A Knight on a chessboard can be looked at from two different  perspectives. Firstly, we can zoom in and analyse it in absolute terms  as a closed system. What is the shape of the Knight? What capabilities  does it have? What kind of language does it use to describe itself?

Secondly, we can zoom out and analyse it in relative terms, like  looking at a Knight in relation to the arrangement of Bishops, Pawns and  Rooks on a chessboard, seeing it as but one element of a broader  interactive system.

Likewise, Bitcoin, and other cryptocurrencies, can be seen from two  broad perspectives. We can immerse ourselves in the code, in the Bitcoin  community and in its rhetoric, and analyse whether these internal  dynamics are positive or not. Or we can ignore the particularities of  the code, the self-proclaimed goals of the proponents, and instead analyse Bitcoin and its connection to the rest of the monetary system,  financial sector and broader societal institutions.

I use this chessboard analogy with caution. The world is not actually  a game played by different institutions with fixed characteristics like  chess pieces. The analogy is useful, though, as a tool to help one see  that the peculiar characteristics internal to say, a knight, really have  to be perceived in light of the context that the knight finds itself  in. Bitcoin does not exist in a vacuum, and as such its attributes can  only express themselves within the constraints set by others on a  broader metaphorical board.

This is important because it affects the way we either praise or  critique Bitcoin. Members of the Bitcoin community sometimes describe  the workings of the cryptocurrency as if they imagined it on a  chessboard with no other pieces, or perhaps on a chessboard made up  entirely of knights. For example, despite the fact that Bitcoin has made almost no dent in central banking, someone might claim “Bitcoin is  an apolitical protocol which renders central banks redundant and allows  us to mutually contract with each other freely…” The statement is prefigurative, a normative vision of an imagined future reality rather than a description of an actual current reality.

Similarly, critiques of Bitcoin might fight against this vision, or  attack Bitcoin in isolation without thinking about its context. They  might claim, “It is subject to abuse and fraud!”, without admitting that relative to  the existing payments and banking system – with its routine,  legitimised, large-scale social injustice committed by transnational banking behemoths – the abuses are tiny.

It is only by zooming in and out, and considering the interplay  between these absolute and relative perspectives that we can start to  detect the complex power dynamics within Bitcoin. Like a country, it has  internal power dynamics – which can be lauded or talked down –  but also finds itself within a broader geopolitical situation, in which  the domestic dynamics are less important. In this article, I will first  sketch the internal narrative of Bitcoin empowerment, then offer four  lines of critique, and then go back and suggest why, despite the  critique, we should be glad Bitcoin exists.

What the Knight says about itself: The narrative of personal empowerment

If you spend time at a Bitcoin event, you will hear a lot of claims  being made concerning Bitcoin’s potential to create personal  empowerment. These imagined benefits often include:

• Bitcoin as defence of privacy: The (semi-)anonymous nature of the  transactions protects people from the prying eyes of authorities,  bypassing oppressive state surveillance and corporations

• Bitcoin as protector against monetary abuse: In contrast to a  central bank that can inflate away hard-earned savings, the hard-coded  money supply protects people through promoting deflation

•Bitcoin as agent of creativity, excitement and self-determination:  There is a certain exhilaration and even fun in using a new,  experimental technology, especially when they are frowned upon by the  existing (state and corporate) status quo. People often search for  spaces of rebellion, and the option to challenge existing conventions in  a spirit of self-determination

• Bitcoin as agent of mental expansion and open-mindedness: We have  long passively accepted monetary monopolies. Bitcoin has opened up the  horizon to multiple currency systems. Furthermore, the underlying blockchain technology can be used for other, non-monetary purposes

• Bitcoin as a less costly way to transact: The current commercial  bank payments system extracts rent from people in many ways. Bitcoin  allows us to bypass that, achieving cheaper transactions

• Bitcoin as creator of financial inclusion:  Bitcoin offers a lifeline to people in countries with unstable banking  systems and corrupt governments, allowing them to escape an otherwise  compromised system

We have to take these claims seriously. For example, we do indeed  value privacy. It allows us to do things that powerful interest groups  might critique, and historically this is a very important driver of  progressive change. Indeed, as books like The Misfit Economy  point out, activities in the grey area between deviance and normality  are often sources of innovation. A similar principle is even found in  ecological design frameworks like permaculture,  where value is not only placed in cultivated systems, but also in the  chaotic creativity that exists on the unregulated margins.

