Tadge Dryja, from MIT’s Digital Currency Initiative, once touted Bitcoin as the currency of enemies. It’s a very apt characterisation in more ways than one — it speaks to the soundness of a money that is used by everyone (and not simply by a single group), though perhaps more importantly, it refers to the adversarial environment that Bitcoin is designed to run in. Trust in other parties, insofar as the protocol is concerned, is not a feature, but a bug.
Indeed, at the heart of cryptocurrency (well, some more than others) lies an ethos of self-sovereignty — the idea that no participant is dependent on another to secure their funds. Barring a takeover of the network by an actor or consortium with majority hashpower — an act of suicide, as dollar value of the coins mined would plummet as the network discovers that it has been compromised — or a critical bug, users are free to transact with whoever they please, anywhere and at anytime.
Setting the digital gold standard/sound money arguments aside for the moment, Bitcoin is still a formidable payment processor, even if the sender or receiver have no interest in the coin itself. It’s trivial for the parties to use on/off-ramps so as to exchange fiat for Bitcoin (or vice versa), though an exchange where neither party wishes to keep the funds in cryptocurrency would probably result in significant slippage of value (on-ramp exchange rate + (minimal) on-chain fee + off-ramp exchange rate).
Many would argue, however, that the positives outweigh the negatives — I’ve just used a fee estimator for a Western Union transaction of $100 to the Philippines. Fees begin at $3.99 (transaction settled to a bank account in 4 business days), up to $10 for my trading partner to be able to collect the funds from a physical location within minutes. Sending above a certain amount with such a service (or for any amount with a bank transaction), you also get to enjoy the wonders of KYC/AML.
I’m not outright saying this isn’t the way to go, but it certainly pales in comparison to the capabilities of Bitcoin — in October, a pseudonymous entity moved close to 30,000 BTC (~$188m) with a fee of $0.1 (only ~0.8 BTC was sent to a new address, with the remainder being returned to the owner as change). The Bitcoin network didn’t ask for a scan of their passport, nor did it question the source of the wealth or care about where it was headed. The recipient could have been anyone from an animal shelter to a violent group of insurgents.
Bitcoin’s agnosticism is undoubtedly one of its greatest strengths. It’s a technology for the transfer of wealth, free of the legal and moralistic constraints that bind existing financial institutions — participants do not seek approval from intermediaries.
This Austrian concept of free market money has made it valuable not only as currency in condoned marketplaces, but equally on those deemed illegal or frowned upon (ultimately, isn’t the the strongest form of money that which is more widely accepted?). Inextricably intertwined with the history of Bitcoin are use cases where cryptocurrency has been a necessity to route around a financial system that stands at odds with what many would consider to be fundamental freedoms.
The Silk Road, Flexin’ on Dapps Since 2011
Try as we might to shirk the stigma of Ross Ulbricht and his heinous crimes (running a website and having the audacity to promote free trade), it’s undeniable that the Silk Road played a notable role in bootstrapping Bitcoin — though it only accounted for roughly 4% of the cryptocurrency’s economy, this didn’t stop sensationalist headlines racking up clicks by covering the dystopian drugs/weapons/fake documents marketplace where untraceable non-government-issued money was used to order hits (in every sense of the word).
The Silk Road leveraged encryption, Tor and Bitcoin to flesh out a cypherpunk dream (eventually falling apart due to some flaws in Ulbricht’s OPSEC). The negative portrayal of Bitcoin during its operation (and even to date) has done little to hinder its growth. There’s no reputational damage, aside from that dealt to nocoiners when they try to bring it up as an argument for why Bitcoin won’t work – again, it’s just a protocol, not a business. Everything from tennis balls to fiat can be used for illicit transactions (spoiler alert: the latter is still the weapon of choice for money launderers).
The Replatforming of Wikileaks
Predating the Silk Road by a year, Wikileaks was another early proof-of-concept that demonstrated the value of Bitcoin in the face of adversity. Due to the nature of Julian Assange’s notorious repository for classified document dumps, it’s unsurprising that the US government pushed companies like Visa, Mastercard and PayPal to deplatform the organisation. Left with few options, Wikileaks opted to use the fledgling Bitcoin for donations.
As well as circumventing a financial blockade, Wikileaks’ early adoption certainly paid off, as Assange announced in a 2017 tweet:
“My deepest thanks to the US government, Senator McCain and Senator Lieberman for pushing Visa, MasterCard, Payal, AmEx, Mooneybookers, et al, into erecting an illegal banking blockade against @WikiLeaks starting in 2010. It caused us to invest in Bitcoin — with > 50000% return.”
(Shoutout to Coinbase for hilariously missing the point of their flagship offering altogether, going so far as to suspend Wikileaks’ account on the platform)
Deplatforming is definitely en vogue these days, stemming from an asymmetry in the powers wielded by an oligopoly of tech/finance companies versus the relative powerlessness of users. We’ve seen it being deployed against organisations that generally hold political views deemed unsavoury.
Disagree with their views? That’s perfectly fine. You may not be a fan of right-wing ideology, but you should be a fan of freedom of expression. You should be concerned that payment processors have taken on the role of judge, jury and executioner, with the ability to majorly disrupt operations of individuals and businesses.
The more these shenanigans continue, the more censorship-resistance becomes a necessity. Luckily, Bitcoin doesn’t rely on Proof-of-Social-Justice.
