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“The Politics of Bitcoin: Software as Right-Wing Extremism” by David Golumbia


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PoliticsBitcoinWe have explored Bit­coin in a num­ber of pro­grams–FTR #‘s 760, 764, 770 and 785.

An impor­tant new book by David Golum­bia sets forth the tech­no­crat­ic fas­cist pol­i­tics under­ly­ing Bit­coin. Known to vet­er­an listeners/readers as the author of an oft-quot­ed arti­cle deal­ing with tech­no­crat­ic fas­cism, Golum­bia has pub­lished a short, impor­tant book about the right-wing extrem­ism under­ly­ing Bit­coin. (Pro­grams on tech­no­crat­ic fas­cism include: FTR #‘s 851, 859, 866, 867.)

In the excerpt below, we see dis­turb­ing ele­ments of res­o­nance with the views of Stephen Ban­non and some of the philo­soph­i­cal influ­ences on him. Julius Evola, “Men­cius Mold­bug” and Ban­non him­self see our civ­i­liza­tion as in decline, at a crit­i­cal “turn­ing point,” and in need of being “blown up” (as Evola put it) or need­ing a “shock to the sys­tem.”

The Pol­i­tics of Bit­coin: Soft­ware as Right-Wing Extrem­ism by David Golum­bia; Uni­ver­si­ty of Min­neso­ta Press [SC]; pp. 73–75.

. . . . As objects of dis­course, Bit­coin and the blockchain do a remark­able job of rein­forc­ing the view that the entire glob­al his­to­ry of polit­i­cal thought and action needs to be jet­ti­soned, or, even worse, that it has already been jet­ti­soned through the intro­duc­tion of any num­ber of tech­nolo­gies. Thus, in the intro­duc­tion to a bizarrely earnest and destruc­tive vol­ume called From Bit­coin to Burn­ing Man and Beyond (Clip­pinger and Bol­lier 2014), the edi­tors, one of whom is a research sci­en­tist at MIT, write, “Enlight­en­ment ideals of demo­c­ra­t­ic rule seem to have run their course. A con­tin­u­ous flow of sci­en­tif­ic find­ings are under­min­ing many foun­da­tion­al claims about human ratio­nal­i­ty and per­fectibil­i­ty while expo­nen­tial tech­no­log­i­cal changes and explod­ing glob­al demo­graph­ics over­whelm the capac­i­ty of demo­c­ra­t­ic insti­tu­tions to rule effec­tive­ly, and ulti­mate­ly, their very legit­i­ma­cy.” Such abrupt dis­missals of hun­dreds of years of thought, work, and lives fol­lows direct­ly from cyber­lib­er­tar­i­an thought and extrem­ist rein­ter­pre­ta­tions of polit­i­cal insti­tu­tions:” What once required the author­i­ty of a cen­tral bank or a sov­er­eign author­i­ty can now be achieved through open, dis­trib­uted cryp­to-algo­rithms. Nation­al bor­ders, tra­di­tion­al legal regimes, and human inter­ven­tion are increas­ing­ly moot.” Like most ide­o­log­i­cal for­ma­tions, these sen­ti­ments are high­ly resis­tant to being proven false by facts. . . .

. . . . Few atti­tudes typ­i­fy the para­dox­i­cal cyber­lib­er­tar­i­an mind-set of Bit­coin pro­mot­ers (and many oth­ers) more than do those of “San­juro,” the alias of the per­son who cre­at­ed a Bit­coin “assas­si­na­tion mar­ket” (Green­berg 2013). San­juro believes that by incen­tiviz­ing peo­ple to kill politi­cians, he will destroy “all gov­ern­ments, every­where.” This anar­chic apoc­a­lypse “will change the world for the bet­ter,” pro­duc­ing “a world with­out wars, drag­net Panop­ti­con-style sur­veil­lance, nuclear weapons, armies, repres­sion, mon­ey manip­u­la­tion, and lim­its to trade.” Only some­one so blink­ered by their ide­o­log­i­cal tun­nel vision could look at world his­to­ry and imag­ine that mur­der­ing the rep­re­sen­ta­tives of demo­c­ra­t­i­cal­ly elect­ed gov­ern­ments and thus putting the gov­ern­ments them­selves out of exis­tence would do any­thing but make every one of these prob­lems immea­sur­ably worse than they already are. Yet this, in the end, is the extreme rightist–anarcho-capitalist, win­ner-take-all, even neo-feudalist–political vision too many of those in the Bit­coin (along with oth­er cryp­tocur­ren­cy) and blockchain com­mu­ni­ties, what­ev­er they believe their polit­i­cal ori­en­ta­tion to be, are work­ing active­ly to bring about. . . .

