Crypto’s Legacy Is Finally Clear
9 min read
For years, crypto skeptics have asked, What is this for? And for years, boosters have struggled to offer up a satisfactory answer. They argue that the blockchain—the technology upon which cryptocurrencies and other such applications are built—is itself a genius technological invention, an elegant mechanism for documenting ownership online and fostering digital community. Or they say that it is a foundation on which to build and fund a third, hyperfinancialized iteration of the internet where you don’t need human intermediaries to buy a cartoon image of an ape for $3.4 million.
Then there are the currencies themselves: bitcoin and ether and the endless series of memecoins and start-up tokens. These are largely volatile, speculative assets that some people trade, shitpost about, use to store value, and, sometimes, get incredibly rich or go bankrupt from. They are also infamously used to launder money, fund start-ups, and concoct elaborate financial fraud. Crypto has its use cases. But the knock has long been that the technology is overly complicated and offers nothing that the modern financial system can’t already do—that crypto is a technological solution in search of a problem (at least for people who don’t want to use it to commit crimes).
I tend to agree. I’ve spent time reporting on NFTs and crypto-token-based decentralized autonomous organizations, or DAOs (like the one that tried to buy an original printing of the Constitution in 2021). I’ve read opaque white papers for Web3 start-ups and decentralized finance protocols that use smart contracts to enable financial-service transactions without major banks, but I’ve never found a killer app.
The aftermath of the presidential election, however, has left me thinking about crypto’s influence differently.
Crypto is a technology whose transformative product is not a particular service but a culture—one that is, by nature, distrustful of institutions and sympathetic to people who want to dismantle or troll them. The election results were at least in part a repudiation of institutional authorities (the federal government, our public-health apparatus, the media), and crypto helped deliver them: The industry formed a super PAC that raised more than $200 million to support crypto-friendly politicians. This group, Fairshake, was nonpartisan and supported both Democrats and Republicans. But it was Donald Trump who went all in on the technology: During his campaign, he promoted World Liberty Financial, a new crypto start-up platform for decentralized finance, and offered assurances that he would fire SEC Chair Gary Gensler, who was known for cracking down on the crypto industry. (Gensler will resign in January, as is typical when new administrations take over.) Trump also pledged deregulation to help “ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world.” During his campaign, he said, “If you’re in favor of crypto, you’d better vote for Trump.” At least in the short term, crypto’s legacy seems to be that it has built a durable culture of true believers, techno-utopians, grifters, criminals, dupes, investors, and pandering politicians. Investments in this technology have enriched many of these people, who have then used that money to try to create a world in their image.
Though the white paper that introduced bitcoin’s origins and philosophy—something of an urtext for crypto overall—does not discuss politics per se, cryptocurrency was quickly adopted and championed by cyberlibertarians. Their core belief, dating back to the 1996 “A Declaration of the Independence of Cyberspace,” is simply that governments should not regulate the internet. Bitcoin and other cryptocurrencies are built on blockchains, which are fundamentally anti-establishment insofar as they are decentralized: They do not require a central authority or middleman to function. As the late David Golumbia, a professor who studied digital culture, wrote in his 2016 book, The Politics of Bitcoin: Software as Right-Wing Extremism, “Many of [bitcoin’s] most vociferous advocates rely on characterizations of the Federal Reserve as a corrupt idea in and of itself, a device run by conspiratorial bankers who want ‘the state to control everyone’s lives.’” For true believers at the time, cryptocurrencies were a techno-utopian response to a broken, exclusionary, and extractive financial system—a response that may either remake the system or burn it down.
Yet today, crypto’s culture is far more diffuse. Exchanges such as Coinbase and Robinhood have effectively opened trading markets to anyone with a bank account and a smartphone. There are certainly true believers in the technology, but they are accompanied by celebrities and memelords drumming up new coins based on viral memes, and scores of day traders hoping to catch one of these speculation tokens at the right moment. Because crypto profits are driven by generating hype and marketing, the technology has spawned a durable digital culture of people longing for community or chasing after the allure of 1,000x returns, as well as those who relish just how much crypto pisses off the right people. Even as crypto becomes more mainstream, many of the industry’s boosters see their investments and community as a countercultural force. And so it makes sense that right-leaning culture warriors such as Jordan Peterson and Joe Rogan (who are now very much the establishment but position themselves as outsiders) have expressed fondness for crypto, and that venture capitalists such as Marc Andreessen, whose firm is deeply invested in crypto, have adopted more and more reactionary politics.
It is easy to make fun of the crypto hype cycles—the Beanie Babies–esque rise and fall of NFTs such as Bored Apes—and to roll your eyes at the shamelessness of memecoin culture. As of this writing, Haliey Welch, a viral sensation turned podcaster (better known as the “Hawk Tuah girl”), is in the middle of a backlash for launching her own memecoin, which immediately spiked and then crashed, infuriating her fans. If that sentence makes perfect sense to you, I’d like to apologize, but also: You get my drift. Crypto culture, with its terminally online slang and imagery, is alienating and off-putting. The industry’s penchant for Ponzi schemes and defrauding retail investors—the implosion of insolvent companies such as FTX and platforms such as Celsius—is more than worthy of scorn. And yet, through all of this—perhaps because of all of this—cryptocurrencies have minted a generation of millionaires, billionaires, and corporate war chests. And now they’re using their money to influence politics.
