It’s time to give China the blockchain virus

The Chinese government tracks its people, stores their biometric data, and ranks them according to their ‘loyalty’ to the Communist Party. Just think what the CCP will do for you.

China cuts Uyghur births with IUDs, abortion, and sterilization as part of a sweeping campaign to curb its Muslim population. Even the Uyghur diaspora lives in fear of the Chinese state. The CCP’s treatment of the Uyghurs should inform our China policy.

The best spin on the Chinese Communist Party’s (CCP) involvement with the global spread of COVID is they were playing around in some biological warfare lab, a virus got loose by mistake, they hid the data, and then all hell broke loose. Worst case, the CCP released this menace as part of a grand strategy to disrupt the U.S. economy and take down an American President who became their worst enemy. Plot or not, it was Mission Accomplished for the most brutal regime on the planet. In the wake of this madness, close to 100 million people have been infected, and 2 million people have died from the Wuhan flu.

Jimmy Lai, a prominent pro-democracy publisher in Hong Kong, has been arrested and charged with working with foreign forces. His real offense is criticizing the CCP and endorsing foreign sanctions for reneging on its 1997 treaty with the UK, which promised to honor Hong Kong’s commercial sovereignty.

China’s 7 Deadly Sins

Since the Chinese Civil War and the establishment of the People’s Republic in 1949, the ‘Mao suits’ worn by Communist party leaders have become soaked in the blood of forced abortions and sterilizations, millions sent to the gulags, the exploitation of labor, and now, the Tibetization of Hong Kong and the take-down of the freedom-fighters. One can add environmental destruction, trafficking fentanyl to the US, and cyber-terrorism to round out their seven deadly sins. It is easy to see how such an evil force would think nothing about spreading a deadly virus to gain a global advantage.

As China ‘westernized’ its economy, its leaders conned gullible Western officials and businesses into believing that eventually, it planned to become a useful and friendly member of the family of nations. All along, the Chinese government assumed that Western elites would remain complicit and sell out their own countries if they got rich. One need not look any further than Nike, Coca-Cola, Apple, the NBA, or frankly, the family of our newly elected President to see this betrayal in full display. These folks and other major companies doing business in China have been pressing Congress to ease legislation cracking down on imports of goods made with forced labor from persecuted Muslim minorities in China. It’s been mammon first, and the rights and well-being of the Chinese people last. Mohandas Gandhi rightly observed, ‘A nation’s greatness is measured by how it treats its weakest members.’ It is now very clear, the CCP has no regard for their weakest, and they are selling the American capitalists the rope with which they will hang us if we sit idle and do not take action.

Big Brother is watching, stealing, and expanding.

Palantir co-founder Peter Thiel warned in his New York Times editorial, ‘In 2017 Xi Jinping added the principle of ‘civil-military fusion’ to the CCP’s constitution,’ which mandates that all research and intellectual property in China be shared with the People’s Liberation Army to do with what they wish. In other words, all roads lead back to the Pigs running the farm.

This mashing-up of commercial and political affairs to increase the control and power of the CCP is no better illustrated by their newly implemented ‘social scoring’ system based upon some hidden and politically motivated algorithms. China’s social credit scoring hands-out punishments and rewards based upon your allegiance to the totalitarian regime. U.S. Vice President Mike Pence described it in October 2019 as ‘an Orwellian system premised on controlling virtually every [Chinese citizen’s] facet of human life.’

When a blacklisted person crosses certain intersections in Beijing, facial recognition technology projects their face and ID number on massive electronic billboards.

The CCP’s game of espionage is not reserved for the home folks alone. Last September, the Trump administration forced the popular Chinese-owned video-sharing app TikTok to strike a technology deal with Oracle out of data security reasons. ‘TikTok is mapping its global users’ biometric data and relationships, and sending this intimate data back to China,’ US National Security Adviser Robert O’Brien disclosed in a July 14 interview. On the day of the announcement, Oracle CEO Safra Catz tried to calm anxieties by stating, ‘We are a hundred percent confident in our ability to ensure data privacy for TikTok’s American users and users throughout the world.’

