The useful part of cryptocurrency
Let’s imagine that you’re concerned about climate change. You’ve decided to leave the city and move to a place where you can grow your own food (or at least some of it). You settle on a part of the country where continued access to fresh water is fairly likely and summer heatwaves won’t become too bad — in the US and Canada this might be near the Great Lakes. This feels like a wise thing to do.
You go to landwatch.com and find an old farm for sale. Compared to property in your city, it’s pretty cheap. You reason that the profitability of the land has been steadily declining for conventional farmers — they need to pour more money into fertilizers, pesticides, and the patented seed that can withstand those, and their margins have become unbearably tight. “Okay,” you reason, “I’m going to spend the next few years building the soil back up and not producing much food — but that’s fine — I will be a responsible steward for this land so it will be healthy and able to feed people when things get dire.” That’s what you’re worried about anyway.
You fly out and visit the farm. The country is beautiful. Everything looks exactly as you imagined it. This is so exciting! Things move fast once the realtor realizes that you’re serious, but you don’t close the deal until you’re back at home. The plan is to stay in your current home for now anyway; the kids are in school and your partner doesn’t have a remote job like yours; not yet anyway. The family will start spending summers and holidays on the farm and transition to living there full-time at some indeterminate point in the future. You will plant fruit and nut trees on much of the land anyway, so years may pass before those are producing anything. That’s fine because you’re not doing this to make a profit, you’re getting ready to live a new life that is more robust to an uncertain future.
(If this scenario sounds nice but unbearably naive, you should know that it’s inspired by a real daydream.)
❦
Several months pass (in the blink of an eye!) between the day you officially became the owner of the property¹ and your first trip out. You intend to start with a few repairs to the small farmhouse before worrying about planting. Yet when you arrive at your new farm, you find a family living there: “this is our property and you’d better get off!” Nobody sticks a shotgun in your face exactly, but you can tell that firearms will appear if you don’t leave right away, so you do.
What to do now? That’s easy: appeal to the state. After all, the state does two things well:
You call the county sheriff to deal with your trespassers. Maybe this sheriff won’t “process” the eviction without a court order, so you start the tedious process of legally defending your claim of ownership. Fortunately for your case, you bought title insurance, and the title insurance company earned their fee by confirming that the seller did, in fact, own the land that they sold you This will get cleared up and the people living on your land will be removed. Whether that’s a violent scene or a just sad one is not something you need to worry about — somebody else is handling it.
This process relies on the county’s Recorder of Deeds office maintaining a careful record of who has owned the parcel and when various claims on it began and ended. Most people who haven’t bought a house in the US or Canada haven’t heard of “title insurance”, it’s bizarre bit of duct tape over our baroque system of land registration. Cryptocurrency fans are right to be skeptical of this complex and brittle system, composed of paper records kept in county offices and banks. The typical house sale involves a host of agents — two banks, two real estate agents, two lawyers, the aforementioned title insurance company, a housing inspector, etc. Imagine if many of these roles were eliminated entirely with the use of a distributed ledger. Transactions on the blockchain might be slow, but they’re an awful lot faster than buying a house.
The most radical claim about cryptocurrency is that, due to its decentralized nature, it will undermine banks and even the state. Yet as much as I hate banks and the state, I realize that I’m not on the same side as cryptocurrency supporters. Among other things², I can’t overlook the fact that they seem really interested in replacing the first thing that states do well (“adjudicating questions of property ownership”) but appear to have no interest in disrupting the second (“enforcing property law using any amount of violent force necessary to do so”).
Cryptocurrency proponents often invoke the “freedom” that we will supposedly gain by decoupling currency from the state. Yet of the various organs of government, I, personally, am much more likely to have my freedom unjustly impinged upon by the County Sheriff than the County Recorder of Deeds. This is true for all of us who did not luck into fortune, yet it’s the inverse for the Peter Thiels of the world³. Whose freedom are they talking about?
When the press covers cryptocurrency, its advocates are cast as visionaries. What is their vision? A world with the same policing and poverty we experience now, but in which some aspects of the state have been taken over by the internet? Contrast this with the call to abolish the police, which arose most loudly during 2020 from over-policed communities themselves; this message may have been watered down (“abolish” replaced with “defund”) and then swept under the rug, but this is the truly utopian vision for our future.
Visionary thinking starts by imagining a world that has solved a current problem (“police kill too many people”), figures out how to implement the solutions (“replace our punitive justice system with a system of restorative justice”), and lays out what trade-offs must be made (“poverty must be eradicated and the wealth gap drastically shrunk”). I used to think that cryptocurrency was a solution in search of a problem. Now I understand that the problems it solves (“banks and governments sometimes inconvenience the wealthy”) and the trade-offs it makes (“we need to consume drastically more power to mine coins and conduct transactions”) are simply the wrong ones.
⁂
[1] Well, you and the bank supplying the mortgage, but you put a sizable portion down and the monthly payments could really just be considered a portion of your larger “retirement portfolio” anyway, right?
[2] The energy demand of “crypto” has been well-covered and is itself a great reason to hate cryptocurrency. But even an imaginary carbon-neutral cryptocurrency (which will never exist) doesn’t solve the right problems.
[3] The situation is actually worse than it sounds here; even the nonviolent parts of the state bureaucracy are more cruel to the poor than to the rich, it’s just that the violent parts are exceptionally cruel to the poor and represent no threat at all to the rich.