Note: This is a lightly edited transcript of a talk delivered at The White West III: Automating Apartheid (Kunsthalle Wien, Vienna, Austria, Feb 13–14, 2020). A fuller version with complete references is in preparation for the conference proceedings.
In the developed world, blockchain promoters insist the technology will solve what they call problems of governance, finance and trust, though historically these have almost exclusively been considered “problems” by the far right. In the developing world, promoters invert the terms of the bargain, arguing that the world’s most impoverished people need blockchain to make themselves more politically and economically equal. These suggestions reiterate in remarkable ways the “white man’s burden” discourse of earlier colonial periods, far in excess of more recent (and still often misguided) schemes to improve the circumstances of people in the Global South. Further, where those recent schemes can at least claim at some level to be honestly committed to helping people, blockchain promoters transparently pursue their own self-interest, often at very significant cost to exactly the people they claim need the technology. In this way as well as many others, and despite its claims to technical innovation, blockchain represents a return to forms of politics many of us thought had long been eliminated from serious consideration in the global polity.
Blockchain Is Garbage: Some Background
It is conventional to begin any work on blockchain by explaining “what blockchain is,” in which one repeats the same advertising slogans that have been stated endlessly by digital evangelists. There is every reason to wonder about the functions of this rhetorical form, so I’m going to try to keep this as brief as possible, and to focus in particular on facts that the sloganeers rarely include in their catechisms.
A “blockchain” is a software model used to track the storage of data not itself directly located on the blockchain — the simplest description usually given is that of a “ledger,” meaning an accounting record of transitions. Blockchains require each machine that is truly participating in them to run and host essentially the entirety of the ledger. Each machine running the blockchain participates in verification operations to ensure that new transactions are authentic before they can be recorded in the ledger. Periodically, machines running these operations are rewarded with tokens, which are essentially just incremented numbers, also recorded in the ledger of transactions.
Blockchains were invented because of those tokens, which are conventionally given the misleading name “cryptocurrencies.” That name was given to them as a result of a decades-long effort by encryption enthusiasts known as “crypto-anarchists” and “cypherpunks,” overwhelmingly associated with the political far right, who were desperate to develop a payment system that would be outside of legal oversight by what they crudely refer to as “the state,” in no small part to fund organized crime activities that they insist should be outside of governmental control altogether. Crypto-anarchists rely on theories developed by self-identified economists who take the Chicago School as the left edge and move farther right from there. At the limits of this discourse, favored by many of the most persistent blockchain promoters, economic theory itself starts to blur into a verbal phantasmagoria that bears many of the hallmarks of fascist rhetoric in its characteristic rejection of reality testing.
What the blockchain promoters don’t want to tell you is that they now have voluminous and incontestable evidence that their “theories,” in so far as they are really deserving that name, are wrong. They don’t want you to know that Bitcoin is by far not the only cryptocurrency, but that reliable trackers indicate that there have been somewhere between 1 and 2 thousand such tokens created over the past decade, most of them with far fewer tokens in circulation than Bitcoin has, and that nearly all of them, no matter how limited the number, have the same value: 0. Scarcity has nothing to do with the persistence of value.
What they don’t want to tell you is that all the trading markets in cryptocurrency are so dominated by scams and frauds that it is hard to locate any significant volume of organic trading in them at all. In fact, “scams and frauds” is a good word to substitute when people mention blockchain. This shouldn’t be a surprise, because in democracies, the “state control” Bitcoin inventors hate so much really exists, or existed until very recently, especially in highly regulated trading markets, to push back against fraud and gaming the system. Bitcoin helps to prove that when you eliminate democratic oversight, fraud rushes in, especially when most economic transactions are still conducted by actors who have reason to value the adherence to rules that regulated systems supply. Here we start to see one of the contradictions at the heart of all these practices; blockchain claims to be structured around “trust” and “verification,” because of the distributed mechanisms built in to verify transactions, but these are confined entirely to technological considerations. Once blockchain systems interact with the world outside of the blockchain itself, which is coyly known in the blockchain universe as “the oracle problem” and is in most cases unsolvable, they become riddled with fraud — fraud that promoters insist is somehow incidental to the software.
