An end to the nation-state, the upending of modern finance and a new world order. What could go wrong?
As cryptocurrency swells in value, both financial and cultural, it’s easy to read the phenomenon as hypercapitalist: Bitcoin’s price swings get airtime on CNBC alongside the Dow and Nasdaq. But a recent dispute among some of the industry’s top figures have served as a reminder of digital currency’s libertarian-anarchist roots.
Alongside the hedge-fund cowboys arbitraging and leveraging their way to fresh fortunes, there’s a culture war being waged, with big implications for anyone thinking that the blockchain is just a cool way to lower the cost of cross-border remittances. Hidden in the army of moneymen is a fifth column of revolutionaries. Meet the new crypto-communists.
We’re stealing the term from Winston Churchill, who used it as a Cold War epithet. If you don’t dwell on the historic echoes, though, it’s a useful shorthand for the more extreme, sometimes radical views that undergird some crypto supporters’ enthusiasm for the idea of detaching the world’s financial architecture from its current moorings.
The ’90s internet had its share of utopian dreamers, as did Web 2.0. Web3, as some call the crypto revolution, is another exercise in grappling with what the future will look like and who will lead it. And as in past upheavals, there are heated debates over who’s the genuine crypto revolutionary — and who’s just faking it.
The crypto culture war exploded into a full-scale tech feud as 2021 was ending when Twitter co-founder and Block CEO Jack Dorsey lashed out at critics who suggested that he was a Web 2.0 remnant trying to reinvent himself as a Web3 pioneer. His now-famous tweet — “You don’t own ‘web3.’ The VCs and their LPs do.” — triggered a bitter tit-for-tat with Marc Andreessen of Andreessen Horowitz, who blocked Dorsey on Twitter, then taunted him for weeks.
Andreessen’s firm has backed Coinbase, OpenSea and other crypto firms that many view as centralizing the crypto world. Dorsey has made a fortune off of the VC-backed Block, but he’s also backed decentralized crypto projects that don’t seem to have any near-term payoff. One way of looking at crypto is the classic alchemy where Silicon Valley transmutes technological disruption into gold; the other prizes disruption as a goal in and of itself.
It’s easy to see the ideological fault lines between the two — even the historical resonances between the compromising Mensheviks, who were willing to work with less-purist parties to bring about change, and the hardline Bolsheviks.
“There are decades when nothing happens, and there are weeks when decades happen.” That’s a quote from the most famous Bolshevik, Vladimir Lenin, but it resonates in Silicon Valley today. (I heard it from a fintech executive who thought he was quoting John Lennon.)
Lenin’s maxim captures crypto’s astounding transformation from fringe movement to world-shaking trend. It has been embraced from San Francisco to New York and from Singapore to London, even as it draws heavy fire from governments, regulators and those who see it as a scam, environmental plague or both.
The question is whether crypto’s supporters are drawn to it because there’s money to be made — see Citadel Securities' recent VC-fueled move into the sector — or because of the prospect for more fundamental change. The line between revolutionary and opportunist is once again blurring.
The barrel of a blockchain
"The government is simply the biggest corporation, with a monopoly on violence and where you have no recourse.”
That one’s not Lenin. It’s recent crypto convert Elon Musk, who emerged last year as an unlikely dogecoin evangelist. But Musk and Lenin seem simpatico when it comes to the “ultimate aim of abolishing the state” (Lenin): “Just delete them all,” Musk recently said, of the government subsidies that have historically sustained his firms. (Perhaps he’s studied Mao Zedong’s essay “On Contradiction.”)
“So long as the state exists there is no freedom,” Lenin declared. “When there is freedom, there will be no state.”
That was the ideal. In reality, a whole lot of state emerged. As Signal founder Moxie Marlinspike recently noted, the decentralized dreams of Web3 are yielding to technical and market realities that call for centralization.
Still, a fair number of crypto supporters more or less openly cheer the idea, to borrow Friedrich Engels’ phrase, of “the withering away of the state.” At the very least, they’re hoping banks and regulators do some withering away.
“We don’t need the financial institutions that we have today,” Dorsey said in June at a bitcoin conference in Miami (if that’s not redundant).
Will that leave a financial system free from the clutches of the wolves of Wall Street — or just a new set of predators, funded by Sand Hill Road? Another Vladimir, this one with the surname Tenev, said he was inspired to start his online brokerage by Occupy Wall Street. We know how that turned out.
In the 2005 book “What the Dormouse Said,” John Markoff drew a line from the ’60s counterculture to the growth of the personal computer industry. That line could easily be extended forward and backwards, from the revolutionary ferment that Marx and Engels sowed to today’s crypto-communists.
That’s a connection Tom Goldenberg, a fintech startup founder who now works at McKinsey, explored in a 2018 essay detailing the similarities between Marx and bitcoin’s mysterious creator, Satoshi Nakamoto, who launched the crypto revolution.
“Marx advocated for a stateless system, where the worker controlled the means of production,” he said. “Satoshi sought to remove financial intermediaries — the banks and credit card companies that controlled the world's flow of value.”
But while Marx and Satoshi both “articulated a reasoned, well-thought-out vision of the future,” Goldenberg added, “neither had the power to predict how their ideas would influence others or be implemented. And neither could control their own creations.”
Visualize whirled peas
So inevitably there’s the squabbling over who should be at the vanguard of the revolution. The debates over whether this person or that company is Web3 enough call to mind other tests of ideological purity.
Pascal Gauthier, CEO of Ledger, the hardware crypto wallet company, spoke dismissively of “Web2 companies trying to become Web3 companies.” Gavin Wood, the Ethereum co-founder whose new company Polkadot is looking to build a blockchain of blockchains, dismissed Coinbase as just another “Web2 entity.” It might remind some of Lenin sorting his fellow communists into “hards” and “softs.”
In the Leninist version of the crypto culture war, Coinbase CEO Brian Armstrong would likely be branded a Web3 “soft.” Responding to Marlinspike’s essay, he defended centralized exchanges as a “proxy to decentralized data.” Armstrong also recently bought a home in Los Angeles for $133 million.
Can’t we just get along? Isn’t crypto all about solidarity?
Dorsey tried to make this argument at another bitcoin event over the summer, when he said what inspired him about bitcoin was “the community driving it,” which reminded him of “the early internet.”
“My hope is that it creates ... or helps create world peace,” he added.
So pick up your guitar, and picture Jack leading the crypto faithful — Elon, maybe even Marc if they can reconcile — in an updated version of the beloved Lennon anthem:
“All we are saying is
Give bitcoin a chance
All we are saying is
Give crypto a chance …”
It’s a nice vision. But we’ll leave the last word to Churchill.
What was his ultimate diss to the crypto-communists of that era? That they wouldn’t admit what kind of world they really sought. A crypto-communist, he said, was "one who has not the moral courage to explain the destination for which he is making.”