, enhance their liberty. My point should focus more on a person’s changing sense of liberties; where one door opens, another may close. That person is not necessarily worse off than they were previously, but they are changed, and insofar as they don’t want to be changed, as they desire to return to a time without the bonds of this connection, they are left stranded. More, of course, could be said of this issue, but it is not the intention of this piece to do so). This though, is not necessarily a matter of moral repugnance. If the reader will recall, I may consent to the restriction of my liberties to assume various benefits from compliance, or to adhere to my own beliefs. Considering all these things, it follows that the entity which seeks to deny us of liberty must be sufficiently transparent for us to consent or reject the entity. This notion, loosely, is an abstraction of the Rawls’ (1971) publicity principle, an idea previously considered by Kant.

Now we may return to cryptocurrency. Cryptocurrency, it appears to me, solves the transparency problem by claiming to remove the second party – the party that is necessary to deprive a person of their liberty. Supposing this is the case, it is easy to see why many would call cryptocurrency a libertarian tool. Similarly, considering the bureaucracy of state – indeed, the very existence of the state! – those same individuals will surely argue that centralised institutions are abhorrently opaque, and thus fail a test such as the publicity principle.

I have demonstrated above, in regard to data security, evidence of this flawed thinking. I now offer my retort to this accusation directly. To do so, I ask a simple question: how might one be anonymous, and yet transparent? For all the rhetoric that may surround the state or private banking institutions, let us not forget we know who they are. I can, should my dissatisfaction become so great, change my bank, vote out my representatives, or indeed move to a different country entirely. I can write letters to CEOs and politicians whom I am disgruntled with; I can hold protests and write essays exclaiming my frustrations; I can, if I want, even challenge directly the positions of those individuals with whom I am so irate.

It is an insufficient argument to say that the state or a bank is too large to surely know which specific individual it is that is violating my liberty at that moment, for such a grievance may be handled in a manner that is sufficient simply by knowing the party or the bank with whom this individual is associated. Can I do the same with cryptocurrency? I cannot.

Whilst I can access the blockchain and perhaps see evidence of market manipulation, I cannot see which person or organisation is behind it. Whilst I can know exactly how much of a particular cryptocurrency has been mined, I cannot petition more to be realised, as I might be able to petition a central bank to increase the money supply. Note the difference: I need not know the person who operates the printing presses at the Bank of England for my concerns to be discharged at the bank generally; but given the nature of cryptocurrencies, my screams may echo into the aether. This is liberty, but only nominally. This is transparency, but only technically.

This argument is perhaps the beginning of my attack on the claims of anonymity, but I would rather consider it a defence of the merits of the state, of which I would hope any wise libertarian would acknowledge there are. If this argument feels detached from the rest of this piece, that is unfortunate, but perhaps inevitable. Let us turn, therefore, back to the claims of anonymity once more.

The correct target

In my introduction, I described anonymity as the silver bullet of cryptocurrency, a feature which serves a purpose and fulfils a promise of the technology that no rival has come close to dislodging. The promise of anonymity, insofar as the libertarian is concerned, is panacea, for it offers the chance for the individual to do whatever they like and not suffer the consequences of these actions. It is now, therefore, that we must address criminal activity.

Let me be clear here: it is not the purpose of this piece to levy a moral judgement on such activity beyond that which all civil society must surely agree is repugnant. As short commentary on this matter, I see no point in debating the content of this piece with that person so fanciful of the doctrine of libertarianism that they might permiss those activities that bring harm to others. This is not a clear line, as any scholar of the harm principle will know; but I take solace in the belief that at the extremes the colours are less grey. It is the person whose colour is much distinguishable from grey, and much the opposite of the average person’s, to whom I address my repugnance.