 

Discussion

2 comments for ““The Politics of Bitcoin: Software as Right-Wing Extremism” by David Golumbia”

  1. Check out one of the big win­ners from the ongo­ing surge in the val­ue of Bit­coin: neo-Nazis. And espe­cial­ly Andrew “weev” Auern­heimer:

    Mic

    Neo-Nazi wealth is rapid­ly grow­ing. Why? Bit­coin.

    by Jack Smith IV
    Pub­lished Dec. 1, 2017

    In many ways, white nation­al­ists were the big losers after the Unite the Right ral­ly in Char­lottesville in August. First, they lost web host­ing for neo-Nazi hives like Storm­front. Some far-right atten­dees lost access to Uber or their social media accounts. Oth­ers lost meet­ing venues and were dri­ven out of sub­se­quent pub­lic spaces dur­ing fol­low-up ral­lies. And of course, some atten­dees, such as those who were exposed in pho­tos tak­en at the infa­mous torch-lit march the night before the ral­ly, lost their jobs.

    In that time, they were also essen­tial­ly forced to invest in bit­coin, and after the cryptocurrency’s mete­oric rise through­out 2017, that finan­cial move has broad­ened their wealth sig­nif­i­cant­ly.

    After the Char­lottesville protests, many white nation­al­ists lost access to mon­ey-trans­fer ser­vices like Apple Pay and Pay­Pal, and there­fore turned to bit­coin, dou­bling down on their invest­ment or cre­at­ing wal­lets to exper­i­ment with the apo­lit­i­cal cryp­tocur­ren­cy.

    In the past few months, the price of bit­coin soared to record heights, reach­ing a trad­ing price over $11,000 per coin on Wednes­day. Through­out this boom, white nation­al­ist wealth has grown, with some of the country’s most vir­u­lent celebri­ty racists often rak­ing in thou­sands of dol­lars in a sin­gle day.

    Bit­coin can be used anony­mous­ly, but in order to accept dona­tions, white nation­al­ists had to de-anonymize them­selves. So John Bam­benek, a cyber­se­cu­ri­ty researcher and threat ana­lyst, cre­at­ed a Twit­ter bot to fol­low and col­lect this infor­ma­tion. It’s from that bot, @NeoNaziWallets, that Mic has col­lat­ed and graphed this behav­ior. Even so, while any­one can watch the mon­ey move in and out of accounts, it’s uncer­tain where the mon­ey trav­els to, who is con­tribut­ing and how many oth­er dig­i­tal wal­lets are involved in the net­work of white suprema­cist bit­coin users.

    ...

    The cryp­tocur­ren­cy is also pret­ty attrac­tive to those who believe in anti-Semit­ic con­spir­a­cies about greedy, often assumed Jew­ish, over­lords who engi­neer our soci­ety through con­trol of cen­tral banks. In March, Richard Spencer declared bit­coin “the cur­ren­cy of the alt-right” — though that should be tak­en with a grain of salt. The alt-right will lay claim to any­thing from New Bal­ance shoes to Papa John’s piz­za if it suits them.

    Bit­coin is the cur­ren­cy of the alt right.— Richard ???? Spencer (@RichardBSpencer) March 18, 2017

    Still, since Char­lottesville, white nation­al­ists who ramped up their invest­ment in bit­coin have seen their vir­tu­al wealth grow.

    The clear­est case of such growth is with Counter-Cur­rents, a pub­lish­ing house for books like Trevor Lynch’s White Nation­al­ist Guide to the Movies and Toward the White Repub­lic. From late August until Wednes­day — our obser­va­tion peri­od for the data — the wal­let for the far-right pub­lish­er held at about 7.7 bit­coin, includ­ing some tiny con­tri­bu­tions (pos­si­bly dona­tions) along the way. Its wealth more than dou­bled, net­ting them about $41,000 between Sept. 2 and Tues­day. And then by Wednes­day it made $5,859 more.