Blockchain promoters also don’t want to explain that there are essentially only two blockchains that actually function today: the Bitcoin blockchain and the Ethereum blockchain. The reason is simple: blockchains are incredibly energy-intensive: indeed, it’s reasonable to argue, as blockchain critics like David Gerard do, that the whole point of the blockchain architecture is to waste as much energy as possible to authenticate transactions, thus making it extremely costly for another actor to try to fool the system. For this reason the system needs to incentivize people to run it, and most of the independent blockchains produce tokens that nobody wants or cares about, or that can very easily be traded for Bitcoin or Ethereum tokens.
Blockchain promoters want to tell you that Ethereum is different from Bitcoin, because the Ethereum software comes with a pseudo-programming language that enables a kind of transaction promoters call a “smart contract.” They call it that, but they don’t want you to know that a “smart contract” has very little in common with a regular contract, and is in fact so useless that very few of them have ever been used for anything relevant to any ordinary person. In fact, one of the only reasons Ethereum still exists is that the system spits out tokens that have at times been the objects of intense financial speculation, but that are no less conditioned by fraud than the rest of the cryptocurrency universe.
Ethereum enables people to use the so-called smart contract feature to set up what look something like corporations, or what they call in their overblown rhetoric “Decentralized Autonomous Organizations,” which come with spinoff cryptocurrencies that “investors” are encouraged to buy. For a while these were called “Initial Coin Offerings” or “ICOs,” modeled after “Initial Public Offerings” of stock. Unlike IPOs, however, the purchaser of an ICO was granted no ownership stake whatsoever in the underlying “company” — instead they were offered a pure speculative bet on the value of the token, which might or might not be correlated with the company’s success the way the price of the shares of stock of an IPO is. If a company had a “real” business plan with some hope of paying a return on its investment, then it might as well work through the more cumbersome processes of venture capital and taking its stock public. If a company wanted to grant ownership stakes via tokens, it would be offering an IPO, and thus would be subject in the US and Europe to laws that the whole point of blockchain is to bypass. So “companies” that chose the ICO route were, unsurprisingly, nearly all frauds. Nearly all ICOs collapsed almost instantly, and nearly all are today under investigation or have been assessed criminal penalties.
The Bitcoin blockchain, the Ethereum blockchain, and the cryptocurrencies produced by them still exist, but in every way the whole cryptocurrency project seems to be waning. That is partly due to the retrenchment of Bitcoin’s trading price, and the subsequent exposure by the financial press that cryptocurrency trading recreates all of the phenomena that modern financial markets were designed to prohibit: coordinated fraudulent trading, massive hoarding by single actors who pretend to be multiple entities, actual fraudulent tokens, a financial press that is dominated by market participants who fail to disclose their direct interest in the commodities they trade, and more. The energy wasted by blockchains is significant enough that countries are starting to limit the amount of power used by the systems. The whole thing appears to be a house of cards, and regulators the world over are starting to catch on and to put enough pressure on the scam-filled trading markets that, among many other factors, most ordinary people know that Bitcoin is too inherently volatile, and too unanchored to anything but its own power consumption, for rational people to use as an investment.
Desperate Measures: We Know What’s Good for You
This has led blockchain promoters to somewhat desperate measures. In part, they build on existing themes I haven’t talked about yet. One of the most prominent and also most troubling features of blockchain discourse is the remarkable emphasis its promoters place on the technology being “good for us”: “blockchain for social good” is a remarkably widespread formation. This advertisement subtly puts the cart before the horse: even as it seems to be finding “good” uses for blockchain, it tacitly assumes that blockchain is an inherent good, or has inherently good properties, and then projects these properties out into a situation that blockchain promoters depict as “bad.” As with so many projects involving what Evgeny Morozov rightly calls “technological solutionism,” these initiatives almost never entail actual knowledge of, let alone expertise in, the conditions that promoters think are “bad.” Rather, they take up old, hackneyed, and typically disproven stereotypes of the way the world is, especially the parts of the world that the typically well-off if not wealthy technological solutionists think the world is, or should be.