The anonymity of cryptocurrency enables individuals to purchase a whole range of illegal products and services online. By doing so, these individuals seem to circumvent the laws of society and insofar as libertarianism advocates the liberty of all people, this feature of cryptocurrency certainly seems initially to be libertarian. There will be, of course, those libertarians that do not support this argument; those who argue we should be granted maximum liberty within the confines of the law, law which exists for a valid reason. I recognise this perspective, despite having never myself met a libertarian who did not advocate some adjustment of the law in one way or another, and for this I am glad. Just as those who might permit repugnant acts in the name of libertarianism ignore the wider debate of what should and should not be legal, so too do those that only challenge liberty within the confines of the law, and do not push for debate – all be it from the opposite direction to their counterparts.

At present, I feel I am offering a reasonable defence for the libertarian nature of cryptocurrency as it allows individuals to interpret the grey areas of legality safely – by which I mean anonymously – which I will not deny may have benefits. But this, I contend, is actually a great weakness of cryptocurrency as a libertarian tool, and the impetus for the invalidation of anonymity as a worthwhile feature.

Remember the cameras. The anonymity of cryptocurrency is only necessary when pertaining to the purchase of illegal items because such items are illegal. If those items were legal, the narrative reverts to the isolated hermit terrified of the world, less common sense be allowed to take over. Anonymity as a feature is a result of the illegality of some items that may be purchased. As such, I suggest it is not libertarian to tout cryptocurrency as a libertarian tool; the liberal activity is actually the debate surrounding the legality or illegality of those items being purchased. Recall our discussion on the merits of cash; my purchasing from a store may just as well have been a purchase of illegal substances. Should I be caught, justice – rightly or wrongly – will be levied not on the means by which I purchased those substances, but on the act of purchase and possession of those substances.

It is thus the debate about the illegality of the substances that is relevant to the libertarian and should be the target of their efforts. Cryptocurrency, beyond the benefit recognised above, merely serves as a substitutable method amongst many others, and should not in und itself be considered the focus of libertarian attention.

But there is a further point to be had. The great defence of cryptocurrencies as being anonymous and thus libertarian crumbles when we realise that anonymity is only relevant when it comes to the purchase of illegal items, and in all other cases, be it the charge of transparency or of value, anonymity is perhaps harmful to the libertarian cause. Of course, I do not seek to belittle the debate; I simply charge libertarians with identifying the wrong area of debate – not the currency, but the item for purchase.

Let us debate the illegality of various things but let us simultaneously relegate cryptocurrencies to the realm of simple units of value. Let us not place anonymity on a pedestal, for anonymity – when necessary – may be found in all currencies and is only necessary in almost all circumstances when they facilitate the purchasing of illegal items. Anonymity is not a feature that should be touted and, insofar as questions of liberty are concerned, anonymity offers little practical benefit.

Concluding remarks

It is easy I believe to take the remarks I have presented here and see an author wholly opposed to cryptocurrencies. I am not. But, with an arrogance I fear has pervaded this piece, I charged some readers with ignorance at the start of this piece. I am surely ignorant also.

However, on this matter I stake a defence. Cryptocurrencies are not libertarian. This does not mean they detract from the libertarian cause, and it does not mean I am opposed to them outright. On the contrary, throughout this piece I have argued the features of cryptocurrencies often mimic that of regular units of value – a strategy I would contend may facilitate the widespread adoption of the technology.

But in far too many discussions I have heard this rhetoric repeated: cryptocurrencies have many libertarian advantages over traditional units of value. I hope I have conveyed to you why this is false:

1. As a means of value being determined, multiple people must agree on a value; as such, the individual is not free to set the value;
2. Cash is insofar as it practically matters as anonymous as a cryptocurrency;
3. Where credit is concerned, blockchain creates a record of transaction that – at least in spirit – fails to differentiate cryptocurrencies and credit;
4. Anonymity shrouds cryptocurrencies in shadows, making adherence to the publicity principle difficult and diminishing the individual’s power of objection;
5. Anonymity is only necessary for the purchase of illegal items, with such items being the true centre of any libertarian debate, rather than the means of purchase

In writing this piece, other ideas came to mind. But I feel, in one form or another, any objections that I presently have the power to predict may sufficiently find redress in the content of this piece.

