Why Progressives Hate Crypto
Posted January 05, 2022
Progressives hate crypto.
To be sure, so do conservatives.
Obviously, not all progressives and conservatives. The hatred… and love… for crypto transcends the political binary.
But, today (and tomorrow), we’ll pick a side.
As part of our intermittent “Everyone Hates Crypto” series, we’ll plunge into why many progressives hate crypto.
And perhaps why some of their criticisms are valid.
Progressives Who Hate Crypto
Echoing popular sentiment…
Adbusters, a left-leaning self-described “mental environmentalist” magazine, calls crypto, especially NFTs, an “environmentally destructive juggernaut.”
Daniel Denvir from Jacobin Magazine says cryptocurrencies are speculative assets “symptomatic of everything wrong with neoliberal financialized capitalism as we charge headlong into climate catastrophe in the absence of a Communist horizon.”
Indeed, much of the criticism — though hardly all — has to do with climate change…
And how pictures of apes and bitcoin transactions are just a clever way for consumerism to keep its destructive nature hidden via yet another layer of digital abstraction.
On the face of it, we get it.
Bitcoin mining uses a lot of energy. Some say more than all of Sweden. Others reckon more than all of the solar panels in the world.
(Counter: We’ve covered this before in, “Why Bitcoin is Good For the Planet.” For starters, this argument overlooks the incredible waste — magnitudes higher in comparison — wrought by fiat currencies and the traditional banking system. If you zoom out, it’s astonishing. But of course it’s given pardon from criticism due to the “fish in water effect.” We take it as a given.
Moreover, Bitcoin’s proof-of-work mechanism does something incredibly fruitful for the planet: it makes cheap energy valuable, no matter where it is in the world.
The most important rule: Incentives rule everything.
The vast majority of the world’s energy goes to waste due to lack of incentives. Whether it’s solar, geothermal, flared gas, or other stranded sources, bitcoin can capture this wasted energy, subsidizing renewable power infrastructure and incentivizing cheaper and cheaper energy. This is happening all around the world. El Salvador’s decision to use a volcano to mine bitcoin — and perhaps power a city — is just a scrape of the surface. Expect more.)
But climate isn’t the only criticism.
Far from it.
According to many, crypto is just…
More of the Same S***… But Worse.
On the surface, the argument here is that cryptos are inherently manipulated speculative assets.
If they provide any value at all, it’s to prey on people trying to escape the rat race of capitalist-induced poverty through “rug pulls” and “pump and dump” schemes, pulling resources away from those who need it to survive.
Go a layer deeper and there’s an assumption that capitalism itself is one big pyramid scheme. And crypto is just capitalism’s 24/7 newfangled digital casino.
Therefore, crypto has only one function: it increases the “financialization” of the economy — a term defined as a movement away from producing goods and toward trading financial products of increasing complexity and opacity.
[Counter: Financialization, by the way, is also a conservative criticism. Both sides generally agree that financialization is bad. And many on both sides generally agree that crypto will only exacerbate the problem. However, I would argue the opposite: crypto gives individuals the opportunity to de-financialize their lives.
Financialization inherently increases complexity and risk. As time goes on, individuals are forced to take on more and more risk for increasingly fewer gains.
On the other hand…
Crypto has the potential to empower individuals by reducing complexity and insecurity and by adding transparency to a traditionally opaque system.
For example, traditional financial assets bear operational risk and counterparty risk. Bitcoin, on the other hand, is a self-custody asset. Moreover, its supply can’t be manipulated by Wall Street or central banks. If you choose, you can cut out all counterparty risk. Plus, it’s perfectly fixed in supply, highly divisible, easily auditable, and easily transferable.
On this subject…
Progressives often point to a book promoted by Ethereum founder Vitalik Buterin called Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, an economist from MIT.
Though I don’t agree on all points, it’s a thought-provoking book… unless you’re a progressive (or a conservative) who hates crypto.
But more on that book tomorrow — and why even people who should love it hate it — in part two of our “Everyone Hates Crypto” series.
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