On the other hand, each of these claims can be tested and subjected  to further scrutiny. For example, is privacy really a form of  empowerment by itself? Sure, it might be an element of a broader  programme to give people breathing room to act independently, but  privacy is equally used as a tool of elites to avoid accountability.

And what about this story of financial inclusion? Sure, maybe Bitcoin might offer a new means to create cheap remittance systems.  On the other hand, there is something obnoxious about the way that  university-educated tech optimists constantly invoke the mythical land  of ‘Africa’, with the imagined African person in the imagined African  village, using Bitcoin to escape corruption in their country. As a  person from ‘Africa’ who has also had experience with international  development, it is easy to see this technology-centric narrative is both  patronising and, to be frank, delusional.

Tech critique 1: Individual empowerment, or collective empowerment?

But, even if we take these claims at face value, and assume Bitcoin does have the potential to create personal empowerment, a second question remains: Does this necessarily translate into broader social empowerment?

Within the Bitcoin community – which has a distinct libertarian bias –  there often seems to be the assumption that personal empowerment is  roughly the same thing as broader social empowerment. There is bias  towards believing that if a tool allows a person to protect themselves  individually, it must also be positive at a collective level.

To illustrate this point using a different example, consider a basic pro-gun narrative you might encounter: this rifle can be used to protect me, and therefore it is a protector of rights, and thus a tool for broader social empowerment.

This approach – which starts from a defensive, individualistic  perspective and then justifies it with an appeal to a secondary benefit  that apparently accrues to everyone else – can be contrasted to  arguments looking at the societal perspective first. In the case of  rifles, we could also start from an assertion that collectively, gun violence harms society, and proceed from there to conclude that individual gun use should be restricted.

This problematic dynamic can be seen in the Bitcoin claim about  deflation as a form of protection. While it is true that from the  perspective of an individual person, deflation appears to empower  them (in that the money-claims they hold miraculously become worth more  relative to goods), deflation at a societal level can just mean that  those who hold savings, or who hold (i.e. own) debt instruments, benefit  relative to those who do not (and owe debts to others). Both inflation  and deflation represent different forms of wealth transfer, and there is  nothing intrinsically empowering or disempowering about either of them. It really just depends on who you are.

Deflation—in a crude sense—means work someone did (abstractly  represented in a money claim) will be valued more than work they get  back from someone else later (claimed with that money). Inflation means  work they did will be valued less than work they get back from someone  else.

Thus, as economist Beat Weber  points out, the idea that deflation protects’you is what might be  called an Uncle Scrooge perspective, in that it most appeals to people  with monetary savings who are concerned about the state ‘inflating money  away’. It is the conservative impulse of a creditor, or perhaps like  that of a squirrel hoarding apparently scarce claims to nuts, a  situation that may leave the individual squirrel empowered, but that  collectively locks squirreldom into a destructive game.

The important point here, though, is not to prove whether inflation  or deflation is preferable. It is rather to point out that it is not obvious  that deflation is somehow better than inflation, and anybody who  presents it as such is clearly taking a very partial view. Indeed, stop  for a moment and think about what deflation means from an intergenerational  perspective. While right now, Bitcoin inequality is justified in terms  of early adopters being rewarded relative to late adopters, this later  would turn into a battle between current generations who hold the  limited currency, versus yet unborn generations who will be forced to  earn it (or buy it) from them by providing services far in excess of  what was required to originally obtain the currency.

