The Breakdown - Why Bitcoin Matters For Freedom [Long Reads Sunday]

Episode Date: July 5, 2020

An appropriate post-July 4th episode of the Breakdown's #LongReadsSunday featuring Human Rights Foundation CSO Alex Gladstein's "Why Bitcoin Matters For Freedom" Read the original on Time Follow Alex on Twitter 

Welcome back to the Breakdown's Free Ideas Festival, a 4th of July exploration of ideas with the potential to shape the future of the economy. This episode is sponsored by BitStamp and Crypto.com. The breakdown is produced and distributed by CoinDesk. And now here's your host, NLW. Welcome back to the Breakdown. It is Sunday, July 5th, and this is Long Read Sunday. I thought it was only fitting that our selection. this week, be in line with the July 4th Independence Day Free Ideas Festival theme that we've been exploring all week. And so I had to turn to Alex Gladstein's seminal essay from time in late

2018, why Bitcoin matters for freedom. Alex Gladstein, as you know, is the chief strategy officer at the Human Rights Foundation and is one of the most thoughtful voices connecting Bitcoin with a larger global world. So here again is why Bitcoin matters for freedom. BitStamp is the original global cryptocurrency exchange. Since 2011, BitStamp has been the preferred exchange for serious traders and investors, trusted by over 4 million customers, including top financial institutions. BitStamp is built on professional grade trading technology.

Their platform is powered by a NASDAQ matching engine, and their APIs are recognized as the best in the industry. Download the BitStamp app from the App Store or Google. or visit bitstamp.net slash pro to learn more and start trading today. That's bitstamp.net slash pro. What's going on, guys? I'm excited to share that one of this month's breakdown sponsors is crypto.com. Crypto.com offers one of the most cost-efficient ways to purchase crypto out there, as they've just waived the 3.5% credit card fee for all crypto purchases. What's more? With crypto.com's MCO Visa card, you can get up to 10% back on things like food and growth.

grocery shopping. When you buy gift cards with the crypto.com app, you can get up to 20% back. Download the crypto.com app today and enjoy these offers until the end of September. In a border city of Kakuta, Venezuelan refugees stream into Colombia, searching for food to feed their families. Years of high inflation, projected to top 1 million percent, has turned Bolivars into scrap paper. More than 3 million Venezuelans have fled since 2014, and 5,500 exit for good each day. According to the United Nations, the exodus is on the scale of Syria and is now one of the world's worst refugee crises. As Venezuelans escape, they leave with close to nothing, desperate and vulnerable. Because they live under authoritarianism, Venezuelans have no way to reform the policies

that have destroyed their economy. They can't hold their rulers accountable through free and fair elections or campaign for change without fear of reprisal. As they stand in hours-long lines for rationed groceries and medicine, and watch their lives. life savings disappear, it can seem like there are no options. But innovation happens at the edge. Today, Venezuelans are adopting and experimenting with Bitcoin to evade hyperinflation and strict financial controls. Speculation, fraud, and greed in the cryptocurrency and blockchain industry have overshadowed the real liberating potential of Satoshi Nakamoto's invention. For people living under authoritarian governments, Bitcoin can be a valuable financial tool

as a censorship-resistant medium of exchange. Take, for example, remittances. After ravaging the domestic economy, the Venezuelan regime is now taking a cut of money coming in from abroad. New laws force Venezuelans to go through local banks for foreign transactions and require banks to disclose information on how individuals get and use their money. According to Alejandro Machado, a cryptocurrency researcher at the Open Money Initiative, a wire transfer from the United States can now encounter a fee of as high as 56% as it passes from dollars to bolivars in a process that can last several weeks. Most recently, Venezuelan banks have, under pressure from the government,

even prevented clients using foreign IP addresses from accessing their online accounts. To circumvent this bureaucracy, some Venezuelans have started to receive Bitcoin from their relatives abroad. It's now possible to send a text message to your family asking for Bitcoin and receive it minutes later for a tiny fee. Government censorship isn't possible, as Bitcoin isn't rooted through a bank. or third party, and instead arrives into your phone wallet in a peer-to-peer way. Then you can, moments later, sell your new Bitcoin into fiat through a local Craigslist-style exchange, or load it onto a flash drive or even memorize a recovery phase, and escape Venezuela with complete control over your savings.