Which brings us back to Trump. Whether he understands crypto beyond the basic notion that it’s a good way to win votes and get rich off the backs of his most fanatical supporters is not clear. But the alliance between Trump and the crypto constituency makes sense philosophically. Trump is corrupt, and he loves money. For supporters, the appeal of his administration revolves in part around his promises to gut the federal government, seek retribution against his political enemies, and remake American institutions. You can see how the MAGA plan might overlap with an edgelordian culture that has contempt for a system it sees as decrepit and untrustworthy. The same overlap applies to technology executives like David Sacks, the anti-woke venture capitalist Trump has named as his AI and crypto czar.
I put all of this to Molly White, a researcher who covers the cryptocurrency industry. She suggested that there was yet another parallel between crypto advocates and the MAGA coalition—namely a desire to become the powerful institutions they claim to despise. “Bitcoin, and to some degree the other crypto assets, have this anti-government, anti-censorship ethos,” she told me. The original crypto ideology, White said, was built around the notion that large financial institutions and the government shouldn’t be part of this new paradigm. “But many crypto advocates have established a great deal of power through the wealth they’ve managed to accumulate using these assets. And over time there’s been a shift from We don’t want those institutions to have the power to We want the power.”
White argues that the crypto industry has become a re-creation of much of what its original ideology claimed to despise. “If you look at Coinbase and other crypto companies, they do similar things to the financial institutions that Satoshi [Nakamoto, Bitcoin’s pseudonymous creator] was disappointed in. A lot of these companies work closely with the government, too, and they do things like the same type of ID verification that banks do,” she said. “They’ve re-created the financial system, but with fewer protections for consumers.”
It seems clear that in a second Trump administration, the crypto industry and its barons might get their wishes. It’s possible that the industry could see regulations declaring tokens as commodities, instead of securities, which would ease restrictions on trading and perhaps lead to more comingling between big banks and crypto assets. Last week, Trump nominated Paul Atkins, a former SEC commissioner, and a pro-crypto voice, to run the SEC. The announcement caused the price of bitcoin to surge to more than $100,000 (at the same time last year, the price was less than half that).
You don’t have to be a cynic to see a flywheel effect: Crypto has become a meaningful political constituency, not because its technology has broad, undeniable utility, but because it has made certain people extremely wealthy, which has attracted a great deal of attention and interest. The industry courts politicians with its wealth, and politicians pander for donations by making promises. Ultimately the pro-crypto candidate wins and the price of bitcoin surges, making many of these same people richer and thus able to exert more influence.
Trump hasn’t taken office yet, but you can already see how this might play out. Justin Sun, a Chinese national and cryptocurrency entrepreneur charged with fraud by the SEC, recently bought $30 million worth of tokens of Trump’s World Liberty Financial coin—an arrangement that may have been quite lucrative for Trump, raising concerns that the incoming president’s crypto investment will be an easy vehicle for bribery. There is speculation that Trump could make good on a proposal to create a strategic reserve of bitcoins in the U.S., which could involve the federal government buying 200,000 bitcoins a year over the next five years—perhaps by using the country’s gold reserves. For large crypto holders, this would be an incredible scheme, a wealth transfer from the government to crypto whales. In practice, this would allow crypto holders to sell off their assets to the government while pumping the price of the asset. Using the government to prop up bitcoin is an interesting maneuver for a technology whose origins lie in decentralization.
Crypto could also end up being the currency of choice for greasing the skids of the second Trump administration, but the broader concern is about what happens if crypto executives get everything they want. As my colleague Annie Lowrey wrote recently, “Industry-friendly rules would lead to a flood of cash entering the crypto markets, enriching anyone with assets already in their wallets, but also increasing volatility and exposing millions more Americans to scams, frauds, and swindles.”
White offered a similar concern, should crypto end up further entangled in the global economy. The collapse of FTX wiped out some of the exchange’s users, but there was no real contagion for the broader financial system. “Back then, crypto companies weren’t too big to fail and there was no need for a bailout,” she told me. “If banks are allowed to get more involved and if crypto and traditional finance are enmeshed, my fear is the industry will grow bigger and the crashes will be greater.”
Crypto’s future is uncertain, but its legacy, at least in the short term, seems clearer than it did before November 5. It turns out that cryptocurrencies do have a very concrete use case. They are a technology that has latched on to, and then helped build, a culture that celebrates greed and speculation as virtues just as it embraces volatility. The only predictable thing about crypto seems to be its penchant for attracting and enriching a patchwork of individuals with qualities including, but not limited to, an appetite for risk, an overwhelming optimism about the benefits of technology, or a healthy distrust of institutions. In these ways, crypto is a perfect fit for the turbulence and distrust of the 2020s, as well as the nihilism and corruption of the Trump era.
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