Tech critique 2: Tools of empowerment are most easily appropriated by the already-empowered

The individualistic bias sometimes found in the Bitcoin community can  prioritise awareness of individual benefits over collective benefits.  Empowerment, in turn, is often seen to stem from the individual not  being interfered with, encapsulated in slogans like ‘don’t tell me what  to do’, and ‘just leave me alone’.

The problem, though, is that Bitcoin finds itself in a de facto  unequal world, and it just so happens that “don’t tell me what to do”  and “just leave me alone” are, perhaps co-incidentally, the same things  that powerful people—like  the freedom-loving Koch Brothers—say  to prevent forms of monitoring or regulation of their giant secretive  global businesses that impact upon the lives of many people with less  economic clout. We have reasonable grounds to be sceptical about this.

The ‘whites’ forming themselves: tech critiques on the ‘dark’ knight Bitcoin
Source: Olli Henze, Flickr Creative Commons

You do not have to be a conspiracy theorist to realise that the  people with the most ability to exploit Bitcoin (to start new companies,  to get access to investment capital to develop the technology) also  happen to be the same people who already are doing pretty well in  society. Thus, even if the technology itself might have positive  principles, access to it—whether that is explicit or implicit—is   unequal.

We see this issue cropping up in gender critiques of Bitcoin, analysis of Bitcoin inequality, and  critiques of the cult of meritocratic technocracy, the fact that  programmers are not just your average Joe but a particular technological  priesthood wielding a language that many do not understand. Indeed, the  Bitcoin community, just like the mainstream finance community, has  arguably developed its own exclusionary language and culture.

Analysing power and privilege like this is not rocket science. It  operates on a few lines, such as 1) gender 2) race and ethnicity 3) age  4) socio-economic situation and education levels and 5) position in the  geopolitical system. So a middle-aged upper-class university-educated  man from America tends to wield much greater power, have much greater  access to goods and services, and perceive the world as much flatter,  than, say, a young impoverished woman from Nepal. Their ability to  enthusiastically adopt an otherwise neutral technology is likewise, much  greater.

Certainly, some Bitcoin proponents can get very irritated when you  draw attention to the subtle inequalities. It is like they perceive it  as an irrelevant point, like the person is thinking “I have access, so  everyone else obviously does too”, and “nobody is stopping you using it,  therefore it is free”. They prefer to imagine that the only barrier to a  utopian world comes in the form of external and unnatural aggressors  like the government, corporate cronies and central banks. They  themselves form no part of such a power structure.

Thus we find Silicon Valley tech entrepreneurs brimming with  optimistic expectations of disruption and future success, proclaiming  the word of blockchain rebellion as a universal tool of empowerment for  all, contrasting themselves to the parasitic Wall Street banker. The  critical observer, though, might just take a step back, and conclude  that this is really just one group of elites fighting another group  of elites for control of the ramparts of power, both invoking the  interests of Average Joe in the process.

At a recent Bitcoin meetup, Vinay Gupta of Ethereum showed a brilliant video that encapsulated this very point. It was Juice Rap News’ New World Order  video, where a guy blames the world’s problems on a nefarious New World  Order. He is subsequently shown that the NWO is a mental construct he  uses as a tool to cast himself in the role of an underdog, to justify  his own position of power within a greater system that he refuses to  acknowledge.

It is an authentically disturbing line of critique, and one to take  seriously. Despite the rhetoric of empowerment and rebellion, there is  too often an inability of those articulating that rhetoric to comprehend  their own position in a system. Their vision of Bitcoin as a neutral  apolitical technology to be used by people to bring liberation to the  world is not a reflection of reality. It is a reflection of the fact  that they wield enough power to fail to perceive the inbuilt barriers to  its usage.

Tech critique 3: Even if access is equal, technology can be abused by people

Perhaps the most well-established line of technological critique is the simple observation that technology can be abused: You can use this axe to chop firewood, but you can also use it to cut my head off.  This is clearly a different line of critique to saying that access to  axes, or encouragement to use axes, or education on axe use, is unequal.