If I may repeat myself once more: I am surely ignorant also. There is not a semblance of belief in my mind that I have the vision to imagine the future of this technology, nor the cognitive power to predict all the nuances attached. I only levy this one charge, based on the content of this piece: cryptocurrencies are not libertarian.

A Modest Proposal for a New Social Media

For many observers and commentators of the recent Facebook data scandal, now is the time to bask in smugness. Smugness, in one regard, because it is Silicon Valley (or at least a major member of it) finally receiving what some might consider to be comeuppance, but also because many will claim to have seen such a scandal coming. The logic behind the latter consideration is simple; with so much data, and so many users, eventually something would go wrong. Popularity, or perhaps frequency, breeds inevitability – a notion that we will return to.

The response to such a scandal, too, has thus far been quite typical of the current digital age, with hashtag movements seeming to galvanise the popular, if sometimes discreet, zeitgeist rejecting social media (irony, of course, pervades, namely, a hashtag campaign to rally against Facebook membership). Meanwhile, governments, who, in more ways than simply potential election irregularities, have felt marginalised by social media, embrace the opportunity to assert some legislative position, even if ultimately nothing transpires from these witch hunts (the use of the phrase ‘witch hunts,’ is not done with some hyperbolic tone as might be conceived; such investigations are supported, and the phrase has been used for lack of a better word).

It is valuable, and indeed necessary, in my opinion, that we begin to examine the role of a) social media, b) digital enterprise more widely and c) big data within the frame of the democratic and social contract. Such examination, I believe, was necessary even before the several high profile examples of dubious social media exploits that have brought these questions to the fore; whilst one should be sad that said scandals have occurred, one must be grateful of any progress given the unrelenting ferocity with which some imagined, ‘future,’ seems intent on imposing itself on society (again, I fear the negative undertones in my words; to be sure, whilst sceptical, it is poetic license, and not the entrenchment of a position, that should be identified from my choice of phrasing). Be it some calls for the public ownership of big data, or the application of anti-trust laws in the face of Silicon Valley behemoths, solutions, be them effective or fanciful, are valuable if only in acknowledging that there is a problem.

Yet, despite the themes alluded to thus far, a precise picture of what has and is happening does not appear clear. It is argued here, to an extent, this is because nothing fundamentally has changed in the way Facebook and its users operate. I think it is a helpful to begin by considering the impending crisis in social media (which, I would suggest, is not necessarily a crisis solely within social media, but also within big data regulation and anti-trust laws around tech companies) to that of the 2008 financial crisis. The parallels, though superficial at times, do, I believe, provide a reasonable basis of thought with which to proceed.

In terms that are far too simplified, the 2008 financial crisis was a failure from regulators, from government, and from individuals, in moderating the behaviour of massive financial institutions as they placed a vast number of moral hazard trades. Such hazardous morality was (and is, to an extent) found in their size and importance to society at the time. The collapse of the banking system challenged not only the financial dominance of the Western world, but also the civil authority of governments – certainly their political authority. Genuine fears of the loss of deposits (even if the threat of such lost deposits was not genuine, the fears certainly were), of home repossession and so on highlighted the importance, yet simultaneous fragility, of the financial system as a social institution. Whilst profit-motive was certainly a driving factor from the perspective of bankers, from the perspective of customers, their motive was to receive some fantastic benefit – say, a home – from the perceived progress and innovation within the financial system. They were sold an idea.

I suggest similar, all be it less apocalyptic, parallels can be drawn between the 2008 financial crisis and Facebook (amongst others) today.