Because blockchain is essentially garbage, its functions in neocolonial discourse are both especially interesting and not immediately amenable to easy analysis. Blockchain has virtually no success to point to; any empirical testing would quickly show that ordinary folks are even more likely to lose money than to make it by investing in cryptocurrency. They are even likely to lose money in purchasing the equipment and power necessary to generate tokens on their own, so that very few individuals even engage in this activity any more, despite its being at the heart of the blockchain story. So rather than any number of lucrative “development” efforts undertaken by both international corporations and humanitarian NGOs, blockchain’s promises are evidently empty signifiers. This is not to say that promises of riches due to natural resource exploitation are fully saturated signifiers, but it is notable that Shell Oil and the exploiters of coltan and other materials for the tech industry can make far more concrete offers of ongoing capital production than can a blockchain startup. Blockchain startups essentially offer relatively modest sums of venture capital, and aggressive, bullying promises which lack practical examples for support.
Some of those promises include: producing currency; replacing existing currency; serving as a “safe haven” currency for countries experiencing financial trouble; replacing central banking; providing “immutable” records of property ownership; providing uniquely unforgeable identifiers of persons or anything else; securing digital interactions so that they are more trustworthy; providing cheap remittance services for international money transfers; “banking the unbanked,” one of blockchain’s most absurd and offensive claims, one key to the political project called Libra recently mooted by Facebook in an effort to bully democracies away from regulating its assaults on our political systems; and supplanting systems that are touched by widespread fraud with ones that are much less easy, to say nothing of impossible, to defraud. To be sure, you can find tens of thousands of stories on the web claiming that blockchain does all of these things: but once you read the stories carefully, you’ll find that you are always reading descriptions of “pilot projects,” or entirely speculative projections of what “could” be, or small running pieces of technology that use only a part of what we call “blockchain technology” but are crucially not running on a public blockchain network that anyone can join. They also typically fail to closely examine existing methods for providing the services in question, which typically are far more robust, reliable, and energy efficient than the blockchain “solutions” promoters advertise.
These continual promises for things that cannot be delivered opens up avenues for pure speculation of the theoretical, not financial sort. For we are all too familiar with a “technology” — or what might be better described as a kind of poiesis or creative making — that is empty, fraudulent, and yet advertised as incredibly desirable, productive, unassailable. That is of course whiteness. Both blockchain and whiteness tell the world that they are incredibly necessary; that no matter how wasteful they may appear by any objective measurement, in fact it is we and not it that are wasteful; that critical attention drawn to it must be directed back at the critic; that it has a more direct an authentic connection to “real” property than the ordinary property relations with which we are familiar; that it has an urgent and direct connection to human right that trumps what the rest of us think rights are; that any attempt to reasonably adjudicate between its claims for itself and the claims of what are apparently similar qualities in other makings (that is, claims about “human beings” made about whites vs non whites, and claims about data storage technologies made about blockchain vs databases, spreadsheets, and other far more useful, widespread, and effective digital storage techniques).
Consider the pattern: critics point out that blockchain is designed to waste energy in order to “verify” transactions; blockchain advocates respond by claiming that blockchain is necessary for “social good” and that therefore no matter how much energy is wasted by it by design, society is obligated to pay that tax because of blockchain’s beneficence. The cryptocurrency world is full of scams and ripoffs: blockchain advocates respond by claiming that critics are actually hurting the world’s poorest people, because blockchain is actually good for them and so criticism will deny them this necessary and beneficent gift. Never mind that the only people blockchain seems to help are the most vicious and dishonest capitalists one can imagine: we are supposed to believe that their intention to scam the poorest people in the world out of the meager amount of resources they do have is for their own good.
Abuse as “Help”
One of the more disturbing parts of recent blockchain advocacy is the offshoring of blockchain activity to countries that have been chosen precisely because of their inability to conduct proper oversight of financial transactions. Probably the best-known of these is one in Puerto Rico, about which Jillian Crandall writes:
Two months after Hurricane Marıa, Brock Pierce (widely acknowledged as the spearhead of the Puertopians) said, “I’m working on building kind of a city. […] I’m moving there with a bunch of my friends.” He believes their aims are altruistic. Pierce says, “when you experience great loss, it creates an opportunity to upgrade […] because you’ve basically lost everything, so you have to start over. And when you start over from scratch you would do it very differently than if you have this big thing that has been building on top of itself for ages and ages.” Although Pierce and his supporters see Puerto Rico as a blank-slate, Puerto Rico is not starting over from scratch. The “big thing” that has been building on top of itself is serial colonialism, which has dominated the archipelago for over 500 years — first from the Spanish, then from United States, and perhaps now with crypto-colonialism. (Crandall 2019, 287)
While Pierce claims his motives are altruistic, when Puerto Ricans turned out to protest these efforts — in no small part because Puerto Rico was and remains desperate for energy and blockchain projects waste huge amounts of it — Pierce and other promoters dismissed the protests as based on misunderstandings of the good they were intending for the hapless residents. Crandall quotes another of the so-called Puertopians: “This isn’t about going down there to make money, although that’s always a primary focus to establishing a foundation and keeping things going for the long-term. It is more so about the spreading of a new religion […] the religion of peace, of economy, of all things that are beauty and all things that we want for this world” (Crandall 2019, 287).