The Belt and Road Initiative is considered the centerpiece of Communist Party chief President Xi Jinping’s foreign policy, who originally announced the strategy as the ‘Silk Road Economic Belt’ on a visit to Kazakhstan in September 2013.

The totalitarian regime’s primary offensive moves to supplant the U.S as the world’s preeminent power are now quite clear.

  • Surreptitiously gather personal data at home and abroad and create a global scoring system to identify and target ‘enemies of the people.’
  • Maintain a relentless campaign to steal the world’s most valuable intellectual property, government secrets, and academic information through any means they can.
  • Plant functionaries throughout transnational organizations, such as the World Trade and World Health Organizations.
  • Bully and wage a commercial war against Asian democracies such as Japan, South Korea, India, and Australia.
  • Beef up its military and planted island bases in international waters and gain control over the world’s commercial chokepoints from the Suez to the Panama Canal.
  • Compromise strategically important nations via multi-trillion dollar investments in over 70 countries' infrastructures through its neo-colonial and imperialist Belt and Road Initiative.

The Counter-Revolution goes blockchain

My thesis here is the most effective and peaceful way to stop the CCP’s global march is to unleash and fuel the thousands of blockchain entrepreneurs and developers pioneering the Counter-Revolution. Their goal is to leverage free-market innovation to radically diminish centralized power, including that wielded by the CCP, all governments, Big Tech, Big Entertainment, Big Media, Wall Street, and the Ivy Leagues. Their roadmap is to replace the old Internet/cloud-computing model with new blockchain applications and infrastructure that allows people to control and own their data using public/private key cryptography. Futurist and international best-selling author of Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy, George Gilder refers to this new paradigm as the Cryptocosm — a world where the people who create the content, own and control it, data is secured via distributed-storage, and the need for central network administration, particularly that provided by Big Tech, is eliminated.

George Gilder’s book predicting the eventual irrelevance of Google sold 2 million copies in China alone. ‘(Ethereum founder Vitalick) Buterin has violated all the principles of Silicon Valley venture capital — that you can only change one thing at a time,’ George told the Cryptonite crowd in the fall of 2018.

Gilder argues that companies like Google, Twitter, Facebook, and other brands that sell their customers for a living, are more than just businesses. ‘Google, in particular, is a utopian cult, powered not by technology but by a philosophy—a globalist theology—one where a small group controls everything because they think they know what’s better for us than we do ourselves,’ Gilder predicted at Cryptonite San Francisco in the fall of 2018. ‘Big Tech is about to meet their nemesis.’ Indeed, blockchain entrepreneurs are working earnestly to realize the Internet's original promise—a truly distributed computing world. Blockchain entrepreneurs also see their efforts to help America return to the classical liberal ideal of civil liberties that formed the basis for the US Constitution. Much like the original European classical liberals of the 19th century, the new Counter-Revolutionaries reject the hereditarian and inegalitarian view of society and the institutions they embody.

Introducing the currency of the people

The modern Counter Revolution was born in 2008, the same year Wall Street’s house of cards came crashing down, and 8.8 million Americans lost their jobs. The inspiration came from an anonymous individual or group under the name Satoshi Nakamoto when he introduced the world to Bitcoin, a new currency independent of any central governmental authority like the Federal Reserve. They achieved their mission by being the first application to solve the double-spending problem for digital currency using a revolutionary Proof-of-Work distributed verification system based on a peer-to-peer network. As of May 2020, around 47,000 nodes run Bitcoin’s code and store its blockchain. Because all these computers are running the Bitcoin blockchain, they each have the same transparent list of blocks and new transactions, making it nearly impossible to cheat the system. Bitcoin was an act of rebellion in favor of the little guy who didn’t get bailed out by the Obama Administration, like the money-changers on Wall Street who created the crisis.

‘One of the more underrated bull cases for cryptocurrency that I have always believed is simply the fact that gold is lame, the younger generations realize it’s lame, and that $9 trillion has to go somewhere,’ postures Ethereum founder Vitalik Buterin.

