The Breakdown - Bitcoin Isn't Apolitical, but It Is Nonpartisan

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexus.io, near NFTX, and produced and distributed by CoinDesk. What's going on, guys? It is Sunday, May 29th, and that means it's time for Long Reads Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. it, give it a rating, give it a review, or if you want to dig deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.l.ly slash breakdown pod. Also, a disclosure as always, in addition to them being a sponsor of the show,

Starting point is 00:00:51 I also work with FTX. And finally, one more little note tomorrow being Memorial Day, I will not have a show coming out. I hope you guys are having a great celebratory beginning of summer weekend. That, let's get to our topic and, oh, baby, is it one that I love? Daniel Kuhn wrote a piece on CoinDesk this week called Bitcoin is a political, but won't be much longer. Practically speaking, everything is eaten by the culture war. You don't even have to be that regular, a listener of the breakdown to know that this topic, Bitcoin's partisan or nonpartisan nature, is one that I think a lot about.

Starting point is 00:01:31 So let's read this piece and then discuss. Ted Cruz, the Republican U.S. Senator for Texas, said he wants the lone star state to be an oasis on planet Earth for Bitcoin and crypto. He said that, reiterating previous support for the state's mining industry during a keynote address at a Heritage Foundation event. The block reported that several speakers harshly criticized the left side of the political aisle at this Bitcoin in the American Experiment Conference. Cruz singled out Massachusetts Senator Elizabeth Warren, a Democrat. quote, why does Bitcoin make Elizabeth Warren toss and turn and Twitch at night?

Starting point is 00:02:06 Because she wants her sticky little socialist fingers to be able to control every penny in every one of our bank accounts. Yet, Bitcoin and the larger crypto industry could largely be described as an experiment with liberalism. That's the lowercase L variety, or the political philosophy that takes an expansive view of individual rights and equality. Open source and open access blockchains enable anyone to participate in or use the monetary, governmental, and social tools built on top of them. Just as the U.S. Constitution codifies

Starting point is 00:02:36 rules meant to foster the, quote, consent of the governed in equality before the law, crypto uses code to enforce similar rights. Still, considering the peculiarities of this day and age, it seems increasingly that Bitcoin belongs to the right politically. That's why we keep seeing politicians like Cruz calling for crypto Oasis and Warren for the industry to be tamped down. It might seem disadvantageous for the left to assume this position, considering how it shares the highest aims that crypto professes. Mertaza Hussein, a reporter at the left-leaning publication The Intercept, recently wrote about Liz Warren's Bitcoin Blindspot, noting that crypto could be a tool for financial inclusion to counter corporate power and mitigate governmental overreach.

Starting point is 00:03:17 A future world of such currencies in which Bitcoin has been regulated out of existence by righteous progressives will also be a world in which mass surveillance and social control is possible on a scale unprecedented in human history, Hussein said, adding that the industry should not be above critique. Crypto-holding political progressives often take a similar view that elected officials should participate in making this unique emergent industry better for all, possibly through thoughtful regulation, supportive programs to expand blockchain use or education, and constructive dialogue with industry leaders rather than trying to quash it. Part of a culture war. To some extent, that is happening, and it often happens across the aisle.

Starting point is 00:03:56 However, I predict that as the industry grows and becomes more relevant to elections, partisan opinions about crypto will likely solidify around the thoughts professed by a few influential political leaders. The culture war between Republicans and Democrats seems unavoidable. This is, of course, a travesty, just as it always is when political infighting prevents governmental action on issues where people, rather than elephants or donkeys, the symbols of the two largest U.S. political parties, should be the primary concern. It's all the more upsetting, considering there's a convincing case that Bick

Starting point is 00:04:26 a non-state, private money, is above politics or even apolitical. But it's also a pragmatic view. In representative democracies like the U.S., citizens delegate responsibility over simple and tough issues to elected officials to write the rules and hire enforcers or regulators. Crypto is a particularly complex issue from which many people likely feel disconnected. A growing number hold these assets, but that's still a minority, and the technology is not yet widespread. It's well-established why the political left has concerns about crypto. These are primarily the small narratives in the mainstream discourse around crypto. Its environmental impact, consumer safety issues, and the negative sentiment around tax avoidance, wealth hoarding, and capitalism generally.

