Author: Ethereum co-founder Vitalik; Translated by Baishui, Golden Finance
Over the past few years, “cryptocurrency” has become an increasingly prominent topic in political policy, with various jurisdictions considering bills that would regulate various actors engaging in blockchain in various ways. This includes the European Union’s Markets in Crypto-Assets Regulation (MiCA), the UK’s regulatory efforts on stablecoins, and the complex legislative and enforcement oversight attempts we’ve seen in the US from the SEC. Many of these bills seem reasonable in my opinion, despite concerns that governments will try extreme measures, such as treating almost all currencies as securities or banning self-hosted wallets. In the wake of these concerns, there has been a growing trend in the crypto space to become more actively involved in politics, and to decide whether or not to support political parties and candidates based almost entirely on their willingness to be tolerant and friendly to “cryptocurrency.”
In this post, I argue against this trend, specifically because I believe that making decisions in this way carries a significant risk of violating the values that got you into crypto in the first place.
“Crypto” is more than just cryptocurrency and blockchain
There’s a tendency in the crypto space to obsess over the centrality of “money” and the freedom to hold and spend money (or, if you prefer, “tokens”) as a secondary political issue. I agree there’s an important battle here: in order to do anything important in the modern world, you need money, so if you can block anyone from getting it, you can suppress your political opposition at will. The right to spend money privately, which Zooko has tirelessly advocated for, is equally important. The ability to issue tokens could greatly enhance people’s ability to create digital organizations that actually have collective economic power and can get things done. But the near-exclusive focus on cryptocurrencies and blockchains is harder to defend, and importantly, it’s not the ideology that created cryptocurrencies in the first place.
The original creators of cryptocurrencies were the cypherpunk movement, a broader techno-libertarian ethos that advocated for free and open technology as a way to protect and enhance individual freedoms. Back in the 2000s, the main theme was resistance to restrictive copyright legislation pushed by corporate lobbying groups such as the RIAA and MPAA, which the internet dubbed “MAFIAA.” One notable legal case that caused a furor was Capitol Records, Inc. v. Thomas-Rasset, where the defendant was forced to pay $222,000 in damages for the illegal downloading of 24 songs through a file-sharing network. The main weapons in this fight were torrent networks, encryption, and internet anonymization. The importance of decentralization was learned early on. As Satoshi explained in one of the very few public political statements he made:
[Lengthy exposition of the system's vulnerability to the monopoly of force omitted.]
You won’t find solutions to political problems in cryptography.
Yes, but we could win a major battle in the arms race and gain a new free territory in a few years.
Governments are good at cutting off the leadership of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be able to hold their own.
Bitcoin was seen as an extension of this ethos for internet payments. There was even an early “regeneration culture”: Bitcoin was an extremely simple way to pay online, so it could be used to organize ways to compensate artists for their work without relying on strict copyright laws. I myself got involved: in 2011, when I was writing for Bitcoin Weekly, I developed a mechanism where we would publish the first paragraph of two new articles I wrote, and we would hold the rest “as ransom,” releasing the content when the total donations to a public address reached a specified number of BTC.
The point of all this is to contextualize the mentality that created blockchain and cryptocurrencies in the first place: freedom is important, decentralized networks are good at protecting freedom, and money is an important area where such networks can be applied — but it’s only one of many important areas. In fact, there are several important areas where you don’t need decentralized networks at all: instead, you just need cryptography and one-to-one communication applied correctly. The idea that freedom to pay is central to all other freedoms is an afterthought — a retroactively formed ideology, a cynic might say, to justify “digital ascent.”
I can think of at least a few other technological freedoms that are as “fundamental” as the freedom to use crypto tokens:
Freedom and privacy of communication: This includes encrypted messaging and anonymity. Zero-knowledge proofs can protect anonymity while ensuring important authenticity claims (e.g., that a message was sent by a real person), so use cases supporting zero-knowledge proofs are also important here.
Liberal and privacy-friendly digital identities: There are a few blockchain applications here, most notably various use cases that allow for revocation and “proving denial” in a decentralized manner, but hashing, signatures, and zero-knowledge proofs are actually used ten times more than that.
Freedom of thought and privacy: This aspect will become increasingly important in the coming decades as more and more of our activities are mediated by AI interactions in increasingly deeper ways. Unless something drastic changes, the default path is that more and more of our thoughts will be mediated and read directly by servers held by centralized AI companies.
High-quality access to information: Social technologies that help people form high-quality opinions on important topics in an adversarial environment. I’m personally bullish on prediction markets and community notes; you may have a different opinion on the solution, but the point is that this topic is important.
The above are just the technologies. The goals that motivate people to build and participate in blockchain applications often have non-technical implications as well: if you care about freedom, you might want your government to respect your freedom to have the home you want. If you care about building a more efficient and fair economy, you might want to look at the impact this has on housing. And so on.
My basic point is this: if you are the kind of person who is willing to read past the first paragraph, you are in crypto not because it is crypto, but because of the deeper underlying goals. Don’t support cryptocurrencies per se, support those underlying goals, and the whole set of policy implications they imply.
At least as of today, current “crypto-friendly” initiatives don’t think this way:
StandWithCrypto tracks “key bills.” It makes no attempt to judge politicians’ freedoms on technology other than cryptography and cryptocurrency.
