The Breakdown - Vitalik on Crypto Single Issue Voting

Episode Date: July 22, 2024

A reading and discussion inspired by https://vitalik.eth.limo/general/2024/07/17/procrypto.html Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

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. What's going on, guys? It is Sunday, July 21st, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly. slash breakdown pod. Hello friends, it will have escaped the attention of exactly none of you that the discourse in the crypto space right now is absolutely dominated by considerations of politics. In many ways

it's been this way since former President Trump decided to put this issue on his political map. And one could argue that it's really been this way ever since Operation Chokepoint 2.0 came along, and parts of the Biden administration got increasingly hostile towards the space. Indeed, one could look at the last couple years of crypto as really just one big long political fight with occasional interludes of price, often based on political changes, like the court decisions that effectively forced the SEC's hand to allow a Bitcoin spot ETF. Now, of course, the conversation has gotten a lot more intense recently, as it has with all politics in America. This week, Vitalik weighed in on that conversation with an essay called Against Choosing Your Political

Allegiances based on who is pro-crypto. The piece echoes in many ways that discussion that's been happening about whether it is appropriate for people to be single-issue crypto voters. Vatalek's main thesis is this. He writes, I argue that making decisions in this way carries a high risk of going against the values that brought you into the crypto space in the first place. So let's read the piece, or rather turn it over to AI-NLW from 11 labs to read the piece, and then we'll come back and discuss it. Over the last couple of years, crypto has become an increasingly important topic in political policy, with various jurisdictions considering bills that regulate various

actors doing blockchain things in various ways. This includes the markets and crypto assets regulation, MyCA and the EU, efforts to regulate stable coins in the UK, and the complicated mix of legislation and attempted regulation by enforcement from the SEC that we have seen in the United States. Many of these bills are, in my view, mostly reasonable, though there are fears that governments will attempt extreme steps like treating almost all coins as securities or banning self-hosted wallets. In the wake of these fears, there is a growing push within the crypto space to become more politically active and favor political parties and candidates almost entirely on whether or not they are willing to be lenient and friendly to crypto. In this post, I argue against this trend,

and in particular, I argue that making decisions in this way carries a high risk of going against the values that brought you into the crypto space in the first place. Section, crypto is not just cryptocurrency and blockchains. Within the crypto space, there is often a tendency to overfocus on the centrality of money and the freedom to hold and spend money, or if you wish, tokens as the post-important political issue. I agree that there is an important battle to be fought here. In order to do anything significant in the modern world, you need money. And so if you can shut down anyone's access to money, you can arbitrarily shut down your political opposition. The right to spend money privately, a cause that Zucco tirelessly advocates for, is similarly important. The ability

to issue tokens can be a significant power-up to people's ability to make digital organizations that actually have collective economic power and do things. But a near-exclusive focus on cryptocurrency and blockchains is more difficult to defend. And importantly, it was not the ideology that originally created crypto in the first place. What originally created crypto was the cypherpunk movement, a much broader techno-libertarian ethos, which argued for free and open technology as a way of protecting and enhancing individual freedoms generally. Back in the 2000s, the main theme was fighting off restrictive copyright legislation which was being pushed by corporate lobbying organizations, e.g.'s the RIAA and MPAA, that the internet labeled as the Mafiaaa. A. A famous

legal case that generated a lot of fury was Capital Records, Inc. v. Thomas Rassett, where the defendant was forced to pay $22,000 in damages for illegally downloading 24 songs over a file-sharing network. The main weapons in the fight were torrent networks, encryption, and internet anonymization, a lesson learned very early on the importance of decentralization. As explained in one of the very few openly political statements made by Satoshi, quote, you will not find a solution to political problems in cryptography. Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Nutella and Tor seem to be

holding their own. Bitcoin was viewed as an extension of that spirit to the area of internet payments. There was even an early equivalent of region culture. Bitcoin was an incredibly easy means of online payment, and so it could be used to organize ways to compensate artists for their work without relying on restrictive copyright laws. I participated in this myself, when I was writing articles for Bitcoin Weekly in 2011, I developed a mechanism where we would publish the first paragraph of two new articles that I wrote, and we would hold the remainder for ransom, releasing the contents when the total donations to a public address would reach some specified quantity of BTC. The point of all this is to contextualize the mentality that created

blockchains and cryptocurrency in the first place. Freedom is important, decentralized networks are good at protecting freedom, and money is an important sphere where such networks can be applied, but it's one important sphere among several. And indeed, there are several further important spheres where decentralized networks are not needed at all. Rather, you just need the right application of cryptography in one-to-one communication. The idea that freedom of payment specifically is the one that's central to all other freedoms is something that came later. A cynic might say it's an ideology retroactively formed to justify number go-up. I can think of at least a few other technological freedoms that are just as foundational as the freedom to do things with crypto-tokens.

