http://wagingnonviolence.org
April 14, 2014

Bitcoin for activists, what you need to know
By Nathan Schneider

Among activists one often finds an aversion to even thinking about money. Associating it with the opponent — who has lots of it — they try to do without money themselves. Often, for as long as they can, they try to organize and resist without it, until burning out, quitting and getting into a different line of work just to keep up on rent. But, as the 19th-century U.S. populist movement recognized, money is also a battleground. Today, as a new wave of sophisticated digital currencies are beginning to arise, this is perhaps more true than ever before.

Bitcoin (the open-source software and peer-to-peer network) and bitcoin (the currency) first appeared in early 2009 — just after the housing bubble burst. It was heavily promoted by a tech-savvy, anti-establishment, libertarian community concerned with the power of big banks and government regulation. Critics have dismissed Bitcoin as being “by the privileged, for the privileged,” while defenders have claimed with an equal lack of subtlety that it is somehow “post-privilege” altogether. Regardless of the label, however, Bitcoin and other cryptocurrency platforms like it aren’t going away, and they are poised to become increasingly disruptive.

To understand why, I turned to Devin Balkind, founder and director of Sarapis, which promotes the use of free/libre/open-source software among non-profits and popular movements. He has recently written (and is continuing to write) a public working paper on cryptocurrency, “Finance Without Force.” Last year, we spoke about the role of open-source tools in the Occupy Sandy relief effort, in which he played a leading role. Before that, he had the distinction of being the first person to tell me about cryptocurrency in the first place, insisting that this was something I should be paying attention to. It has taken a while, but I am finally coming back to him for more.

What do social justice activists need to know about crypocurrency?

Cryptocurrency is open-source money. It lowers the cost of producing a means of exchange — a money system — down to almost zero. That means it’s easier than ever to organize alternative monetary systems. Some activists know about time-banking and mutual credit systems. Cryptocurrency makes it possible for people to turn the hours or credits from systems like that into money that can easily be sent around the world or spent at a local store. It completely changes what’s possible from the perspective of solidarity economics.

Where does the “crypto” come in? What role does cryptography play, and why is it so important?

The primary challenge with creating cash is that you have to produce a medium of exchange that can’t be spent more than once. If you could simply photocopy a dollar bill to make more cash, the U.S. monetary system wouldn’t work. The government uses security features such as special paper, ink, designs and holograms to prevent people from “double spending” cash. A unit of cryptocurrency, on the other hand, is just a string of characters — letters, numbers, symbols. This actually represents a “private key,” and when you share it with someone, you give them the ability to upload it to the network for authentication. Through a process of cryptography, every transaction is checked against a public ledger on a peer-to-peer network. If it’s illegitimate the transaction doesn’t execute.

What will it take to make cryptocurrency work in ways that are more democratic and just than the economy we already have?

The existence of strong cryptocurrencies is already making the economy more democratic simply by giving people a choice when it comes to the type of money they want to use. Many people take for granted that there is only one type of money used in the United States, but this wasn’t always the case. Scrip, bank notes, precious metals, whiskey and livestock have all been popular currencies in the United States over the past 200 years. While these might not seem like good currencies from a modern perspective, they all made it possible for people without access to official currency to trade and make deals with each other. From my perspective, that’s precisely what we need today: more ways to exchange with and reward people. Cryptocurrency makes that possible today, just as barter or using silver made it possible 100 years ago. Cryptocurrency can be money by the people and for the people.

A more open market doesn’t necessarily mean democracy. It has been observed, for instance, that many of those benefitting most from cryptocurrencies are those who already have high-level technical knowledge and lots of conventional capital to invest. Won’t this just deepen the inequality we already have, while perhaps also weakening the conventional social safety net? How can those most left behind in the current system use cryptocurrencies to build power?

Yes, it’s true that most cryptocurrencies are being deployed by privileged technologists, but so were websites in the 1990s, and I think we can all agree that the Internet has been a positive development for humanity. Over time these technologies democratize. Cryptocurrencies, for instance, could fuel an underground economy in which vendors can accept substantially lower prices for their goods and services because they don’t report their transactions as commercial activity and thus deny people consumers protections people often expect from conventional transactions. For example, if you buy a cookie from me with U.S. dollars and it gets you sick, you can sue me, but if you buy it with bitcoin, I can deny the transaction ever took place and make it very difficult for you to establish who is liable and for what.

Does that type of scenario create more or less inequality? On one hand prices are being reduced, enabling people with less to get more, but on the other hand it creates a lot of potential for abuse because of a lack of consumer protections. Indeed, it’s not hard to image a dystopian future in which two separate economies co-exist: one for the rich who use official currencies, and have consumer protections, and one for everyone else who use alternative methods of exchange and have fewer protections. In general, I think more choices are better and that unregulated commerce, grassroots businesses and alternative exchange practices are a great way for people left behind in the current system to build their personal and communal power.

I hear a lot of talk about using cryptocurrency to bring access to financing to under-banked communities. Is it hard to get a cryptocurrency adopted? To what extent is this a community organizing challenge?