    Bitcoin’s been par­tic­u­lar­ly use­ful for Andrew Anglin, a neo-Nazi leader who’s been in and out of the pub­lic eye since the South­ern Pover­ty Law Cen­ter filed a poten­tial­ly debil­i­tat­ing law­suit against him. Bam­benek has esti­mat­ed that Anglin has tak­en in about $250,000 in bit­coin since 2014.

    On Oct. 1, the Dai­ly Stormer with­drew $64,353, reap­ing the ear­ly rewards of the bit­coin boom, short­ly after mak­ing about $2,202 in just one day. Since then, the bal­ance for the Dai­ly Stormer has been fair­ly lev­el, as who­ev­er man­ages the wal­let skims the occa­sion­al few hun­dred dol­lars off the account, with some with­drawals as high as $1,602.

    Oth­er white nation­al­ist exper­i­men­ta­tions in bit­coin are fair­ly mea­ger. Spencer — pres­i­dent of the Nation­al Pol­i­cy Insti­tute, a white nation­al­ist think tank — had about $3 in bit­coin sit­ting in an account until Nov. 22, when rough­ly $1,000 in bit­coin was trans­ferred to the wal­let. As of Wednes­day, he had about $1,317. Van­guard Amer­i­ca, a mil­i­tant white nation­al­ist group with a large con­tin­gent in Char­lottesville, grew a small bal­ance from rough­ly $218 on Aug. 27 to about $533 on Wednes­day with no new deposits.

    One neo-Nazi stands above the rest in his bit­coin usage: Andrew “weev” Auern­heimer, who’s received over $1 mil­lion in bit­coin, accord­ing to one report. Even though Auern­heimer has with­drawn rough­ly $118,620 from his bit­coin wal­let between late August and Wednes­day, his remain­ing bit­coin store has been replen­ish­ing his wealth through­out the recent bit­coin boom.

    While bit­coin is an effec­tive, apo­lit­i­cal escape pod for mov­ing mon­ey away from ser­vices that become inhos­pitable to hate groups, many main­stream wal­let providers can still de-plat­form white suprema­cists. After the Char­lottesville ral­ly, Coin­base alleged­ly kicked users off of its wal­let-pro­vid­ing ser­vice for donat­ing to the Dai­ly Stormer.

    In the mean­time, all of the trans­ac­tions mov­ing in and out of the iden­ti­fied wal­lets are still in pub­lic.

    “The dis­ad­van­tage [for neo-Nazis] is that I can see their trans­ac­tions, I can see when they’re spend­ing mon­ey, and giv­en effort and invest­ment of time, I could fig­ure out who is donat­ing to them also,” Bam­benek told Mic.

    Bam­benek said his next project is to chart the web of trans­ac­tions around the neo-Nazi bit­coin wal­lets to try to deter­mine where the mon­ey is going and, poten­tial­ly, the iden­ti­ty of the donors using cryp­tocur­ren­cy to lend thou­sands of dol­lars to the white nation­al­ist cause.

    ———-

    “Neo-Nazi wealth is rapid­ly grow­ing. Why? Bit­coin.” by Jack Smith IV; Mic; 12/01/2017

    “After the Char­lottesville protests, many white nation­al­ists lost access to mon­ey-trans­fer ser­vices like Apple Pay and Pay­Pal, and there­fore turned to bit­coin, dou­bling down on their invest­ment or cre­at­ing wal­lets to exper­i­ment with the apo­lit­i­cal cryp­tocur­ren­cy.”

    So fol­low­ing the back­lash from the neo-Nazi vio­lence in Char­lottesville, the ‘Alt Right’ neo-Nazis redou­ble their inter­est in Bit­coin, includ­ing for fundrais­ing, allow­ing them to turn those dona­tions into mas­sive prof­its as a result of the recent Bit­coin surge.