In 2014, Ethereum founder Vitalik Buterin and his team developed an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether. The Ethereum blockchain extended the peer-to-peer network model to general computing by introducing a ‘smart contract’ administered system that runs without any downtime, fraud, control, or interference from a third party. Under the Ethereum ‘smart contract’ model, networks are run by self-executing agreements between buyer and seller directly written into lines of code and therefore remain fully transparent and immutable.

In the first decade of the revolution, blockchain emerged as the data-authentication system that currently secures Bitcoin, Ethereum, and all other cryptocurrencies. As fantastical as the Bitcoin story might sound, since it was born in 2009, the new ‘currency of the people’ emerged as the highest performing global asset class over the last decade, including real estate, gold, and the S&P 500. As of this writing, the combined market value of Bitcoin, Ethereum, and the cryptocurrency market they inspired just surged past $1 trillion in market capitalization.

Sucking the power out of the Paper Belt

Blockchains and cryptocurrencies are now well poised to play an even more important role as a cultural force well beyond the financial transaction world. ‘Public blockchain solutions will keep quietly moving forward and gaining actual adoption,’ says Ethereum founder Vitalik Buterin. Originally the Internet transferred data, then scarcity (Bitcoin), and now computation (Etheruem), and soon, identity, ownership rights, and social graphs.

Back in 2013, Coinbase founding CTO Balaji Srinivasan predicted millions of independent blockchain applications would be spawned and suck much of the power out of current economic centers he refers to as ‘The Paper Belt.’ As Balaji defines it, the Paper Belt is the four metropolitan areas where the most critical industries and political infrastructures converged during the post-war era: Boston (education), New York City (publishing, finance), Los Angeles (media, Hollywood), and Washington DC (politics, law). ‘Cryptocurrencies, virtual reality, and mobile devices are helping individuals escape failed institutions,’ Balaji believes. It has become clear that crypto's agaric potential goes far beyond digital money and will steadily bring the world’s illiquid, opaque, paper-based assets online.

‘Public blockchains are massively multi-client databases, where every user is a root user. They are useful for storing shared state between users, particularly valuable data that users want to export without fail — like their money.’ explains Balaji Srinivasan, formerly the CTO of Coinbase and General Partner at Andreessen Horowitz.

Spinning forward to 2021, a growing number of unnamed entrepreneurs all over the planet are now building new blockchain technology-based applications and infrastructure to make possible a more private and free world. Blockchain data company, reports that, on average, 1,500 new blockchain applications are created a day. In addition to privacy concerns, the smartphone generation abhors the inconvenience and added expense of middlemen. They prefer direct, peer-to-peer interaction and instant gratification. As a grand example of the power of P2P, in 2020, mobile peer-to-peer cash transactions in the U.S. topped $400 billion. Kids now largely store their own cash with no interest in dealing with a bank.

Spy versus Spy

Growing mistrust in almost all institutions and fears that companies and the government are spying on us has created fertile ground for the Counter-Revolution. A recent Gallop poll asked Americans about their confidence levels in 15 societal institutions. Only three — the military, small business, and police — earned a majority level of trust. When Wall Street’s excessive greed led to the financial collapse in 2008, whatever faith people had in centralized institutions completely evaporated.

In 2019, the FTC found that Cambridge Analytica improperly obtained the data of up to 87 million Facebook users and ordered Facebook to pay a record $5 billion fine to settle privacy concerns.

The perception (and reality) of several years of Big Brother creep at the hands of both Big Business and government is driving our fears. A recent Pew Research poll shows most Americans feel they lack control over their personal data and are concerned about how companies and governments are using it. According to Pew, 79 percent of adults say they are worried about how companies are using their data, and 64 percent say they have the same concerns with the government. A mere 19 of Americans say they feel they have any control over the data that companies gather, and 16 percent express similar sentiments regarding the level of data the government is collecting. Roughly 80 percent of Americans think the risks of companies collecting data about them far outweigh any benefits. A new Rasmussen Reports national survey found that 70 percent of likely U.S. voters are concerned about the government spying on American citizens, including 39 percent who are very concerned. There now exists a huge chasm between what companies and our government believe they can do with our data and what Americans are comfortable with.

