On 15th July, Ben Arc published in Bitcoin Magazine an open letter addressed to me in a bid to convince me that I should reassess my rejection of Bitcoin as a force for good; as a bulwark for democratising capitalism and paving the ground for socialism. Here is my reply.
Dear Ben Arc,
Thank you for your open letter and your efforts to bring a socialist perspective to bear upon my assessment of Bitcoin.
In my reply below, I shall address you as a fellow socialist, rather than put together a reply meant to address all sorts of different perspectives (e.g. Keynesian, Hayekian, neoclassical).
As you know, I am one of those who, back in 2011, were genuinely intrigued, fascinated even, by the remarkable blockchain algorithm. The prospect of a decentralised ledger controlled by its community of users was mesmerising.
As you also know, I was unimpressed by Bitcoin as an alternative to fiat money that is either likely, or indeed desirable, under our current capitalist predicament.
Having read your open letter, I remain as enthusiastic on blockchain’s capacities and as unimpressed by Bitcoin’s ability to help us either civilise or (as any socialist dreams of) transcend capitalism.
Two propositions support this view. In the hypothetical case where Bitcoin were, under presently-existing capitalism, to replace fiat money: (1) It would lack the mechanism necessary to stop capitalist crises from yielding depressions that benefit only the ultra-right; and, (2) Its community-based, democratic protocols would do little to democratise economic life.
I shall explain my two propositions briefly below. But, before you despair (at my continued negative take on Bitcoin), let me foreshadow the concluding sentence in the Epilogue below: Once (and, of course, if) socialism dawns, money will have to be founded on a distributed-ledger, monetary commons enabling technology.
In other words, I shall argue that Bitcoin is not fit for purpose under capitalism, or as a vehicle toward transcending capitalism, but something like Bitcoin will characterise monetary systems in a future world free of private banks and share markets.
OK, let me now support my two propositions:
Proposition 1: Bitcoin lacks the shock absorbers necessary to prevent capitalist crises from doing untold damage to the working class.
Consider the Crash of 2008 or the more recent 2020 Covid-19-induced crisis. Suppose that Central Banks did not have the capacity instantly to create trillions of dollars, euros, pounds and yen — and instead had to rely on a spontaneous majority of Bitcoin’s users to agree to a massive increase in the supply of money. The result would be a 1929-like collapse of banks and corporations.
While socialists would shed no tears for the tragedy of the oligarchy, socialists should beware that a 1929-like systemic collapse is bound to strengthen the forces of the ultra-right — not of the socialist left (that has been, since at least 1991, languishing in the doldrums of political…