It’s definitely hard to get a cryptocurrency adopted. Bitcoin didn’t become popular just magically. People deliberately organized an online community with the intention of making it popular; there were forums, listservs, in-person meetups and apps built for the sole purpose of spreading Bitcoin. One such app was the Bitcoin “faucet,” which gave people tiny amounts of bitcoin so they could experience it. The person who created that ultimately became one of the first leaders of the Bitcoin Foundation — which shows how important community engagement is for a project like this. But this is nothing new. Ask Paul Glover — the inventor of Ithaca Hours time-banking credits — what his secret to success was, and he’ll tell you the key is relentless organizing. He’ll tell you that he spent a decade calling businesses every day to discuss with them how they could meet their needs without using U.S. dollars. For me, organizing alternative money systems feels like a very natural and practical way for social justice activists to help the communities in which they live in material ways.

What particular examples of cyptocurrencies in action are you most interested in?

First of all, we need to give Bitcoin its due credit. It went from being worth pennies to hundreds of dollars in five years. Without Bitcoin we wouldn’t be talking about cryptocurrency — so I’m still very interested in it’s proliferation and success. People are beginning to create all types of interesting “altcoins,” which are modified Bitcoin software deployments that run on independent networks, and have their own configurations and market values. I really like Devcoin, which could theoretically fund lots of open source software production, and Permacredits, which propose a way for people to invest in permaculture projects. Maza Coin is now the official currency of the Traditional Lakota Nation, which has the potential to be really historic. The idea of giving these “altcoins” national identies is really catching on, with dozens of “national altcoins” now in existence.

The other really interesting development that’s slowly maturing is that people are beginning to use cryptocurrency’s components to do things other than mere “currency.” The most promising of those projects is Ethereum, a platform for coding cryptographically secured contracts. The implications are immense when you consider how much of our society depends on contracts — corporations, constitutions, financial securities, laws, even games. Ethereum is being designed to give us the ability to create machine-readable and executable contracts that we can generate quickly, easily and at near zero cost, and administered not by bureaucracies but by computers. People who are interested should check out the project website. But first, they should read your article about it on Al Jareeza.

It’s striking to me that enthusiasts describe cryptocurrency as a “space” and an “ecosystem,” when it seems so clearly divorced from physical space and ecology. But there has also been discussion about using cryptocurrencies to change how we govern natural resources. Do you think they could help fight climate change, for instance?

Yes — though in ways we haven’t thought of yet. Right now groups could get funding through cryptocurrency communities. Dogecoin, for instance, leveraged a meme to create a popular cryptocurrency, and then used that popularity to fund do-good projects that got their community excited, which then resulted in even higher values for dogecoins. I also think we’ll see institutions that exist to maintain common assets like art museums and land trusts figure out how to generate valuable currencies that they’ll be able to use to fund projects that align with their interests and support local economies. While having art museums become cryptocurrency banks might not sound revolutionary, it’s an example of how we can create money systems around the resources we value most, rather than around government fiat. In the future, systems like Ethereum will create opportunities to rewrite how society operates. That process will present a historic opportunity for laws to be changed. Will the social justice activists be driving that change or will they be hiding from it?

So this is really about power.

Whenever we talk about money we’re also talking about power. If we want to focus solely on cryptocurrency, we’re talking about the ability of normal people to take control over money, to make it their own, to use it as a tool to better organize their communities and meet their needs. If we expand the conversation to focus on crypto-contracts, we’re also talking about the “refactoring” of our society into something that can be read and processed by machines. Cryptocurrency and crypto-contracts go hand in hand — so yes, we’re talking about a lot more than money. We’re talking about a machine-readable society and potentially the biggest shift in law since the advent of lawyers. Society is poised to remake itself.

What’s the best way for people to start learning more about this scene and become involved?

There are lot of news sites out there for cryptocurrency. CoinDesk is a good one. So is the Bitcoin subreddit. If you’re in New York City, you can go to an event at the Bitcoin Center, but if hanging with libertarian men isn’t your idea of fun you might not want to try that out. I highly recommend reading Hayek’s Denationalization of Money for some economic, philosophical and historical context. It was written in the 1970s and is a good reminder that people have been thinking seriously about alternative monetary systems for a long time, and that there is a lot of knowledge already out there about how these systems could work. Read part 8, “Putting Private Token Money Into Circulation,” for a pretty simple plan for how to operate your own currency. Remarkable stuff.

Remarkable, perhaps, but also profoundly destabilizing. It sounds to me like we’re talking about not guaranteed liberation but a new battleground, and the outcome will depend on who fights and how.

I urge activists to think about cryptocurrency as a set of new organizing tools — tools that the social justice community hasn’t really begun to use. But when it does, it will find them quite powerful on the battlegrounds on which it fights. Crypto-contracts are also a tool, and with even wider implications because their adoption will create new types of interactions, entities and institutions. We’re still in the early days with these technologies, but I urge people to start learning about them now so they’re prepared to take advantage of the opportunities these tools will surely create.