If a politician supports your free currency exchange, but they say nothing about the above topic, then their underlying thought process in supporting free currency exchange is very different from mine (and probably yours). This in turn means that there is a high risk that they will come to different conclusions than you on the issues you care about in the future.
Crypto and Internationalism
Ethereum node diagram, source ethernodes.org
One social and political cause that I, and many cypherpunks, have always held dear is internationalism. Internationalism has been a key blind spot for national egalitarian politics: they enact all sorts of restrictive economic policies to try to “protect workers” at home, but they often pay little or no attention to the fact that two-thirds of global inequality is between countries, not within them. A popular strategy lately to protect domestic workers is tariffs; but unfortunately, even when tariffs succeed in achieving this goal, they often do so at the expense of workers in other countries. A key liberating aspect of the internet is that, in theory, it does not discriminate between the richest and the poorest countries. Once we get to the point where most people around the world have a basic standard of internet access, we can have a more equal globalized digital society. Cryptocurrency extends these ideals to the world of money and economic interactions. This has the potential to contribute greatly to the flattening of the global economy, and I have personally seen many examples of this already being achieved.
But if I care about “crypto” because it’s good for internationalism, then I should also judge politicians and their policies by how much they care about the outside world. I won’t give specific examples, but it should be clear that many of them fall short of that standard.
Sometimes it’s even about “the crypto industry.” While attending EthCC recently, I heard from multiple friends who told me they couldn’t come because it had become more difficult for them to get a Schengen visa. Visa availability is a key issue when deciding locations for events like Devcon; the US scores low on this metric as well. Crypto is uniquely international, so immigration law is crypto law. Which politicians and which countries recognize this?
Being crypto-friendly now doesn’t mean it will be crypto-friendly five years from now
If you find a politician who is friendly to crypto, one thing you can do is look up what they thought about crypto itself five years ago. Likewise, look up what they thought about related topics like crypto messaging five years ago. In particular, try to find a topic where "pro-freedom" doesn't coincide with "pro-corporations"; the copyright wars of the 21st century are a good example. This can be a good guide to how their views might change five years in the future.
The Difference Between Decentralization and Acceleration
One way this can diverge is if the goals of decentralization and acceleration diverge. Last year, I did a series of polls asking people which of the two they valued more in the context of AI. The results clearly favored the former:
Regulation is generally harmful to both decentralization and acceleration: it makes the industry more centralized and slows it down. Much of the most harmful crypto regulation (“mandatory KYC for everything”) is certainly moving in this direction. However, it’s always possible that these goals diverge. For AI, this may already be happening. Decentralization-centric AI strategies focus on smaller models running on consumer hardware, avoiding the dystopia of privacy and centralized control in which all AI relies on centralized servers that can see all our actions, and the biases of the operators of those servers affect the AI’s output in ways we can’t escape. One advantage of a smaller-model-centric strategy is that it’s better for AI safety, because smaller models are inherently more limited in their capabilities and more likely to act more like tools and less like independent agents. Meanwhile, acceleration-centric AI strategies are enthusiastic about everything from the smallest micromodels running on microchips to the $7 trillion clusters of Sam Altman’s dreams.
As far as I know, we haven’t seen such a big divide in the crypto space yet, but there’s a good chance we will one day. If you see a “pro-crypto” politician today, it’s worth exploring their underlying values to see which side they would prioritize if a conflict did arise.
What “Crypto-Friendly” Means for Dictators
There is a general “crypto-friendly” style among authoritarian governments that is worth being wary of. Predictably, modern Russia is the best example.
The Russian government’s recent policy on cryptocurrencies is quite simple and has two aspects:
When we use cryptocurrencies, this helps us avoid other people’s restrictions, so that’s a good thing.
When you use crypto, it’s harder for us to restrict or monitor you, or put you in jail for 9 years for donating $30 to Ukraine, so that’s bad.
Here are examples of each type of Russian government action:
Another important conclusion is that if a politician supports cryptocurrency today, but they are either the kind of person who is very power-seeking or willing to flatter those who are power-seeking, then this is the direction their advocacy for cryptocurrency will take ten years from now. This will almost certainly come to pass if they or the people they flatter actually consolidate power. Also, be aware that the strategy of staying close to dangerous actors in order to "help them become better" will often backfire.
But I like [politicians] because of their entire platform and perspective, not just because they’re pro-crypto! So why shouldn’t I be passionate about their crypto stance?
The political game is far more complex than “who wins the next election” and your words and actions influence many factors. In particular, by publicly giving the impression that you support “pro-crypto” candidates simply because they are “pro-crypto”, you are helping to create an incentive gradient that makes it clear to politicians that all they need to gain your support is to support “crypto”. Whether they also support banning crypto messaging, whether they are power-seeking narcissists, whether they are pushing bills to make it harder for your Chinese or Indian friends to attend the next crypto conference — all the politicians have to do is make sure you can easily trade crypto.
"Someone is playing with coins in a cell", StableDiffusion 3 running locally
Whether you’re someone with millions of dollars ready to give, someone with millions of Twitter followers ready to influence, or just an average person, you can help craft a more respectable incentive gradient.
If a politician supports cryptocurrency, the key question to ask is: are they in it for the right reasons? Do they have a vision for the development of technology, politics, and economics in the 21st century that aligns with yours? Do they have a good, positive vision that goes beyond short-term concerns like “smash the other bad tribes”? If they do, great: you should support them and make it clear that this is why you support them. If not, then either stay out of it entirely or find a better force to ally with.