Social media and the social contract

It is foolish to ignore the integral social role Facebook, Twitter and Google play in our society, even if the actual purpose or value generated by these companies within an individual mindset is limited or even possibly negative. The value of these sites is not in the services they provide per se; rather, value is derived from the ubiquity of their services. It is quite impossible to tell if Facebook is the best social media company, or Google the best search engine; but we are quite certain that a plethora of friends may be found on Facebook, and a sufficient quantity of relevant information found on Google. This is the tenet of big data – precision may be forgone, provided a large enough sample is available (precision is oft the word used when discussing big data – it is perhaps more appropriate to say personality when discussing Facebook or Google, amongst others). Equally, quality may be forgone, provided what remains is sufficient given present demands. This phenomenon, rather than traditional mechanisms of establishing monopoly, is how these sites have become embedded in our society. They do just enough, and those few that would like more, or at least different, are just that – few.

It is the popular premise that big data, harnessed via social media’s complex algorithms, can provide a social networking experience that offers genuine benefits to the user; an augmentation of a user’s social interactions with others for the better. Yet it seems unreasonable to allow a company whose business is the augmentation of societal interactions to exist outside of the social contract that governs all other social interactions, especially when the natural barriers of reality are blurred and belittled by digitised substitutes (it might be cute and amusing to see a company’s sassy Twitter response to a customer, but one should not forget that each retweet is also advertising, for example).

By engaging in this industry, one must accept their social responsibilities, and the moral hazards that are also brought forth, and act in such a way as to not defile the former and exploit the latter. Further, and in what will be discussed in more detail below, it is an insufficient argument to suggest that the lack of obvious equitable exchange between a social media platform and its users constitutes a means of invalidating the social contact; quite the opposite, I suggest: data is not currency, and as such, any exchange involving it must embed the tenets of trust and consent that follow a great many other interactions governed by the social contract.

If one still remains unconvinced that social media holds a social contract with us, or more generally that the movement of activities from reality to the online space serves to invalid any formerly present social contract, one need only ask oneself would they divulge the same amount of personal information given online to real world strangers? Would they post a photo of themselves in the middle of the town, knowing that photo is not just liable to be seen, but also stolen and exploited, by those one neither knows nor trusts? Perhaps, if all one’s friends had also participated, but then we must ask the question of who is validating the action? Surely a social contract still exists; not between oneself and the entire town, but between oneself and one’s friends, whereby faith in their judgement is levied against any other consequences. However, such an argument seems dumb – the fury at any und to ord consequences is surely to be levied at the person who steals the photo or hijacks the information, not the colleagues who advocate the advertisement of such things in the first place. And surely, by extension, the existence of any fury demonstrates a violation of something borne between oneself and this mystery villain – a social contract.

And thus, even if you would be willing to give tremendous amounts of personal information to a stranger, be it for apparent benefit, or via a friend’s recommendation, or both, one might only deny the presence of a social contract if an undesired – yet possibly permitted – use of that information does not invoke outrage, fury or despair. Given the furore presently surrounding social media, and what I would contend is a perceived undercurrent of distain for social media more generally – though, of course, I offer no evidence for this conviction – I believe my argument is sufficiently valid, at least insofar as this piece is concerned, to take that as evidence of the presence, and recent violation of, a social contract between social media and society at large.

Accepting that a social contract does exist between social media and its users demands, thus, that we consider how this relationship manifests currently, which is to say how are these companies presently embedded within society?

Where Twitter has enabled the public broadcast of a stray thought as would previously be limited to a conversation in a coffee shop or bar, Google has enabled the modern construction of Alexander’s library. Facebook has perhaps been even bolder, combining all which might be called media into a self-curated space – what I have previously likened to the invention of the soul. These companies challenge our notions of institutions, public and private, by leveraging promises of efficiency that what might be called terrestrial institutions could never possibly achieve. The impetus of such efficiency is, of course, data; and it is to data we now turn (it is not beyond me that the transformative nature of social media makes the former comparison between social media and the stranger on the street dubious, as social media may redefine what a stranger is and indeed force us to question where, or at least how long and wide, the street is. Yet I feel the comparison still serves a relevant purpose, if only insofar as it makes a complex digital landscape more rational for non-digital entities – namely humans – to understand).