It isn’t merely that these projects are misguided and ignorant reiterations of colonial gestures; they are also larded with the libertarian lust for self-interest disguised by vague altruism that characterizes the whole cryptocurrency discourse. While the blockchain startups Pierce and others advocate for seem intended to poach resources from Puerto Ricans in fairly straightforward fashion, they go hand-in-hand with a possibly more nefarious form of scam, in which the promise of economic progress is coupled to a demand that the already limited ability of the developing country to regulate fraudulent economic activity be relaxed entirely. Thus, Crandall goes on,
other crypto-proponents have found a way to form a right-libertarian enclave via the Security Token Offering (STO). The STO combines typical venture capital with cryptocurrency to create a “tokenized venture capital fund” tied to real assets, such as ownership rights in a new company, or real-estate (Ortiz 2018). … In true “crypto” style, their sought-after properties (including key pieces of real estate — a headquarters, office buildings, apartments) are distributed throughout Old San Juan to extract rent and do business. …
Blockchains at times act as “gated platforms for payment, accounting, and exchange” (Nelms et al 2018). Although there are no physical walls gating the crypto-utopia in San Juan, there are digital walls and gates that keep anyone out unless they are high net-worth “accredited investors” (according to the VSJ Re-Fund Token Sale Agreement 2018), and on the inside in the “blockchain space.” This is similar to the process of redlining and gatekeeping loans and mortgages, yet different because the STO does not require the intentional coordination of banks and governments — rather, investors can do it via exclusive digital frameworks. (Crandall 2019, 288)
Yet these schemes exist because blockchain promoters have taken advantage of a loophole in Puerto Rico’s economic development laws that are supposed to “offer tax incentives for new residents and businesses coming in from outside of Puerto Rico” (Crandall 2019, 283). In other words, Puertopians are being paid by the Puerto Rican government to run businesses and conduct transactions that are best understood as entirely fraudulent (in addition to Crandall, see also Watlington 2019, Yarovaya and Lucey 2018).
This scenario is being replicated elsewhere in the world. In New Zealand, Papua New Guinea, and Fiji, to name some of the better-documented examples, blockchain promoters have demanded governments create “special economic zones” for their activities. Of course, Special Economic Zones already exist as a part of the neoliberal world order, and they are often deeply exploitative; but a blockchain Special Economic Zone is a special thing indeed, for it functions as a kind of tax and regulatory haven to bypass scrutiny of transactions that are largely being conducted elsewhere. Think of it as a bit like offshore gaming, with the added benefit that it is not regulated as such, and is advertised not as a recognized “entertainment” industry but as an ethical and economic boon to the very people whose own assets are being stripped by the activity. One of the main proponents of these Special Economic Zones is a man named Tim Draper, a major Silicon Valley venture capitalist who owns huge amounts of Bitcoin, while predicting that its price will explode in value very soon, in just the sort of speculation that he is constrained from making in quite such naked form with regard to ordinary trading instruments (see Jutel 2019 for more on blockchain in the Pacific). Draper is the same man who advocates for California to secede from the US by splitting into six (or more recently, three) separate states, and was an early investor in the fraudulent medical device company Theranos, a company that almost everyone is now convinced never had any hope of delivering the product it promised, because the promises were physically impossible: Draper is one of the few people around who still insists, despite SEC rulings and criminal indictments, that Theranos was not fraudulent to the core.