Starting point is 00:05:08 As mentioned, there are many progressive cases for crypto, but it would be valuable to quickly say why crypto belongs to the right. Both parties at times push for universalist agendas. There's a populist argument for state-run health care, education, and environmental action among the right and the left. Looking for ways to step up your crypto game? Then go with Nexo. For starters, you get free crypto for each purchase or swap. How about earning guaranteed yields? Up to 17% paid out daily.

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Starting point is 00:06:53 NFTs. When you trade NFTs on FTX, you pay no gas fees. Download the FTX app today and use referral code breakdown to support the show. Current and future impact. Crypto in time might impact various governmental concerns, including health care, voting, and human rights, among other issues, and so it might be seen as another universalist project. But it's important to think about the actual things it affects now. That is to say, money. There are distinct political issues involving money and therefore crypto today. There's the question about what to do with billionaires, the question of how to fairly livy taxes, and the questions around how to best regulate markets. The right and the left often diverge on these issues. Crypto, as a financial technology, offers individual's strong

Starting point is 00:07:41 protections over their wealth relating to how to spend it, save it, and shield it. If leftists sometimes ask whether billionaires should exist, crypto presents a way to negate that question. How do you tax or confiscate wealth, ill-gotten gains or not, if you don't have the keys? The right, broadly speaking, is also more favorable to free markets. Crypto, because of its censorship-resistant attributes, can support the most open markets. All participants can engage in economic activity as they see fit. This can range from capital formation to building markets around social media. Regulatory agencies like the Food and Drug Administration, Environmental Protection Agency, and Securities and Exchange Commission, many rooted in the progressive era of U.S. history,

Starting point is 00:08:20 operate from the position that unfettered capitalism causes social harm and must be overseen and contained. Many crypto projects have their inception in a founder identifying some market inefficiency, sometimes the result of governmental or corporate interference, and offering a token to widen trade and rebalance the scales. This method hasn't always been successful, as seen by the body count of failed initial coin offerings. Crypto, like politics itself, is often future-oriented in that it presents a way to reach a radically different potential world. The solution crypto offers is to expand individual authority over their economic activity, sometimes called software, in the industry, hoping that the right combination of tools, money, and people can collectively

Starting point is 00:08:59 act for the better by doing right for themselves. Progressives take a different approach. They may be concerned with fostering and maintaining individual rights, but the solutions they offer are through a stronger, more sovereign state. This is seen by observing the mandates on offer, like enabling a well-endowed state to be the single competitor in the healthcare industry, or enforcing rules that might make firms less competitive to support what's called environmental or social justice. This distinction is often why observers call crypto libertarian. None of this is to say that crypto cannot be put to use for even socialist aims to use Cruz's bugbear, or that crypto cannot or will not be reincorporated into the state as we've seen. Crypto has become a source of tax

Starting point is 00:09:37 revenue and is not always as non-confiscatable as sometimes claimed. That reality presents a tough question for the industry. What, then, is this all for? Last week, Bitcoin philosopher, erudite author and associate professor at Yale and US College, Andrew M. Bailey wrote a Twitter thread outlining how the common belief that Bitcoin, quote, was born from right-wing or libertarian conspiracy theories is incorrect. Bailey, though ideological, is genuinely interested in ideas, loves debates, and his research and book project, resistance money with a number of similarly honest, self-declared progressive bitcoins is informative. Indeed, cryptocurrency shares a history and agenda with the radical, pro-privacy, and civil rights cryptographers called the cipherpunks.