Privacy anyone?

We now have the platform to build applications that can privatize most of our personal data, from our citizenship and voting history to our medical, credit, and academic records. There is absolutely no reason why U.S. citizens should not possess the power to live and operate invisibly in America via owning and controlling their own data. Under this new paradigm, every citizen would have crypto data keys to blockchain applications chronicling and storing their personal data. Under this new data management infrastructure, only the person who has created the content could view, download, share and even delete it if they wish. If applying for a loan, seeking a new doctor, or trying to find a job, people can easily share the parts of their personal data needed to achieve their goals, but would also have the power to take their data back instantly for whatever reason they wish.

For the entrepreneurs busy building out the Cryptocosm, there is no turning back. There is very little doubt in my mind that we are at the dawn of a new era of privacy and civil liberties. Steve Jobs once said, ‘People don’t know what they want until you show it to them. Our job is to figure out what they’re going to want before they do.’ It is already clear from every research report you read, Americans want their privacy back; they just need some folks to show them how it can be done. This time has come.

Blockchains are very safe. Using cryptography (digital signatures, encryption, time-stamping) and systemically embedded economic incentives for network maintaining entities, blockchains provide a secure way of storing and managing information, including personal data.

The smartest VCs in Silicon Vally has already pivoted to the new blockchain-driven wave. Silicon Valley has had an incredible run during the modern venture capital era of the last 50 years—from the semiconductor to the PC, Internet, and smartphone. VC and bitcoin billionaire Tim Draper told a Cryptonite crowd at Draper University in 2019. ‘The Bitcoin and blockchain boom will be the biggest wave of all because we are re-writing how we operate—all over again—but in a way the delivers power and privacy back to the individual.’ Draper also emphasized the peer-to-peer model eliminates the need for middlemen and is the most effective and cost-efficient way to transact. ‘Governments, in particular, could deliver services at a fraction of their historical costs,’ says Drape.

A VC with libertarian instincts, Tim Draper was an early Bitcoin enthusiast. In his best-selling book, Startup Hero, Drape tells the sorry about how, back in 2016, he out-bid 30 bidders in a U.S. Marshall blind auction for 30,000 bitcoins they had confiscated from the Silk Road. The market price at the time was $618 per Bitcoin. At the last minute, Drape upped his winning bid to $632. His original investment of roughly $19 million was worth over $1 billion at the time of this post.

To run an orderly society, of course, our existing judicial system must remain as the ultimate adjudicator. But in the new era, prosecutors, defenders, judges, and juries will benefit from better forensic evidence supported by immutably documented blockchain-based data more easily available to all parties at a lower expense. The basic dysfunction in the U.S. government we face today is the politicians and officials that are supposed to serve us surveil us instead. The U.S. governance culture must and will change. U.S. citizens will be treated like customers, not suspects, as citizens take power and control back into their own hands. We will also know exactly what our tax money is being spent on and which representatives voted for what as we move into a new era of public transparency and accountability.

Back to the Chinese

The thesis of this post is the best way to slay the Mighty Dragon is to show the world it is possible to live in a free country again. Let’s remake America into a culture with minimal central control, where anonymity and privacy are cherished, and citizens can transact peer-to-peer in a secure, trusted, and transparent way. A recent Gallop poll shows that 750 million people want to flee socialist and corrupt homelands to free, democratic, capitalist societies. The U.S. remains by far the most popular country in the world, with 21 percent of potential migrants selecting it as their top destination. Canada, Germany, France, Australia, and the U.K. also rank as highly desirable destinations.

Pew Research Center revealed that up to two-thirds of the 1.1 billion population of sub-Saharan Africans want to migrate to the U.S. or Europe — a number set to more than double by 2050.

