By Vitalik Buterin
Compiled by: Mary Liu, BitpushNews
Over the past few years, “cryptocurrency” has become an increasingly important topic in political policy, with different jurisdictions considering bills to regulate various actors in various ways in blockchain business. This includes the EU’s Markets in Crypto Assets Regulation (MiCA), the UK’s efforts to regulate stablecoins, and the complex legislative and enforcement attempts we’ve seen in the United States from the U.S. Securities and Exchange Commission (SEC).
In my opinion, many of these bills are reasonable, although there are concerns that the government will try extreme measures, such as considering almost all tokens as securities or banning self-hosted wallets. In the wake of these concerns, crypto has become a larger and larger issue in the political arena, with people supporting political parties and candidates almost entirely based on their willingness to be tolerant and friendly to "cryptocurrency."
What this article is trying to say is that I am against this trend, specifically because I think decisions made in this way are likely to go against the values that brought you into crypto in the first place.
I sat down with Vladimir Putin in 2018. At the time, many in the Russian government expressed a willingness to be “open to cryptocurrencies.”
Crypto is more than just cryptocurrency and blockchain
In crypto, there’s a tendency to hyperfocus on the centrality of “money” and the freedom to hold and spend money (or “tokens”, if you prefer), 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 money, you can suppress your political opposition at will. The right to spend money privately is equally important, a cause that Zooko Wilcox (CEO and founder of Zcash) has tirelessly championed. The ability to issue tokens can greatly enhance people’s ability to create digital organizations that truly have collective economic power and take action. But a “focus only” on cryptocurrencies and blockchains is unsustainable, and importantly, it’s not the ideology that created crypto in the first place.
The original creator of encryption was 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, which was pushed by corporate lobbying groups such as the RIAA and the MPAA, which the Internet referred to as "MAFIAA." A famous legal case that caused great public outrage was Capitol Records, Inc. v. Thomas-Rasset, in which the defendant was forced to pay $222,000 in damages for illegally downloading 24 songs through file-sharing networks. Seed networks, encryption, and Internet anonymization became the main weapons in this fight, and also taught us about the importance of decentralization very early on.
As explained in one of the very few public political statements Satoshi made (omitting his lengthy exposition on the system’s vulnerability to monopoly by force):
“You’re not going to find solutions to political problems in cryptography.
Yes, but we could win a major war 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 got involved myself: 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 hold the rest “as ransom,” to be published when donations totaled a specified number of BTC to a public address.
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 several important areas. In fact, there are several more important areas that don’t require decentralized networks at all: instead, you just need cryptography and one-to-one communication applied correctly. The idea that freedom to pay is core to all other freedoms came later — an ideology that, a cynic might say, was retroactively formed to justify “the numbers going up.”
I can think of at least a few other technological freedoms that are just 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 that support zero-knowledge proofs are also important here.
Liberal and privacy-friendly digital identities: There are already some blockchain applications in this space, most notably various use cases that allow revocation and “proving denial” in a decentralized manner, but there are actually ten times more uses for hashing, signatures, and zero-knowledge proofs.
Freedom of thought and privacy: This issue will become increasingly important in the coming decades as more and more of our activities become more deeply mediated through AI interactions. 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 information acquisition: Social technologies help people form high-quality opinions on important topics in an adversarial environment. I personally like 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 the government to respect your freedom to have the home you want. If you care about building more efficient and fair economies, you might want to look at the impact this has on real estate, and so on.
My basic point is this: if you've read past the first paragraph of this article, you're not in crypto because it's crypto, you're in it because there are deeper underlying goals. Don't just support crypto for its own sake, support those underlying goals, and the whole set of policy implications that they imply.
At least as of today, the current “pro-crypto” movement doesn’t think so:
StandWithCrypto tracks “key bills.” It makes no attempt to judge politicians’ freedoms regarding technology outside of 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 hold dear is internationalism.
Internationalism has always been a key blind spot for national egalitarian politics: they enact all sorts of restrictive economic policies in an attempt 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 recent strategy for protecting 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.
The advent of the internet solves a key aspect: in theory, it does not discriminate between the richest and the poorest countries. Once we reach a 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 greatly contribute to the flattening of the global economy, and I have personally seen many cases where this has already been 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 “crypto.” When attending EthCC recently, I got messages from multiple friends telling me they couldn’t come because it had become more difficult to get a Schengen visa. Visa availability is a key issue when deciding where to host events like Devcon; the US is notoriously hostile in this regard. Which politicians and countries recognize that crypto is uniquely international and therefore immigration law is part of crypto law?
Being crypto-friendly now does not mean being crypto-friendly five years from now.
If you find a politician who is friendly towards crypto, one thing you can do is to check what they said about crypto itself five years ago.
Likewise, look at their views five years ago on related topics like encrypted messaging. 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 divergence could occur 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 bad for both decentralization and acceleration: it makes the industry more centralized and slows it down. Much of the most harmful crypto regulation (“mandatory KYC 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 those server operators shape 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 than independent agents. Meanwhile, acceleration-centric AI strategies are enthusiastic about everything from the smallest micromodels running on microchips to the $7 trillion models of Sam Altman’s dreams.
As far as I know, we haven’t seen such a big divide in the crypto space yet, but it’s very possible that 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 widespread “crypto-friendly” style among authoritarian governments that is worth being vigilant about. Unsurprisingly, the best example is Russia.
The Russian government’s recent policy on cryptocurrencies is quite simple and consists of two aspects:
When we use encryption, it helps us avoid restrictions from other people, which is good.
When you use crypto, it’s harder for us to restrict or monitor you, or throw you in jail for 9 years for donating $30 to Ukraine, that’s bad.
The following are examples of various types of Russian government actions:
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 of their advocacy for cryptocurrency in ten years.
If they or someone they flatter actually consolidates power, this will almost certainly happen. Also, be aware that the strategy of cozying up to dangerous actors in order to “help them become better” will often backfire.
If you say: But I like [politician] because of their entire platform and views, not just because they support crypto! Then why shouldn’t I be passionate about their stance on crypto?
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 foster a so-called “incentive gradient”, which can make politicians feel that all they need to gain your support is to support “crypto”, and all they have to do is make sure you can easily trade tokens, regardless of whether they also support banning encrypted messaging, are power-seeking megalomaniacs, or are pushing bills to make it harder for your Chinese or Indian friends to attend the next crypto conference…
Whether you’re someone ready to donate millions of dollars, someone with millions of Twitter followers ready to influence, or just an average person, you can help create a more respectable incentive gradient.
If a politician supports cryptocurrency, the key question is: are they supporting it for the right reasons?
Do they share your vision for how technology, politics, and economics will develop in the 21st century? Do they have a good, positive vision that transcends short-term concerns like “smashing the other bad guys”?
If they are, great: you should support them and make it clear that this is why you support them.
If not, then either stay out of it completely or find a better power to ally with.
