The sound of a Missouri household is Fox News.
Since the 2008 financial crash, the conversation has focused on the inefficiency of the powerhouse that is the U.S. government. The idea of lessening the federal government’s role in the daily lives of American citizens is a narrative that can’t get enough air time. Equally as omnipotent to a Missourian, is the rise of the surveillance state.
The new conservative, a pseudo-libertarian holds the overreach in contention. Anarchists and agitators now build payment systems that skirt Big Brother. And that’s been pushed forward by the release of Bitcoin, a decentralized digital currency protocol that uses distributed authentication and an expensive proof of work algorithm to keep unknown actors working towards the same goal.
A political leaning cannot be gleaned from the Satoshi Nakamoto Bitcoin whitepaper, but many Bitcoin evangelists will tell you the message embedded within the first Bitcoin transaction–”The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”–remarks on the incompetence of the banking system and monetary policy.
But will we praise the separatist tools of these minority entrepreneurs that will save us from 1984 or will we revolt against a technology co-opted by madmen to do nothing more than harm?
“Balancing privacy and transparency is the biggest puzzle of the 21st century,” said Peter Kirby, president and CEO of Factom, one of a growing number of blockchain-as-a-service providers (Factom hasn’t launched a commercial product yet).
These companies, trying to appropriate the open source technology for a business case and financial gains, have arisen out of the popularity of Bitcoin itself. And entrepreneurs aren’t the only ones looking to liberate the idealism.
Big banks, such as Citi and Barclays, and governments are looking at ways to harness the blockchain for efficiency. David Andolfatto, vice president of research at the Federal Reserve Bank of St. Louis, has taken a particular interest in the concept of Fedcoin, a cryptocurrency protocol that would be designed by the Federal Reserve and allows U.S. citizens to trade paper dollars for digital Fedcoin. While Andolfatto skimped on some of the more technical details (mining algorithms and issuing limits), the concept itself harkens back to the history of the Federal Reserve and state-issued dollars as a kind of public utility for the population.
Payments, more generally, are starting to look more like an electrical grid based on subscriptions than a traditional financial service. I like the idea, as I addressed in this PaymentsSource’ article on the U.K. government’s Payment System Regulator.
And I’m especially fond of highlighting people and groups in Missouri that have relevant opinions on broader conversations. Because these people usually go unheard.
Living in New York City for nearly three years, it was surprising how few people had even the slightest idea where Missouri is. And as soon as they did, they always voiced their opinion about the Tea Party. I usually agreed with the critiques (yes, by voting conservative and decreasing the ability of unions, most Missourians, working in blue collar jobs, are relinquishing power from large private corporations that work for the benefit of their shareholders, not necessarily their employees), but coming from someone who hasn’t stepped foot in the Bootheel, the critique is shallow. Until you’ve seen their hands, dirty and cracked, it’s hard to understand why they care so much about the safekeeping of one penny.
Sure, the conversation in the Midwest is radical. It has to be, or people won’t bother to listen. Whether a conscious strategy or a subconscious evolution, in Missouri, you get an ear only for extremism.
So while a conservative Missourian thinks all Muslims should be watched, they’re agitated at the thought of the government keeping tabs on them and their dozens of Rugers in the basement.
But the government’s role is to “protect people when they don’t protect themselves,” said Dave Birch, director at Consult Hyperion, a U.K.-based consultancy focusing on electronic transactions. At one time, motorcycle riders weren’t required to wear helmets, Birch said, referencing the fact the government had to regulate that in to protect the people. In the States, this particular rule has been left up to each state individually, and after crossing the border into Illinois, bikers exposed their skulls to the sun.
“It’s all part of a massive privacy versus transparency debate that we didn’t have a technological solution for until very recently,” Kirby said. “Blockchain technology lets us build a globally distributed ledger of information (transparent) and hide the data in encrypted files (private).”
Tools can then be built on top to reveal data in stages to only the appropriate parties, he said. Theoretically, it’s a powerful concept that’s being built upon for the age of the internet of things (IoT). I’ve yet to see in practice. I can only guess imaging these systems is easier than building them.
But this appropriation of Bitcoin by centralized institutions, strikes fear in many Bitcoin theists, and the right wing contingent who saw Bitcoin, once touted as anonymous, as a bastion of hope in a surveillance state.
“Fedcoin is the ultimate oxymoron, like jumbo shrimp or military intelligence,” Jon Matonis, a Bitcoin industry pundit, said in an email.
It’s an exaggeration to be sure and a bit passive aggressive, but Matonis continues, “I just don’t believe much else is gained by simply launching a digital token within the same cartel-based paradigm.”
