Crytpto's missing breakout

Anything internet-related seems to become aesthetically discredited at an accelerated rate. Take these beginning and ending passages from A Declaration of the Independence of Cyberspace, written in 1996 by Electronic Frontier Foundation founder John Perry Barlow:

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.
We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.
[…]
We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.

This says a lot about our society, and yet we live in one. Gamers rise up.

Jokes aside, we can’t blame cypherpunks for being naive. The 1990s was a time of deep and diverse cyber-prophecy, something that can be attributed to the disjunction between the obviousness of an internet-swallowed future and the opaqueness of what, exactly, that future looked like. High-flown pronouncements made at this embryonic stage could only age badly.

If one of these nineties-era hackers were transported to 2019, they’d be faced with a strange contradiction: life-essential internet services are more centralized than ever, but the cypherpunk technological wish-list has been delivered on with shocking abundance. Bitcoin works, and it’s more efficient than institutional methods of sending money. Bank transfers take three to five “business days” – what an ugly unit of time. How does it still exist? We and our hacker friend ask this question with the same timbre of disbelief. All three of us likely absorbed some of the Declaration‘s belief that cyberspace can secede from its real-world substrate. Cryptocurrency, as implemented today, has absorbed this ideology too, in the form of affordances and restrictions that it provides to users.

Infrastructure is not neutral, though this fact is easy to forget. The New York City Subway, for example, has a Manhattan-centric hub-and-spoke plan that makes it easy to travel from City to borough but difficult to move between the boroughs themselves. Some stations have access to express trains, but most do not. The layout and operations of this system are the result of decisions made by a constellation of politicians, capitalists, technocrats, and pressure groups with the competing considerations of urbanist philosophy, social justice, fiscal policy, and union interests. If you live in New York, your social experience exists in the shadow of such decisions. If you live in Brooklyn, you will never meet the person who would have been your spouse if the Subway conveniently connected your borough to Queens.

Bitcoin is, of course, closer to the ideal of neutrality than any rapid-transit system could be. It can be deployed anywhere that has an internet connection, and doesn’t suffer from the rivalrous nature of physical space, existing in the non-space of “the Mind,” as Barlow might have put it. But, just as with the Subway, the decisions that went into Bitcoin and its attendant tools are ideological: it’s deflationary, its transactions are irreversible, and the responsible use of it demands a kind of cryptographic paranoia. It’s this last property that truly shapes Bitcoin’s social landscape, walling the currency off to everyone except the most self-sufficient techno-libertarians.

If blockchain technology can save us from the caprice of third parties, the opportunity to prove it has arrived. The struggle to limit political dissent on the internet has only recently extended to the domain of online payments companies like PayPal, mutating from social-media censorship without much innovation. It began with fringe personalities like Alex Jones, but it’s swept up Charles Murray, author of The Bell Curve and a scholar at the center-right American Enterprise Institute. This isn’t surprising, since PayPal sources advice on whom to censor from the Southern Poverty Law Center, a political persecution organization that sits on the far left of American politics.

Patreon, a crowdfunding website, delivers its bans in the same, conservative-leaning direction. Its string of political purges prefigured the more recent PayPal-centric anxieties, and in fact pushed some of the top earners off the platform: center-right liberals Jordan Peterson and Sam Harris quit Patreon in protest. What business purpose could this serve for Patreon?

There is reason to believe that there’s a policy-contagion dynamic at work in the tightly interlocked payment-services industry. In an interview, Jacqueline Hart, Patreon’s head of trust and safety, indicated that there is an ambiguous pressure from the payment processors that the crowdfunding platform relies upon:

[A]s a membership platform, payment processing is one of the core value propositions that we have. Payment processing depends on our ability to use the global payment network, and they have rules for what they will process.
[…]
We’re not Visa and Mastercard ourselves – we can’t just make the rules. That’s what I’m saying – there is an extra layer there.

The global payment network that Patreon is downstream from includes the aforementioned Visa and Mastercard, as well PayPal itself. Only one party in this entire the chain needs to fold to pressure before everyone has its business interests aligned with policing dissent.

The most plausible solutions come in the form of alternative payment processing companies that are more or less identical to the traditional options but with a tweaked mission; this is Jordan Peterson’s plan. But Peterson doesn’t have the power to exit this tainted conga-line. His venture will likely go the way of a “free-speech” Patreon-alternative called Hatreon, which was created in the 2017 only to have its services suspended by Visa in November of that year.

This should the the perfect storm for blockchain technology, being unfettered by the legacy relationships of the payment-services industry, and yet no storm has come. Bitcoin, ten years old, enjoys a mature ecosystem of developers and associated services, but none of them have managed to ease the cognitive friction inherent to cryptographic self-ownership. Exchanges are as close as we get to cryptocurrency banks, and those are routinely hacked, a function of the rugged individualism that justifies non-reversible transactions. But the April crash has laid the truth bare: blockchain technology has had fourteen years and hundreds of billions of dollars of funding to develop, but has almost nothing useful show for it.

This is an ideological problem, not an engineering problem; the crypto community is not suffering from a lack of clever people. That community is missing the ability to give the political animal what he craves: the assurance of socially mediated institutions. Like any other currency, cryptocurrency requires banks, and each of the layers of legal, regulatory, and social mediations that are concomitant with a bank. Such a financial institution could hold the Bitcoin of clients like it would gold: in cold storage, away from the grasping hands of hackers. A centralized digital credit that represents Bitcoin – think bank notes on the gold standard – with reversible transactions would be issued by the bank, and those credits would be spendable, tradable, and redeemable for the real thing. At any time a client could withdraw some of their Bitcoin and use it like cash: unmediated, vulnerable, and free.

This is just one possibility for joining cryptocurrency with the affordances required by most human beings. I am sure there are cleverer schemes that have already been outlined somewhere, but any implementations that can solve the social problem run into ideological rather than technical obstacles. It’s easy to see how a detractor of such an institutionalization of Bitcoin would see the venture as merely another iteration of PayPal. They would be wrong. In fact, it’s this kind of implementation that would allow Bitcoin to approach its promised neutrality by giving it the ability to change into a shapes that would flatter a multitude of parties. Techno-libertarians, paradoxically, need to let their ideology evaporate from Bitcoin’s implementation so that they can use the currency in marketplace of more than just fanboys. If normies who just want to sell shoes online can’t use Bitcoin, then even veteran cypherpunks are going to be as frustrated today as they were in 1996.

Consummating the cypherpunk dream means waking up from it. As things shift out of reverie and into mundane clarity, we can see where the rubber meets the road, that there is no world of the Mind that can be alienated from socio-physical infrastructure. Smart contracts require third-party “oracles” to tell them about the state of the real world. A Bitcoin transaction only begins on the blockchain, and ends when a deliveryman actually brings your package to your doorstep. No cryptographic sleight of hand can route around this.