To understand what role social media plays in society, we must consider how we and it interact, and – in what might be an economist’s unavoidable habit – perform something akin to a cost-benefit analysis. I first propose a simple idea: that the exchange of data, insofar as it might act like currency, for greater efficiency through the medium of customisation, is as equitable a trade as the exchange of dollars for bread. Supposing this notion is true, then it is not the case, as some might suggest, that the act of exchanging data is inherently bad. Instead, it is an act that is concerned with choice and trust. Returning to the financial crisis, the act of taking out a mortgage was not in itself malignant; yet the act of irresponsible lending – where choice was manufactured and falsified, and trust manipulated – produced a crisis.

In a sense, one might accuse the transgressions during the financial crisis of consisting of an irresponsible leveraging of social equity, leading to dramatic consequences when such an account was ultimately balanced. Similar, I propose, has occurred with Facebook. In utilising personal data to achieve desired efficiencies such as targeted advertising, the leveraging of social equity has occurred, and it has been disastrous. In part, I feel, because the recent exploitation of private data was done with intent and purpose, rather than simple neglect, damaging the sanctity of trust between user and site.

But in part also because data is not currency. The value of data is not in the collective belief in its value, as currency might be said to function, but rather in its specificity to an individual. In that sense, we cannot compare the risking of deposits on risky mortgage products with the careless utilisation of data for questionable ends as the bank notes – regardless of one’s depository claims – bare no intrinsic relation to the depositor in the process of utilisation, whilst the data always does. The attitude of treating data like capital which might be utilised to achieve profit ignores the fundamental characteristic of data, and as such perpetuates its misuse. This serves to demonstrate the apathy of choice; that any utilisation of personal data demands that we choose to have our data utilised that way, and in absence of that conscious choice we feel betrayed. Such a betrayal may not intimately be felt when our deposits are gambled by banks, as we choose to deposit a specific amount of money, not a specific type of money (which is to say, we do not care if the bank notes we receive on withdrawal are the exact same notes we deposit, only that the value of the withdrawal meets the value desired).

Thus, in considering how social media is currently embedded in society, I suggest the answer is immediately prevalent. It is the process by which social interactions are used to derive and ultimately combined with those that might seek to interlope on such interactions – advertisers, special interests, punditry perhaps – which forms the odd amalgamation that is social media, and thus that leaves us wanting. The exploitation of personal data on an industrial scale on the one hand serves to atomise the individual’s relevance and degrades concepts of choice and trust attached to their data (for remember, data is not currency; unlike the bank deposit that can be spent as the bank wishes, for their only obligation is to return the deposit upon request, personal data is only ‘deposited,’ in the context of the need expressed by the company, and as such any further use of the data, serves to violate the data in the context of the social contract).

If we are to fix social media, or at least address some of the issues and concerns that are coming to the fore, it seems necessary as part of a partial solution to improve a user’s perception of their choice when using social media, and to improve the trust relationship between platform and user. These things are, of course, only part of the solution, though additional problems, most notably the widespread use of misinformation online, receive significantly more coverage than the problems of choice and trust. Whilst this piece does not seek to belittle the need to solve the problems of fake news and clickbait (to give them their accurate titles), these problems may be implicitly tackled by improving the choice and trust in social media. Choice, in that rather than algorithms identifying those potentially more susceptible to misinformation (and any targeted information, for that matter) it is the user whose conscious actions consent to their viewing that information. And trust, for whilst any misinformation online is undesired generally, a user will feel more aggrieved at, say, Facebook, if they believe either through intention or negligence they are receiving false information and that they can’t trust the site to respect their data and/or their intellect.

A  modest proposal

Multiple ways of embedding choice and trust surely exist, and are accessible to those minds more inspired than I; I offer here a single conceptualisation. It is an inescapable fact that those who use social media must be subjected to advertising, and thus it seems logical to target this element of social media beyond all else. My idea is rather simple at the heart of it: allow users to choose what advertising they see, and show them nothing they have not elected to see. Of course, we must then ask the question: why would anyone elect to see advertising? The answer I propose is because it is part of a fair, equitable exchange.