    But in order to accept those dona­tions, the neo-Nazis had to make their Bit­coin “wal­lets” pub­licly known, allow­ing peo­ple to track at least the pub­licly avail­able Bit­coin neo-Nazi wealth. Which is exact­ly what cyber­se­cu­ri­ty researcher John Bam­benek did:

    ...
    Bit­coin can be used anony­mous­ly, but in order to accept dona­tions, white nation­al­ists had to de-anonymize them­selves. So John Bam­benek, a cyber­se­cu­ri­ty researcher and threat ana­lyst, cre­at­ed a Twit­ter bot to fol­low and col­lect this infor­ma­tion. It’s from that bot, @NeoNaziWallets, that Mic has col­lat­ed and graphed this behav­ior. Even so, while any­one can watch the mon­ey move in and out of accounts, it’s uncer­tain where the mon­ey trav­els to, who is con­tribut­ing and how many oth­er dig­i­tal wal­lets are involved in the net­work of white suprema­cist bit­coin users.
    ...

    And what did Banenek find? Well, found that Storm­front founder Andrew Anglin has tak­en in an esti­mate $250,000 in bit­coins sinc 2014, but that’s dwarfed by Anglin’s asso­ciate, neo-Nazi hack­er Andrew Anglin who as seen over $1 mil­lion in bit­coins flow­ing into his wal­let:

    ...
    Bitcoin’s been par­tic­u­lar­ly use­ful for Andrew Anglin, a neo-Nazi leader who’s been in and out of the pub­lic eye since the South­ern Pover­ty Law Cen­ter filed a poten­tial­ly debil­i­tat­ing law­suit against him. Bam­benek has esti­mat­ed that Anglin has tak­en in about $250,000 in bit­coin since 2014.

    On Oct. 1, the Dai­ly Stormer with­drew $64,353, reap­ing the ear­ly rewards of the bit­coin boom, short­ly after mak­ing about $2,202 in just one day. Since then, the bal­ance for the Dai­ly Stormer has been fair­ly lev­el, as who­ev­er man­ages the wal­let skims the occa­sion­al few hun­dred dol­lars off the account, with some with­drawals as high as $1,602.

    ...

    One neo-Nazi stands above the rest in his bit­coin usage: Andrew “weev” Auern­heimer, who’s received over $1 mil­lion in bit­coin, accord­ing to one report. Even though Auern­heimer has with­drawn rough­ly $118,620 from his bit­coin wal­let between late August and Wednes­day, his remain­ing bit­coin store has been replen­ish­ing his wealth through­out the recent bit­coin boom.
    ...

    Based on this per­for­mance, we should prob­a­bly expect neo-Nazis to con­tin­ue favor­ing Bit­coin when it comes to accept­ing dona­tions. But there is one big catch to all this: Bit­coin is only qua­si-anony­mous and it’s often pos­si­ble de-anonymize a Bit­coin wal­let and fig­ure out who is mak­ing all these neo-Nazi dona­tions. And that, of course, is Bam­benek’s next project:

    ...
    In the mean­time, all of the trans­ac­tions mov­ing in and out of the iden­ti­fied wal­lets are still in pub­lic.

    “The dis­ad­van­tage [for neo-Nazis] is that I can see their trans­ac­tions, I can see when they’re spend­ing mon­ey, and giv­en effort and invest­ment of time, I could fig­ure out who is donat­ing to them also,” Bam­benek told Mic.

    Bam­benek said his next project is to chart the web of trans­ac­tions around the neo-Nazi bit­coin wal­lets to try to deter­mine where the mon­ey is going and, poten­tial­ly, the iden­ti­ty of the donors using cryp­tocur­ren­cy to lend thou­sands of dol­lars to the white nation­al­ist cause.
    ...

    So it’s going to be inter­est­ing to see how many peo­ple end up get­ting iden­ti­fied as a neo-Nazi donor (at which point they will like­ly act very per­se­cut­ed when peo­ple don’t think well of them for donat­ing to/being neo-Nazis and ask for more dona­tions them­selves).

    And don’t for­get that this study of neo-Nazi Bit­coin activ­i­ty is based on the wal­lets that have iden­ti­fied as owned by a neo-Nazi. So Bam­benek’s study is real­ly just a sub­set of the total neo-Nazi Bit­coin wealth.

    Posted by Pterrafractyl | December 5, 2017, 3:59 pm
  2. Check out one of the ‘dis­rup­tion’ projects Steve Ban­non is work­ing on: It’s Bit­coin. Sur­prise!