A popular alternative? Having your family wire money to a bank in Colombia, walk across the border to withdraw, then walk back to Venezuela with cash in hand, can take far longer, cost more, and be far more dangerous than the Bitcoin option. Venezuela isn't the only place where people can use Bitcoin as an escape valve. In Zimbabwe, Robert Mugabe printed endless amounts of cash and inflated the savings of his citizens into nothing, but his successors can't print more Bitcoin. In China, Xi Jinping can track all of your transactions on Ali Pay and Wepay, but he cannot

orchestrate mass surveillance on all Bitcoin payments. In Russians, Vladimir Putin can target an NGO and freeze its bank account, but he can't freeze its Bitcoin wallet. In a refugee camp, you might not be able to access a bank, but as long as you can find an internet connection, you can receive Bitcoin without asking permission and without having to prove your identity. Naturally, we must pay attention to the dark side of emerging technology. Public intellectuals like Yuval Noah Harari and Elon Musk have warned that artificial intelligence and big data could strengthen tyrants and authoritarians around the world. Regimes in Venezuela, Iran, and Saudi Arabia are even trying to mutate and centralize Bitcoin's

concept of peer-to-peer digital money to create state-controlled cryptocurrencies like the Petro, which could allow them to more effectively censor transactions, surveil user accounts, and evade sanctions. But decentralizing technologies can provide a countering force. Beyond Bitcoin, there are encrypted communication apps and browsers like Signal and Tor, privacy-preserving cryptocurrencies like Zcash and Monaro, mesh network devices like Gottena, and censorship-resistant storage systems like IPFS. By building on and investing in tools like these, we can ensure that our cities, social networks, and financial systems don't turn into tools of surveillance and control. Cash remains one of the best ways to exercise free speech. Paper or metal

money is virtually anonymous and can be used without government surveillance. But in places like Venezuela, where bills are weighted in stacks by the kilogram even for small transactions, cash is increasingly impractical, and it's vulnerable to theft or seizure. And from China to Sweden, governments and companies are driving us towards a cashless world. It's a sense. It's a sense. that we explore electronic money that can preserve the peer-to-peer quality of cash for future generations. When you pay someone with software like Venmo, you might use three or four financial intermediaries, even though the recipient might be standing in front of you. Each intermediary can potentially censor, surveil, and profit. And the billions of humans living under repressive regimes

can't expect most payment softwares in the future to remain as innocent or benevolent as Venmo. As As Seam Nicholas Talib has written, Bitcoin is a, quote, insurance policy against an or well- in future. To be sure, Bitcoin is still in nascent technology and doesn't offer cutting-edge usability, speed, or privacy. But engineers are constantly working to bring those attributes to Bitcoin by building better apps and on-ramps, upgrading the base protocol, and creating new second-layer technologies like the Lightning Network, which could eventually mask and dramatically scale the number of possible Bitcoin transactions per second. In the same way that the mobile phone began as an absurdly expensive, barely functional, and only available to the elite, Bitcoin

continues to evolve and will become easier to use and more accessible for the masses in the future. Less than 1% of the world's population, no more than 40 million people, have ever used Bitcoin. But according to the Human Rights Foundation, more than 50% of the world's population lives under an authoritarian regime. If we invest the time and resources to develop user-friendly wallets, more exchanges, and better educational materials for Bitcoin, it has the potential to make a real difference for the 4 billion people who can't trust their rulers and who can't access the banking system. For them, Bitcoin can be a way out.