Bitcoin, like many other technologies, can be overtly abused by  people. This is something that keeps cropping up in the news, with  stories of various forms of fraud, scams and hacks  within the Bitcoin ecosystem. These scams, furthermore, are most likely  to hit people who are already in a disempowered situation, such as  those who are in debt and who are desperate for a quick way out.

The volatile and speculative nature of Bitcoin trading, like that of  financial day trading, online poker, lotteries, and win-a-car  competitions, can be twisted into a story of empowering escape from  economic reality. This can also have a parasitic class element to it, as  venture capitalists and technological elites push get-rich-quick  narratives to the working man in the pub, claiming to be on the same  side.

Of course, merely pointing out that a technology can be abused is not  that interesting. Your cash can be robbed from your wallet, but we do  not use this fact as an argument for banning the institution of  banknotes.

A more compelling subsection of this critique is not so much  concerned with current abuse of the technology. Rather, it concerns the  increasing control certain individuals have over it, and how this in  turn opens up the scope for large-scale future exploitation. For  example, we might consider the growing power of mining pools, which increasingly have a domineering position within the network.

These Bitcoin corporations are emerging because there are centralising tendencies internal  to Bitcoin’s design. Miners are rewarded with new bitcoins for  processing transactions and securing the network, but because the  issuance of new bitcoins occurs at a fixed rate, regardless of how many  people are mining, the more miners there are on the network the less the  individual miner is likely to get. This means that to compete the  individual miner must either obtain increasingly powerful computers, or  band together with others to create collective corporations with enough  processing power to compete. Unlike in some industries, there are no advantages to being a small nimble operation. Sheer brute force is really the only competitive edge, and that requires access to capital.

Where does this lead us? The future of Bitcoin could be one of  passive users relying on huge mining pools, essentially corporate  players, to run the network. Such an outcome would leave it not that far  at all from our current bank-centred payments system.

Tech critique 4: The Techno-Leviathan

The three aforementioned critiques add up to a simple conclusion:  there is unequal access to a technology that can also be abused by those  who use it, and that may fail to deliver the collective benefits that  some claim it would. People are used to such observations about  technology. It is like pointing out that a pen can be used to write  inspiring masterpieces as well as hate speech, in a society where only  some people can read and write.

But what about the power dynamics built into the technology itself?  What about the way the act of writing with a pen makes you think? This  line of technological critique is not nearly as familiar as the normal  ‘people can abuse technology’, or ‘there is unequal access to  technology’ lines. This is the idea that the technology, in itself and regardless of other people, is not neutral.  It is the kind of critique associated with people like Marshall  McCluhan. A technology like a TV might show different content—government  propaganda, Fox News, or a National Geographic documentary—but conceals  an invisible power dynamic that is there regardless of the content. The fact that you are passively sitting there giving it energy. Are you aware of the attention that you have deferred to the machine?

I want to challenge the notion, pervasive in some parts of the Bitcoin community, that technology itself is apolitical, and to do so I developed a concept called the Techno-Leviathan.  The essence of the concept is this: technological infrastructures do  not offer an escape from government, they just offer another, competing,  governance system with its own power dynamics. You can decide to view  rule by algorithms as a positive or negative thing, but the point is to  recognise the power that is being given to the apparently neutral  technology.

One way to conceptualise this is to think of mirrors. Can you see a mirror? Sure, you can see an image in a mirror, but try see the mirror itself.  It is almost invisible behind the projected image. Likewise, people see  all sorts of visions in the blockchain, visions of human freedom and  epic escape, but they struggle to see the thing it is reflected in, and  that thing is the internet monarch, the Techno-Leviathan. It is like  reflective glass. And, like Narcissus, you should be careful about  falling in love with the reflection in the mirror, because it obscures  the fact that it is then the mirror itself that controls you.