    But not just Bit­coin. Ban­non is inter­est­ed in all sorts of cryp­tocur­ren­cies. Includ­ing mak­ing up some of his own (and mak­ing a bunch of mon­ey in the process). And part of his sales pitch is that no polit­i­cal move­ment is tru­ly free unless it con­trols its own cur­ren­cy. He’s even talk­ing about mak­ing a ‘Deplorable Coin’. So that’s appar­ent­ly Ban­non’s next big plan: mak­ing par­ti­san cryp­tocur­ren­cies that he can sell to the right-wingers as ‘free­dom’:

    The New York Times

    Stephen Ban­non Buys Into Bit­coin

    By Jere­my W. Peters and Nathaniel Pop­per
    June 14, 2018

    WASHINGTON — Stephen K. Ban­non, 10 months removed from the job of chief strate­gist to Pres­i­dent Trump and five months after his ouster from the arch-con­ser­v­a­tive news site Bre­it­bart News, is bet­ting that Bit­coin and oth­er cryp­tocur­ren­cies can dis­rupt bank­ing the way Mr. Trump dis­rupt­ed Amer­i­can pol­i­tics.

    Mr. Ban­non won’t reveal very much about his cryp­tocur­ren­cy plans — he wor­ries that the con­tro­ver­sy that comes with his name could have a bad impact on projects just get­ting off the ground.

    But he has had pri­vate meet­ings with cryp­tocur­ren­cy investors and hedge funds where he has dis­cussed work­ing on so-called ini­tial coin offer­ings through his invest­ment busi­ness, Ban­non & Com­pa­ny. And in his first inter­view on the top­ic, he said he had a “good stake” in Bit­coin.

    In a small gath­er­ing of aca­d­e­mics at Har­vard Uni­ver­si­ty this spring, he even float­ed the pos­si­bil­i­ty of cre­at­ing a new vir­tu­al cur­ren­cy, the “deplorables coin.” The name is a nod to Hillary Clinton’s descrip­tion of Mr. Trump’s sup­port­ers as “a bas­ket of deplorables.”

    The work that Mr. Ban­non is doing in the vir­tu­al cur­ren­cy realm is still in its ear­ly stages. But he has expressed an inter­est in help­ing entre­pre­neurs and even coun­tries look­ing to cre­ate their own cryp­tocur­ren­cies — gen­er­al­ly out­side the Unit­ed States.

    The off­beat world of cryp­tocur­ren­cies has drawn inter­est from all sorts over the last few years, from drug deal­ers and scam artists to the biggest com­pa­nies in Sil­i­con Val­ley and the most staid insti­tu­tions of Wall Street.

    It is not a shock­ing place for Mr. Ban­non, 64, to plot his re-emer­gence. Cryp­tocur­ren­cies have many of the char­ac­ter­is­tics that drew him into Tea Par­ty pol­i­tics: They break old rules, they exist on the periph­ery, and they pose a chal­lenge to the pow­er­ful fig­ures and insti­tu­tions that have long called the shots.

    “It’s dis­rup­tive pop­ulism,” Mr. Ban­non said in the inter­view, at his Capi­tol Hill town­house in Wash­ing­ton. “It takes con­trol back from cen­tral author­i­ties. It’s rev­o­lu­tion­ary.”

    Even though he has no for­mal ties to the busi­ness any­more, Mr. Ban­non still refers to his town­house as the “Bre­it­bart Embassy,” the nick­name giv­en to it because so much of the site’s busi­ness was done there.

    While Bre­it­bart edi­tors and writ­ers no longer linger at all hours inside the embassy, rem­nants of the web­site remain in Bre­it­bart memen­tos hang­ing from the wall and cof­fee mugs with the sig­na­ture block B logo strewn about the kitchen. Mr. Ban­non still accepts a steady stream of vis­i­tors who pro­vide him intel­li­gence and gos­sip from the con­ser­v­a­tive cir­cles he once com­mand­ed. But these days he is just as like­ly to be con­ven­ing meet­ings there on his new finan­cial ven­ture.