Here is the crux of my proposal. Social media should implement a reward based system for users, allowing users to generate some sort of token currency, perhaps even a cryptocurrency (yet, at this early stage of conception, this seems to create more problems than solutions), from their regular activity online. This currency could then be taken to an online marketplace where users could purchase benefits from innocuous cosmetic items to perhaps real-world discount coupons (in lieu of cryptocurrency once more, such a platform seems odiously suitable for a product such as crypto-kitties). In purchasing these coupons, users would consent to these companies advertising to them on the site, and thus an equitable exchange of sorts may be seen to have been established (again, and with emphasis on the infancy of this idea, such currency might be used to pay for online news subscriptions, adding a barrier to entry for dubious sites to get onto social media feeds, and imbuing in readers an expectation of quality news given they’ve laid out their hard earned, shall we call them, clicks?).

Several problems present themselves, most notably, how might such a system be created such that it is not rife for exploitation and does not degrade the meaning of a like or a share. Additionally, how might the financial relationship be structured such that a click (see above), which seems to have even less inherent value than real world fiat money, translates into a pound or a dollar?

On the latter note, my initial estimation would be that the spending commitment generated by the selling of a discount coupon is greater than the revenue generated from even well targeted advertising. Of course, without such a system in place to test such a hypothesis, we are left to pontificate. On the former, I would task the hypothetical computer scientists and mathematicians to resolve this problem. Exploitation of the laws of diminishing returns built into complex and tightly guarded algorithms with currency sinks (see cosmetic items) to regulate this new currency market seem like one answer, yet again, such a system seems difficult to judge purely theoretically.

I am not beyond the slippery slope. The slow but promising rise of Sesame credit in the East seems wholly comparable to the click system proposed here, and must certainly raise the question of where would it end. To regulate a secondary market in coupons, for example, a unique user code tied to each social media account may be necessary – how long before this becomes an online identification code?

Further, would such a system suck any soul out of social media, turning the process of socialising into a financial grind? Would a like become meaningless; a status update literally a means of earning the daily bread? For some, surely these things are already reality; yet who am I to subject others (potentially) to such a reality?

Finally, there is of course the problem of control. Those same algorithms and the computer sciences behind them would hold tremendous sway over a potentially enormous online institution. Any changes, and all judgement calls, would not just impact a person’s convenience, but also their financials. This is serious enough in itself; but when combined with the copious amounts of data also held by these gatekeepers, be it age or gender or race, the risk of implicit bias built into a system which, in its present state and for better or worse, is rather equal in this regard, seems not without concern. However, though not to diminish these issue, we should acknowledge that such faceless discretion is held by social media giants presently and must, as anyone in the regulatory and policy world will tell you, be held by someone no matter how the system is assembled. This is not to excuse this concern as one without solution; instead, I only wish to suggest any solution will likely not being wholly or even mostly satisfying.

I bring up these issues because they are inescapable whilst borne out in theory, and it is incumbent as part of good authorship to acknowledge them, even if solutions are not forthcoming. As part of any criticism that might surround this piece, surely these weaknesses must form an integral part. Whether one accepts the proposal given here as panacea, or rejects this proposal as a menacing nail in an imagined coffin, the key to any development, and certainly any online development, is time and consideration. Though hardly the sexiest of messages for Silicon Valley, if this piece has any point it is to highlight that social media cannot ignore its social responsibility, and thus, if any solution is to be proposed, it seems prudent to address the issues openly, as a means of forestalling negligence.

We cannot escape social media, and in the spirit of the internet – indeed, by the means which social media functions so effectively, it is difficult to rationalise an application of anti-trust laws as was seen with the robber barons. That is not to say these laws are irrelevant, but additional tools and nuanced ideas, of which it is hoped this piece has contributed towards, might sure to provide more effective solutions to the problems of social media.