Perhaps this is unnecessarily dramatic. A concept like the  Techno-Leviathan is, mostly, derived by an internal reading of Bitcoin,  in an imagined world where no other system exists. Yes, indeed, if  blockchain technologies were to become pervasive, then this  Techno-Leviathan would emerge. But, the reality of the world right now  is that we’re nowhere close to that situation.

Back to the chessboard: The geo(electric) politics of a cashless future

So let’s take a step back now, and zoom out to a bird’s-eye view of  the chessboard. While the critically minded individual might take  pleasure in deconstructing the narrative put out by the Knight on the  chessboard, remember that the cryptocurrency remains a very small part  of an overall system that is much more destructive.

The reality of our current world is that regardless of the  rhetoric—conservative libertarian, left-wing anarchist, or otherwise—of  the Bitcoin community, the mainstream financial sector is infinitely  more powerful, much bigger, and has much more political clout. In fact,  there is not even yet a real financial system that exists for Bitcoin.  There are no banks for it, or official systems of lending, or real  negotiable financial instruments denominated in it.

Better a dark knight than no knight at all

From this perspective, we do not actually have to care about whether  or not Bitcoin’s hardcoded monetary policy is positive or not, or  whether the evangelists are full of nonsense. From a strategic  meta-level perspective, we might merely see Bitcoin as a potential  future counterpower to the existing, and much more powerful, bank  payment system. It does not necessarily matter if that counterpower  happens to have some internal negative characteristics. What is  important is that it is a counterpower.

This is especially important in the context of a growing move to a cashless society. The  payments space is currently gurgling with excitement about contactless  technology and micropayments, the increasing ability to use cards to pay  for almost everything. Companies like Paypal, Stripe, Square and Venmo  have the gloss of disruptive innovation, but all the start-ups and  technological advances are built on one foundation: The commercial banks  that act in concert with credit card networks like Mastercard and Visa.

Regardless of which efficient payments provider you use, whether it  is ApplePay or Google, in the end they all rely on the same commercial  banking payments infrastructure. And that is because the entire  electronic money supply—that the payment system is supposed to move  around—is created by commercial banks and does not exist without them.

If that comes as a surprise, it is worth noting that not one unit of electronic currency that you use comes from the central bank. Indeed, the only government money we directly  use are coins and banknotes, otherwise known as central bank notes. An  imagined cashless future, in which we move away from use of such notes,  is basically one where all transactions must occur via commercial banks,  who in turn deal with each other via the central bank.

And this means that every single one of your transactions becomes a  potential  piece of data to be monitored, incrementally building up a  database of your personal characteristics so vast that even Facebook  would be jealous (actually, have you considered why Facebook is trying  to get into the payments game?). And with the correct big data methodologies to make sense of it, such data becomes hot property.

Some might react to this with indifference, saying “I’ve got nothing  to hide, and contactless payment is so convenient”. Those who express  doubt about cashless society are cast as either Luddites or criminals,  trying to remain in the backward shadows.

This narrative needs to be countered. I am not a privacy fetishist,  but I do know that it is essential for the sense of mental freedom it  gives us. Without the occasionally ability to be invisible, society  takes on the feeling of a panopticon,  and that itself breeds distrust. You need the ability to feel  alone—like that feeling of sitting alone in a toilet cubicle, at peace  with all your vulnerabilities—in order to value the presence of others.

A very small amount of our overall transaction volume is currently  undertaken with coins, but coins are important precisely because they  give us that little passageway of flexibility and anonymity. They give  the ability to flick a tip and a smile to a busker as we pass them in  the street, a personal gesture that is unmediated and unverified and  unmonitored.

In a potential future world where such physical tokens disappear, I  want Bitcoin to exist. I want something that feels roughly like  electronic cash, something that can exist as a marginal counterpower  outside the walled gardens of mainstream payments.

And like coins, I expect Bitcoin will never become a dominant payment  system. I expect it will, at most, account for 1 per cent of  transactions. But that is fine. 1 per cent privacy is going to be like a  beautiful lifeline in any future world of 99 per cent bank  surveillance.