    He won’t talk about a pos­si­ble return to pol­i­tics some­day. His messy rup­ture with the White House over crit­i­cal com­ments he made in Michael Wolff’s book “Fire and Fury” about col­leagues and Don­ald Trump Jr. is still too fresh. But he does see a polit­i­cal com­po­nent to vir­tu­al cur­ren­cy.

    “It was pret­ty obvi­ous to me that unless you got some­how con­trol over your cur­ren­cy, all these polit­i­cal move­ments were going to be behold­en to who con­trolled the cur­ren­cy,” Mr. Ban­non said.

    His vision for vir­tu­al cur­ren­cy has ele­ments of his unortho­dox ide­ol­o­gy. He sounds like both an avowed lib­er­tar­i­an who wants gov­ern­ment out of his life and a pro­gres­sive who wants Wall Street held to account when he insists that vir­tu­al cur­ren­cies can help cit­i­zens take back pow­er from the cen­tral banks that “debase your cur­ren­cy” and make cit­i­zens “slaves to debt.”

    His focus on cre­at­ing new dig­i­tal tokens, which are usu­al­ly offered through ini­tial coin offer­ings, puts him square­ly in the edgi­est, most scam-filled slice of the cryp­tocur­ren­cy busi­ness.

    New com­pa­nies have raised bil­lions through these I.C.O.s, which allow them to bypass reg­u­la­tors and oth­er mid­dle­men and go straight to investors. That has also led to plen­ty of scams, and author­i­ties through­out the world are start­ing to crack down.

    Mr. Bannon’s involve­ment in cryp­tocur­ren­cies has raised eye­brows among peo­ple try­ing to move the busi­ness toward the main­stream. They fear he will fur­ther cement the technology’s rep­u­ta­tion as a play­thing of fringe ele­ments.

    “It almost seems like a nat­ur­al pro­gres­sion for a man who gained promi­nence by shov­el­ing out unfound­ed con­spir­a­cies to now shilling com­plex tech­nol­o­gy and finan­cial instru­ments to an unso­phis­ti­cat­ed invest­ing pub­lic,” said Col­in Platt, a cryp­tocur­ren­cy researcher and advis­er.

    Bit­coin are stored and moved around a glob­al net­work of com­put­ers that allows for the sys­tem to work with­out rely­ing on a cen­tral author­i­ty. That lack of over­sight has made Bit­coin a favorite method of pay­ment for online drug mar­kets and ran­som schemes.

    Bit­coin has been pop­u­lar with the alt-right and nation­al­ist com­mu­ni­ties because it has pro­vid­ed them with a way to receive online dona­tions and evade restric­tions put on them by banks and pay­ment com­pa­nies. Pay­Pal and Apple Pay, for exam­ple, shut down the accounts of some right-wing groups last year.

    Cryp­tocur­ren­cies are also gain­ing main­stream inter­est. Gold­man Sachs, where Mr. Ban­non worked in the 1980s, recent­ly said it was cre­at­ing a Bit­coin trad­ing oper­a­tion. The par­ent com­pa­ny of the New York Stock Exchange has been look­ing at build­ing an exchange for dig­i­tal tokens. And Face­book has put top exec­u­tives on a project explor­ing use of the tech­nol­o­gy.

    These big com­pa­nies are gen­er­al­ly try­ing to take the tech­nol­o­gy away from its rad­i­cal polit­i­cal roots. But Mr. Ban­non is hop­ing to embrace those roots. “Con­trol of the cur­ren­cy,” he said, “is con­trol of every­thing.”

    Tim­o­thy Lewis, a hedge fund man­ag­er who met with Mr. Ban­non to talk about cryp­tocur­ren­cies last month, said he was impressed with the degree to which Mr. Ban­non had delved into the details of the tech­nol­o­gy and the chal­lenges it faces.

    “I didn’t know what to expect going in, but he had clear­ly done his home­work,” said Mr. Lewis, who is a co-founder of the Iki­gai hedge fund, which invests in cryp­tocur­ren­cy projects. He said they had talked about the laws gov­ern­ing new cryp­tocur­ren­cies and a few ini­tial coin offer­ings that had recent­ly raised mon­ey from investors.

    Mr. Ban­non is par­tic­u­lar­ly inter­est­ed in the pos­si­bil­i­ty that coun­tries could cre­ate coins tied to nation­al wealth — an Ital­ian coin tied to mar­ble deposits in the coun­try, for instance.