Regionally, the desire to migrate was found to be highest in sub-Saharan Africa, where 33 percent of adults wanted to migrate permanently, followed by Latin America and the Caribbean (27 percent), European nations outside of the EU (26 percent), and the Middle East and North Africa (24 percent).

My view is that the desire to be free and have power over one’s destiny is innate in every living soul, and all the polls cited reflect this desire. If the Counter Revolution can move the U.S. closer to a purer form of civil and privacy rights, the pressure on all centralized powers will become immense, especially on the CCP. There is no more radical example of centralized power than the CCP’s seven-man Politburo Standing Committee, with one clear supreme master—the current General Secretary Xi Jinping—the most powerful CCP leader since Mao Zedong.

The seven members of China’s Politburo Standing Committee pose after their names were unveiled October 25th, 2017, at the National Congress along with the announcement of Xi’s second term. In an unusual move, the Congress concluded without naming a potential heir for Xi, indicating the president’s grip on China's future will hold far beyond his second term, which ends n 2022.

By embracing the new blockchain metaphor, we can maintain our Creator-given rights and emancipate ourselves from the Big Data Robber Barons, the unlawful intrusion by our own government as well as hostile foreign powers. Most importantly, we can help 1.5 billion Chinese people free themselves and the world from the seven evil men responsible for committing the CCP's seven deadly sins.

Update on April 7, 2021: Peter Thiel, former Secretary of State Mike Pompeo, and former national security adviser Robert O’Brien spoke at a Seminar On China yesterday. Key excerpts:

Peter Thiel: ‘Silicon Valley tech leaders are acting with some combination of wishful thinking and blind profit motivation. They have become useful idiots — the Chinese Communist Party’s fifth column collaborators. If you think of it in terms of human rights and what they are doing to the Uyghurs, I’m tempted to say it’s just profoundly racist. It’s like saying that because they look different — they don’t have the same rights. There is something super wrong going on here.’

Mr.Thiel also slammed Silicon Valley for outsourcing vital technologies to the CCP. Google, he noted, exports its artificial intelligence and facial recognition technology to China, tools used to oversee the genocide of Uyghur Muslims in Western China. Mr. Thiel, who also co-founded recently public spook company Palantir, finds it non-sensical for American companies to refuse to cooperate with the Pentagon and yet acquiesce to Beijing’s every need. He believes the United States must take a more active role in pressuring private companies to divorce from Chinese markets.

‘We need to call companies like Google out on working on AI with Communist China, not with [the] U.S. military,’ Mr. Thiel said. ‘I think we should be putting a lot of pressure on Apple regarding their treatment of their iPhone manufacturing labor force in China. Apple is practicing this crazy double standard where labor laws that apply in the U.S. don’t apply there. They are taking advantage of the commercial benefit of this double standard. We need to need to call these companies out relentlessly on these issues. The state of our cybersecurity is simply a mess as far as I can tell.’

Robert O’Brien: Mr. O’Brien accused Silicon Valley leaders of the hypocrisy of preaching ‘woke pieties’ about social justice issues in the United States while ignoring crackdowns on human rights and political freedom within China. ‘Silicon Valley postures itself as a very woke industry, yet what’s happening to the Uyghurs, the Tibetans, the democrats with a small ‘d’ in Hong Kong, and the threats against Taiwan — that’s not very woke. Silicon Valley seems oblivious to what’s happening there and more concerned for woke progressive politics here.’

Mike Pompeo: Mr. Pompeo expressed that a significant element of the conflict with China is an ideological struggle. Beyond preparing the American tech industry for competition with China, Americans must also ‘be unashamed’ about addressing abuses perpetrated by the Chinese Communist Party. ‘We need to be unashamed about talking about the CCP’s abuses, whether on college campuses, at a PTA meeting, or the United Nations.’

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Anthony Perkins

Anthony Perkins

Silicon Valley OG. Founder and Editor of Cryptonite. Previously Founder of Red Herring, AlwaysOn, Churchill Club, SVB Tech Group

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