It should be clear, the U.S. born, London resident is anti-state.
“Would you want to live in a world where all payments had to be politically-correct?” Matonis asks. Well, no, not if “correct” was determined by arbitrary morals, which in the U.S. they have been for some time. Friends of mine in London guffawed that presidential candidates in the U.S. were still obliged to divulge their religious affiliation (and it better damn well be Christian), and women’s rights on abortion and gay rights on marriage were still being debated.
While the U.S. has been slower than other countries to drop traditional morality, I haven’t seen America moving in the direction of being less open, which is why millennials, notorious oversharers, are seen as not caring about privacy.
“We tend to think privacy and transparency are all or nothing things,” said Bill Maurer, a professor of anthropology at the University of California-Irvine and expert of mobile money and payments. “But privacy and transparency are contextual and situational; there are graduated levels and degrees of privacy.”
Plus some people will always be able to buy in or out of privacy and transparency, while others will always be exposed, he said. And this is why Maurer struggles to see how blockchains enhance either concept.
In the summer of 2013, Edward Snowden, a Booz Allen Hamilton infrastructure analyst for the U.S. National Security Agency, releases documents on the NSA’s PRISM, a giant government surveillance program. The price per bitcoin was steadily rising from $100 at the same time. Less than six months later, the price per bitcoin hit it’s all-time high at $1,147.25, according to CoinDesk’s Bitcoin Price Index Chart.
There’s no coincidence. Bitcoin’s use case is as a censorship-resistant payment mechanism. Individuals that work directly with the protocol don’t need to identify themselves and can then send value (the price per bitcoin currently hovers around $270) across the globe to anyone in a matter of minutes with insubstantial fees.
And at one time, I’d tell my parents just as much. A conversation about Bitcoin doesn’t lead to yelling, like “socialized healthcare,” religion or the militarization of the police does.
But when thought about along with the politically and sometimes religiously motivated destruction that is an everyday occurrence throughout the world, the concept becomes a scarier one. While most in Bitcoin’s fan club would spurn the use of the cryptocurrency for nefarious purposes (although nefarious is defined looser for this contingent, not directly correlated to legality), such as terrorist activity or the sex trade, there are extremists that seem less worried, even accommodating to these destructive use cases.
Amir Taaki and Cody Wilson (apologies for picking on the obvious as there are others, such as the DigitalNote XDN project) have spent a significant portion of time building controversial software that the two anti-heroes release to the public. Wilson even went so far as to call Dark Wallet, a software that allows anonymous and untraceable online transactions using bitcoin, “money-laundering software.”
*Wired’s Andy Greenberg wrote an amazing feature, Waiting for Dark, on the duo.
In the article above, Taaki and Wilson muse on the new world that uses the technology, that good and evil will rise together. Sure that scorned ex might not get caught for hiring a hitman, but everyday citizens will have the ability to avoid government blockades and donate to WikiLeaks. The idea that freedom to information is always advantageous is at the heart of their work.
But as John Oliver so poignantly put while interviewing Snowden in Russia (start at 19:35 for Oliver drilling Snowden), “What some people do care about is whether Snowden considered the adverse consequences of leaking so much information at once.” After Snowden cops out saying, “In my defense I’m not handling anything anymore, that’s been passed to the journalists,” Oliver bites back with an example, the improperly redacted Snowden document that the New York Times ran about Al Qaeda in Mosul. “You have to own that then.” Oliver said.
The weaponization of the payments system could work against us at some point. It definitely works against a large number of innocent people, who had the unfortunance of being born in a country where extremism, especially against the superpowers, breeds.
Matonis has a point about using currency for identity tracking , but his examples don’t hit quite as hard, especially for people in developed nations. He wants a limit on the number of tokens that can be issued, creating a kind of deflation that makes early adopters rich. His reasons aren’t consciously that, but more, seemingly standing with citizens in Argentina and Greece, that without a limit, the central banks will inflate a currency into near worthlessness.
I can’t speak to Matonis’ hatred of the banks. But in older Missourians, who would side with a lot of what Matonis says, the malice is anger. During the financial crisis, baby boomers had chips in the game, chips that are consistently being scaled down. That population was hitting the halfway mark around 2008 and in turn thinking about retirement and Medicare.
Millennials, like me were in their teens and early 20s. No one was thinking about social insurance and pensions. This group isn’t necessarily mad at promises not kept, they’re skeptical because they watched it all unfold.
The anger and cynicism has led Americans to question the system, to ruminate on power structures, to voice extreme opinions, such as complete anonymity in the coming undocked surveillance state. This sentiment gets a voice nowhere better than the Midwest, yet I haven’t found a place to use my bitcoin.