    He found his way into the vir­tu­al cur­ren­cy uni­verse through Brock Pierce, a for­mer child actor who appeared in films like “The Mighty Ducks” before start­ing a com­pa­ny in Hong Kong that sold the vir­tu­al gold that play­ers use in the video game World of War­craft.

    The com­pa­ny, Inter­net Gam­ing Enter­tain­ment, or IGE, brought on Mr. Ban­non as vice chair­man in 2005 to help Mr. Pierce expand the busi­ness and deal with legal threats.

    Mr. Ban­non cred­its the com­pa­ny with intro­duc­ing him to the ranks of dis­af­fect­ed young men who gath­ered online around video games, and who became pil­lars of the alt-right move­ment.

    Since leav­ing IGE in 2007, Mr. Pierce has become involved with a wide array of vir­tu­al cur­ren­cy projects, includ­ing an effort to cre­ate a cryp­tocur­ren­cy enclave in Puer­to Rico that takes advan­tage of the island’s low tax­es, and a new vir­tu­al cur­ren­cy known as EOS, which has raised over $3 bil­lion.

    Mr. Ban­non said he would have got­ten involved with Mr. Pierce and cryp­tocur­ren­cies back in 2016 if the Trump cam­paign hadn’t inter­vened.

    Mr. Pierce’s big claims for cryp­tocur­ren­cies — and a recent turn toward new age spir­i­tu­al­ism — have made him a tar­get for crit­ics. John Oliv­er, on his HBO com­e­dy show, recent­ly held up Mr. Pierce as an emblem of the bom­bast that floats around the vir­tu­al cur­ren­cy com­mu­ni­ty. After the seg­ment, the com­pa­ny that cre­at­ed EOS said Mr. Pierce had left the com­pa­ny.

    ...

    ———-

    “Stephen Ban­non Buys Into Bit­coin” by Jere­my W. Peters and Nathaniel Pop­per; The New York Times; 06/14/2018

    “Stephen K. Ban­non, 10 months removed from the job of chief strate­gist to Pres­i­dent Trump and five months after his ouster from the arch-con­ser­v­a­tive news site Bre­it­bart News, is bet­ting that Bit­coin and oth­er cryp­tocur­ren­cies can dis­rupt bank­ing the way Mr. Trump dis­rupt­ed Amer­i­can pol­i­tics.”

    That’s appar­ent­ly Ban­non’s big bet: Bit­coin can dis­rupt bank­ing the way Don­ald Trump dis­rupt­ed Amer­i­can pol­i­tics. Oh joy.

    But the par­tic­u­lar dis­rup­tion Ban­non has in mind does­n’t appear to revolve around Bit­coin. Instead, he’s talk­ing about help­ing oth­ers start their own cryp­tocur­ren­cies and even start­ing his own (like the pro­posed “deplorables coin”) and get­ting in on the poten­tial­ly lucra­tive ‘ini­tial coin offer­ings’, when a siz­able por­tion of the coins in some new cryp­to­coin are giv­en to ear­ly investors:

    ...
    Mr. Ban­non won’t reveal very much about his cryp­tocur­ren­cy plans — he wor­ries that the con­tro­ver­sy that comes with his name could have a bad impact on projects just get­ting off the ground.

    But he has had pri­vate meet­ings with cryp­tocur­ren­cy investors and hedge funds where he has dis­cussed work­ing on so-called ini­tial coin offer­ings through his invest­ment busi­ness, Ban­non & Com­pa­ny. And in his first inter­view on the top­ic, he said he had a “good stake” in Bit­coin.

    In a small gath­er­ing of aca­d­e­mics at Har­vard Uni­ver­si­ty this spring, he even float­ed the pos­si­bil­i­ty of cre­at­ing a new vir­tu­al cur­ren­cy, the “deplorables coin.” The name is a nod to Hillary Clinton’s descrip­tion of Mr. Trump’s sup­port­ers as “a bas­ket of deplorables.”
    ...