Most of us in the west probably know that the phrase “the white man’s burden” comes to us from a poem by the British writer Rudyard Kipling. Kipling spent much of his life living in and other parts writing about India, and this may lead those of us less familiar with the literary background to presume that the poem is about the duty of the British to colonize and educate Indians. While this probably does form some of the background of the poem, its subtitle reveals a different focus: “The White Man’s Burden: The United States and the Philippine Islands,” and as Patrick Brantlinger puts it, “Kipling’s aim was to encourage the American government to take over the Philippines, one of the territorial prizes of the Spanish-American War, and rule it with the same energy, honor, and beneficence that, he believed, characterized British rule over the nonwhite populations of India and Africa” (Brantlinger 2007, 172). Yet our divergent national histories entail certain differences in the imperial project seen from across the North Atlantic. The British could claim, however hypocritically, to be gracing its imperial others with the benefits of centuries of “civilization”; the US, on the other hand, saw itself constantly rebuked as an uncivilized upstart, and for historical reasons had been reluctant to engage in colonization projects beyond what it perceived as its legitimate territorial boundaries. Kipling’s plea to Americans, then, has been taken to emphasize an abstract whiteness as the justification for imperialism, but just as much the advances in industrialization and technology that were coming more and more to characterize the US in the minds of the West.
The historian of technology Michael Adas has focused specifically on US adventurism in the Philippines as a site where technology supplants cultural history and religion as prime justifications for imperialism. While “the Americans’ well-publicized intent was to prepare the Filipinos for self-rule” (Adas 407), “the preparation of the Filipinos for independence was never seen in purely political terms.” Instead, “perhaps more than in any other colony, the role of the engineer as civilizer was touted by politicians in Washington and officials in the Philippines.” Adas offers as an example the “impatient businessman turned colonial administrator W. Cameron Forbes”: “As he saw it, the Filipinos could not get enough of the new technology that colonization made available to the islands.”
Adas is largely talking about technologies related to transportation and construction, although he notes that “modernization” of legal codes and “currency” were also important to technological imperialism. The example of blockchain suggests another dimension to technological imperialism that the evident utility of railroads and irrigation systems may obscure. For blockchain, despite the amazing hype associated with it, appears to benefit nobody but the colonizer, and whatever subordinates the blockchain imperialist has to pay off to get his way. The real “benefit” blockchain provides is something like whiteness, with all its attendant fictions and contradictions: whiteness is a technology that cannot deliver, or can only deliver a lack, a lack that too frequently erupts into fascism on the domestic front, and colonialism elsewhere (Seshadri-Crooks 2000). In both cases, it has nothing to offer but the disparagement of the non-white and the exaltation of the white, on grounds that it knows only too well it cannot actually provide. In this small way, then, blockchain may help to illuminate something that may be less clear in other imperialist projects: that even when what imperialism delivers include material benefits to its subjects, its most important deliverables may be neither economic nor practical in nature, but rather cultural and political: the power of the message that what is “possessed by” or even characteristic of colonized peoples may in fact be owed as the wages of whiteness, that one of the core properties of whiteness is its ability to convince everyone, whites and non-whites alike, that non-whites owe themselves to whites (this may provide a way of joining the psychoanalytic analyses of Seshadri-Crooks to the important critique of whiteness as property in Harris 1993). Whether it is whites on the homefront, or nonwhites in the periphery, who subscribe to this belief, the results are arguably no less destructive.
· Adas, Michael. 2006. Dominance by Design: Technological Imperatives and America’s Civilizing Mission. Cambridge, MA: Harvard University Press.
· Brantlinger, Patrick. 2007. “Kipling’s ‘The White Man’s Burden’ and Its Afterlives.” English Literature in Transition, 1880–1920 50:2. 172–191.
· Crandall, Jillian. 2019. “Blockchains and the ‘Chains of Empire’: Contextualizing Blockchain, Cryptocurrency, and Neoliberalism in Puerto Rico.” Design and Culture 11:3. 279–300.
· Harris, Cheryl L. 1993. “Whiteness as Property.” Harvard Law Review 106:8. 1707–1791.
· Jutel, Olivier. 2019. “The Blockchain, Imperialism, and Techno-Solutionist Discourse.” Draft paper.
· Seshadri-Crooks, Kalpana. 2000. Desiring Whiteness: A Lacanian Analysis of Race. New York: Routledge.
· Watlington, Chloe. 2019. “Tales from the Cryptos: Blockchain Visionaries and Old Colonial Scams in Puerto Rico.” The Baffler 43 (Jan).
· Yarovaya, Larisa, and Brian Lucey. 2018. “Bitcoin Rich Kids in Puerto Rico: Crypto Utopia or Crypto-Colonialism?” The Conversation (Feb 14).