Starting point is 00:10:18 These men and women non-conforming coders were staunchly anti-authoritarian, and opposed institutional overreach, corporate and state alike, by promoting the use of open source and open access technologies Bailey argued. No disagreement there. However, although cypherpunks and crypto offer apolitical solutions to state or corporate supremacy in digital realms, politicians are increasingly interested in crypto. Lines will be drawn even if they shouldn't be. And, as a simple fact, it's clear how partisans informed or ignorant of crypto's history will see crypto is fitting into their agenda or not. Crypto and Progressives share many aims, but they differ radically in how to get there.

Starting point is 00:10:54 It's fair to say that the industry, which is increasingly politically engaged, may be bringing this on itself. To give Bailey the last word, perhaps crypto should be a little less pragmatic and return to its intellectual roots. Said Bailey, digital authoritarianism, the use of computers to surveil and control is on the rise. you needn't be on the right or left to see it. First of all, thanks to Daniel for a great piece and to Andrew, a former guest of this show, for prompting it with his Twitter thread.

Starting point is 00:11:21 I think the thing that I want to follow up on is less about the progressive or left arguments for Bitcoin versus the right libertarian conservative arguments for Bitcoin, but instead what I've observed from watching the industry and in particular watching just about every major crypto hearing for the last four years or so. Daniel rightly recognizes the intense, gnawing pressure, the all-consuming maw of American political partisanship. It is the dominant force that has shaped discourse in Washington, at least, for a good long time at this point. There is a caricature of Bitcoin on both sides. On the right, Bitcoin is the ultimate small government force.

Starting point is 00:12:02 On the left, Bitcoin as boiling the oceans, an environmental disaster that is likely just a new tool of Wall Street anyway. Now, clearly, when presented like that, it's not hard to tell which perspective on Bitcoin most Bitcoiners would more naturally align with. But my observation is that when it actually comes down to it, the culture warriors who are starting to glom on to Bitcoin and put it into their culture war quivers represent a very small part of the political engagement with Bitcoin and the crypto industry as a whole. Watching hearings in both the Senate and Congress, one of the gaps that becomes most immediately clear is not so much right or left, Democrat or a Republican, but age. And not really age even so much as Washington institutionalization,

Starting point is 00:12:53 of which age is just a proxy. Put differently, it matters a little that a lot of the pro-or-at-least interested in crypto voices are 36, 37, 40, 42. It matters a lot that they've only been in Washington for a few years, because they're only that age. When I watch hearings, especially in Congress, more and more, I see people from the left and the right asking really deep, interesting questions trying to get beyond the soundbite narratives, trying to understand how this technology might actually be relevant for their community, no matter where their community is geographically. I think it is absolutely correct that there may be more native alignment between Bitcoin's mechanism of change as a non-sovereign technology versus, for example, a government program,

Starting point is 00:13:45 and certain political philosophies. But I'm not seeing that mean that people aren't interested in Bitcoin and crypto as a whole, even if they don't share that native alignment. As I said, it's much more pronounced in Congress, but it's not just in Congress. Remember, Democratic Senator Kirsten Gillibrand has joined a vowed bitcoiner, conservative Republican senator from Wyoming, Cynthia Lummis, in working on a new common-sense regulatory framework for the industry. Daniel is right to be worried that the partisanship in America, which is so cancerous and consuming, is going to try to pull Bitcoin into its orbit. But I've watched it do a hell of a lot better resisting it than just about any other issue I've ever seen. To me, that is about as

Starting point is 00:14:33 optimistic a thing as could be. For now, I want to say thanks again to my sponsors, nexo.io, near and FtX. And thanks again to you guys for listening. Until not tomorrow, but the day after, be safe and take care of each other. Peace. Hey, breakdown listeners, come join CoinDesk's Consensus 2020, the festival for the decentralized world this June 9th through the 12th in Austin, Texas. This is the only festival showcasing and celebrating all sides of blockchain, crypto ecosystems, Web 3, and the Metaverse, and is designed for crypto newbies, investors, entrepreneurs, developers, and creators. Use code breakdown to get 15% off your pass at coindesk.com slash consensus 2020.

The Breakdown - Bitcoin Isn't Apolitical, but It Is Nonpartisan

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