1. Freedom and privacy of communication. This covers encrypted messaging as well as pseudonymity. Zero knowledge proofs could protect pseudonymity at the same time as ensuring important claims about authenticity, e.g.a that a message is sent by a real human. And so supporting use cases of zero knowledge proofs is also important here. Two, freedom and privacy-friendly digital identity. There are some blockchain applications here, most notably in allowing revocations in various use cases of proving a negative in a decentralized way, but realistically hashes, signatures and zero knowledge proofs get used 10 times more. 3. Freedom and privacy of thought. This one is going to become more and more important in the

next few decades, as more and more of our activities become mediated by AI interactions in deeper and deeper ways. Barring significant change, the default path is that more and more of our thoughts are going to be directly intermediated and read by servers held by centralized AI companies. 4. High-quality access to information. Social technologies that help people form high-quality opinions about important topics in an adversarial environment. I personally am bullish on prediction markets and community notes. You may have a different take on the solutions, but the point is that this topic is important, and the above list is just technology. The goals that motivate people to build and participate in blockchain applications often have implications outside of technology as well.

If you care about freedom, you might want the government to respect your freedom to have the kind of family you want. If you care about building more efficient and equitable economies, you might want to look at the implications of that in housing, and so on. My underlying point is, if you're the type of person who's willing to read this article past the first paragraph, you're not in crypto just because it's crypto, you're in crypto because of deeper underlying goals. Don't stand with crypto as in cryptocurrency, stand with those underlying goals and the whole set of policy implications that they imply. Current pro-crypto initiatives, at least as of today, do not think in this way. If a politician is in favor of your freedom to trade coins, but they have said nothing about the topics above,

than the underlying thought process that causes them to support the freedom to trade coins is very different from mine and possibly yours. This in turn implies a high risk that they will likely have different conclusions from you on issues that you will care about in the future. Hello friends, before we get back to the rest of the show, I want to implore you to join me at Permissionless. Permissionless is the conference for Cryptonatives by CryptoNatives, and the reason it's so important this year is that despite regulators' best attempts to push industry, founders, devs, and executives out of the U.S., the United States remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to

embracing it. Literally now, we are in a major political party's platform, which will lead ultimately to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is the conference for those using and building on-chain products. It's home to the power users, the devs, and the builders. And perhaps more importantly, I will be there. The location is Salt Lake City, the dates are October 9th to the 11th, and tickets are just $499. If you want to get 10% off, use code Breakdown 10. Go to the Blockworks website, blockworks.co. There will be links to register for the conference, and again, you can use code Breakdown 10 to get 10% off.

Section. Crypto and internationalism. One social and political cause that has always been dear to me, and to many cypherpunks, is internationalism. Internationalism has always been a key blind spot of statist egalitarian politics. They enact all kinds of restrictive economic policies to try to protect workers domestically, but they often pay little or no attention to the fact that two-thirds of global inequality is between countries rather than within countries. A popular recent strategy to try to protect domestic workers is tariffs. But even when tariffs succeed at achieving that goal, unfortunately they often do so at the expense of workers in other countries. A key libertory

aspect of the internet is that, in theory, it makes no distinctions between the wealthiest nations and the poorest. Once we get to the point where most people everywhere have a basic standard of internet access, we can have a much more equal access and globalized digital society. Cryptocurrency extends these ideals to the world of money and economic interaction. This has the potential to significantly contribute to flattening the global economy, and I've personally seen many cases where it already has. But if I care about crypto because it's good for internationalism, then I should also judge politicians by how much they and their policies show a care for the outside world. I will not name specific examples,

but it should be clear that many of them fail on this metric. Sometimes this even ties back to the crypto industry. While recently attending ETHCC, I received messages from multiple friends who told me that they were not able to come because it has become much more difficult for them to get a Schengen visa. Visa accessibility is a key concern when deciding locations for events like DevCon. The USA also scores poorly on this metric. The crypto industry is uniquely international, and so immigration law, is crypto law. Which politicians and which countries recognize this? Section. Crypto-friendly now does not mean crypto-friendly five years from now. If you see a politician being crypto-friendly, one thing you can do is look up their views on crypto itself five years ago. Similarly,

look up their views on related topics such as encrypted messaging five years ago. Particularly, try to find a topic where supporting freedom is unaligned with supporting corporations. The copyright wars of the 2000s are a good example of this. This can be a good guide on what kinds of changes to their views might happen five years in the future. Section. Divergence between decentralization and acceleration? One way in which a divergence might happen is if the goals of decentralization and acceleration diverge. Last year, I made a series of polls essentially asking people which of those two they value more in the context of AI. The results decidedly favored the former. Often regulation is harmful to both decentralization and acceleration. It makes industries more concentrated

and slows them down. A lot of the most harmful crypto-regulation, mandatory KYC on everything, definitely goes in that direction. However, there is always the possibility that those goals will diverge. For AI, this is arguably happening already. A decentralization-focused AI strategy focuses on smaller models running on consumer hardware, avoiding a privacy and centralized control dystopia, where all AI relies on centralized servers that see all our actions, and whose operator's biases shape the AI's outputs in a way that we cannot escape. An advantage of a smaller models-focused strategy is that it is more AI safety-friendly, because smaller models are inherently more bounded in capabilities and more likely to be more like tools and less like independent agents.

