People across the Atlantic have witnessed the socialization of risks and the eradication of private wealth by means of bank bail-outs and bail-ins. Governments have proved far better at spending trillions of their taxpayers’ money saving banks than at passing laws to reform the banking sector.
Governments have repeatedly demonstrated that far from presiding over the banks and financial institutions, they are merely puppets to the demands of global finance. Discussion of the ‘capture’ of government by banks and financial institutions has become a commonplace of mainstream academic political discourse.
The Far Left and Right make good bedfellowsBy extension, consumers and voters are forced to buy into this system with their own private funds. A moral boycott – such as no longer buying clothes from high street stores or becoming a vegan – is not just ineffective but impossible in an essential industry that whitewashes the money of drug cartels, manipulates its own rates, and bets on the bankruptcy of homeowners and entire states.
The forced bail-in in Cyprus, which included a 9,9 % levy on deposits over €100.000, has been criticised from the left as robbery of everyday savers, and from the right as modern day Bolshevism. From any perspective, it has got private individuals thinking twice before leaving their money in the bank.
While Bitcoin is an undoubtedly a volatile currency, there are far worse and the leap of faith required to convert Euros or Dollars into anonymous “internet money” seems far less drastic to those in countries like Croatia, which is changing to its third currency in a generation. Bitcoin’s near instant rebound after the closure of Silk Road, a multi-million dollar online drug market that traded only in Bitcoin, demonstrates that this is more than the drug bazaar’s currency of choice or the commodity of Internet age gold bugs.
For many, Bitcoin is more than money. It’s the symbol of a political utopia. The moral arguments for it are two-fold. Firstly, Bitcoin is “private“ money that has the power to liberate its users from governments’ monopolies of power. This feeds into popular ideas of liquid democracy: the peer-to-peer administration of Bitcoin means that government cannot centrally regulate its value. Secondly, Bitcoin is anonymous. Governments and other institutions cannot trace its movement and do not have information about its ownership. This “Swiss style” anonymity was long frowned upon, but is given traction by the on-going NSA and GCHQ scandals and growing public desire to keep personal information secret.
In the ideology of Bitcoin, the Far Left and Right make surprising bedfellows. Postulating money as a “natural freedom” and an entirely private concern is to borrow from the very dreams of free and unregulated markets that led to the crash. In this respect, the Bitcoin rhetoric bears striking similarities with the Tea Party’s. This utopia ignores the fact that the real causes of the crisis lie in the markets, and that governments have become mere sub-contractors to a much more powerful dynasty of power: financial capitalism.
The power to reboot the systemThat may be true, but at least Bitcoin has the power to “reboot” the system. It allows wealth to be shifted into a market that has not yet been rigged and saturated by the interests of a very small group of people. Anyone that enters the Bitcoin market today does so with equal chances and without the threat of government manipulation, by inflation or such other means. This is the rhetoric of Bitcoin traders.
Which is to say, Bitcoin is a means of extracting wealth from the established markets, but it functions very much inside the realm of financial capitalism by being – more or less – a commodity traded like any other. The only difference is that, temporarily, a different class of people have more information and more power. Surely utopia is more than switching Soros for Winkelvoss? Bitcoin has the instruments to serve the interests of the few but still lacks the mechanisms to serve societies as a whole. And if this is utopia, does that mean that our imaginations have been stunted to the point where even heaven operates according to the laws of the market?
By Guylain Gustave Moke
World Affairs Analyst
Photo-Credit: AFP-Bitcoin- A decentralized International Currency