An acceleration-focused AI strategy, meanwhile, is enthusiastic about everything from the smallest micro-models running on tiny chips to the $7 trillion clusters of Sam Altman's dreams. As far as I can tell, within crypto, we have not yet seen that large a split along these lines, but it feels very plausible that someday we will. If you see a pro-crypto politician today, it's worth it to explore their underlying values and see which side they will prioritize if a conflict does arise. Section.

What Crypto-friendly means to authoritarians. There is a particular style of being crypto-friendly that is common to authoritarian governments that is worth being wary of. The best example of this is predictably modern Russia. The recent Russian government policy regarding crypto is pretty simple and has two prongs. When we use crypto, that helps us avoid other.

people's restrictions, so that's good. When you use crypto, that makes it harder for us to restrict or surveil you or put you in jail for nine years for donating $30 to Ukraine, so that's bad. Another important conclusion of this is that if a politician is pro-crypto today, but they are the type of person that is either very power-seeking themselves or willing to suck up to someone who is, then this is the direction that their crypto advocacy may look like 10 years from now, or the person they are sucking up to actually do consolidate power, it almost certainly will. Also note that the strategy of staying close to dangerous actors in order to help them become better backfires more often than not. Section, but I like politician because of their entire platform and outlook,

not just because they're pro-crypto. So why should I not be enthusiastic about their crypto stance? The game of politics is much more complicated than just who wins the next election, and there are a lot of levers that your words and actions affect. In particular, by publicly giving the impression that you support pro-crypto candidates just because they are pro-crypto, you are helping to create an incentive gradient where politicians come to understand that all they need to get your support is to support crypto. It doesn't matter if they also support banning encrypted messaging, if they are a power-seeking narcissist, or if they push for bills that make it even harder for your Chinese or Indian friend to attend the next crypto conference. All that politicians

have to do is make sure it's easy for you to trade coins. Whether you are someone with millions of dollars ready to donate, or someone with millions of Twitter followers ready to influence, or just a regular person, there are far more honorable incentive gradients that you can could be helping to craft. If a politician is pro-crypto, the key question to ask is, are they in it for the right reasons? Do they have a vision of how technology and politics and the economy should go in the 21st century that aligns with yours? Do they have a good positive vision that goes beyond near-term concerns like smash the bad other tribe? If they do, then great, you should support them and make clear that that's why you are supporting them. If not, then either stay out entirely or find better

forces to align with. All right, back to regular non-AI-NLW here. In many ways, as you can hear from the conclusion, what Vitalik is really arguing against is single-issue voting. And while it's expressed in terms of crypto here, it feels likely to me that that might be his take more broadly, although I can't say that for sure. His conclusion, if a politician is pro-crypto, the key question to ask, are they in it for the right reasons, is actually a much bigger political question. To what extent does a populace or should a populace care about the motivations for a politician to have a particular position versus it just being the position that they express? This is a perennial debate about politics. It's a question of idealism versus efficacy. It's contextualized based on whatever policies

that person might be able to enact. But what about how the crypto industry responded to this? One side of the takes are effectively an appreciation for resetting the dials a little bit on the idea that everyone in crypto has suddenly become pro-Trump. Justin Slaughter, the policy director at Paradigm, for example, writes, it's hard to think of someone more universally admired in crypto than Vitalik Buterin, that he's arguing against people determining their political support only based on candidates' crypto issues is important and underscores that crypto owners are not yet definitively pro-Trump. But that he's surpassingly choosing to speak on politics shows that crypto is trending towards Trump, in large part due to specific choices made over the last 3.5 years by parts of the Biden

administration. And indeed, by far the more prevalent. take was some version of the idea that even if a person hadn't been a single-issue voter in the past, the degree to which crypto had been fought by this current administration made it a slightly different situation. Evan Van Ness, for example, writes, voting for pro-cryptop politicians when Biden is trying to criminalize open source code is good, actually. Etherian Vibin writes, sir, one party has been actively trying to destroy our industry and one party hasn't. We all want what's best for the future of Ethereum, because a brighter future for Ethereum means a brighter future for humanity. and that means a Trump presidency. Eric Kanoa writes,

quote, you want a candidate who will pump your bags. Uh, no, I want a candidate who will allow crypto innovation to flourish in the U.S., one that does not demonize and criminalize crypto founders, one who doesn't force me off airdrop lists with the likes of Iran and North Korea. What I would add to this discourse is simply this. As I mentioned at the top, and as you will no doubt have experienced, the discourse has gotten significantly more rancorous, both within the crypto industry and beyond it. In the days since Fatalek has published this post, however, I would argue that that discourse has improved in the context of civility, specificity, and more. Ultimately, the lack of monoculture in crypto and the fact that it does

have such a weird and diverse constituency is one of the things that makes it really unique in the political landscape. I hope that this community can continue to debate within itself and bring the best parts of that to the broader world as well. For now, though, that is going to do it for today's breakdown. Until next time, be safe and take care of each other. Peace.