    And note how Ban­non is fram­ing this move to start his own cryp­tocur­ren­cies: It’s all about ‘tak­ing back con­trol from cen­tral author­i­ties’. So Ban­non’s pri­vate cur­ren­cy that he wants to ped­dle to the pub­lic is how one ‘takes back con­trol’:

    ...
    The work that Mr. Ban­non is doing in the vir­tu­al cur­ren­cy realm is still in its ear­ly stages. But he has expressed an inter­est in help­ing entre­pre­neurs and even coun­tries look­ing to cre­ate their own cryp­tocur­ren­cies — gen­er­al­ly out­side the Unit­ed States.

    ...

    “It’s dis­rup­tive pop­ulism,” Mr. Ban­non said in the inter­view, at his Capi­tol Hill town­house in Wash­ing­ton. “It takes con­trol back from cen­tral author­i­ties. It’s rev­o­lu­tion­ary.”

    Even though he has no for­mal ties to the busi­ness any­more, Mr. Ban­non still refers to his town­house as the “Bre­it­bart Embassy,” the nick­name giv­en to it because so much of the site’s busi­ness was done there.

    ...

    “It was pret­ty obvi­ous to me that unless you got some­how con­trol over your cur­ren­cy, all these polit­i­cal move­ments were going to be behold­en to who con­trolled the cur­ren­cy,” Mr. Ban­non said.

    His vision for vir­tu­al cur­ren­cy has ele­ments of his unortho­dox ide­ol­o­gy. He sounds like both an avowed lib­er­tar­i­an who wants gov­ern­ment out of his life and a pro­gres­sive who wants Wall Street held to account when he insists that vir­tu­al cur­ren­cies can help cit­i­zens take back pow­er from the cen­tral banks that “debase your cur­ren­cy” and make cit­i­zens “slaves to debt.”

    ...

    Cryp­tocur­ren­cies are also gain­ing main­stream inter­est. Gold­man Sachs, where Mr. Ban­non worked in the 1980s, recent­ly said it was cre­at­ing a Bit­coin trad­ing oper­a­tion. The par­ent com­pa­ny of the New York Stock Exchange has been look­ing at build­ing an exchange for dig­i­tal tokens. And Face­book has put top exec­u­tives on a project explor­ing use of the tech­nol­o­gy.

    These big com­pa­nies are gen­er­al­ly try­ing to take the tech­nol­o­gy away from its rad­i­cal polit­i­cal roots. But Mr. Ban­non is hop­ing to embrace those roots. “Con­trol of the cur­ren­cy,” he said, “is con­trol of every­thing.”
    ...

    “It was pret­ty obvi­ous to me that unless you got some­how con­trol over your cur­ren­cy, all these polit­i­cal move­ments were going to be behold­en to who con­trolled the currency...Control of the cur­ren­cy is con­trol of every­thing.”

    So are all polit­i­cal move­ments in the US are behold­en to the Fed­er­al Reserve and US Trea­sury? Well, that’s the nar­ra­tive Ban­non is adopt­ing. So, pre­sum­ably, when he sells worth­less “deplorable coins” to all the Bre­it­bart rubes he’ll be ped­dling it as ‘tak­ing back con­trol of every­thing’.

    Also keep in mind that Bit­coin is about the worst exam­ple one could think of when it comes to ‘the peo­ple’ ‘tak­ing back­ing’ their cur­ren­cy because it’s almost all owned by a tiny num­ber of peo­ple. Accord­ing to a recent study, 87 per­cent of all exist­ing Bit­coins are owned by half a per­cent of the Bit­coin wal­lets. In oth­er words, Bit­coin is already a pri­vate cur­ren­cy with a de fact oli­garchy. And a com­plete­ly anony­mous oli­garchy. So when Ban­non is talk­ing about ‘talk­ing back con­trol of every­thing’ using cryp­tocur­ren­cies he is pre­sum­ably talk­ing to his oli­garch bud­dies.

    And while cryp­tocur­ren­cies may not actu­al­ly allow peo­ple to ‘take back con­trol of every­thing’, the lack of reg­u­la­tions in this area does poten­tial­ly allow peo­ple to legal­ly get away with what amounts to a pyra­mid scheme: raise a bunch of mon­ey direct­ly from investors with the ‘ini­tial coin offer­ings’ (I.C.O.s) that bypass reg­u­la­tors:

    ...
    His focus on cre­at­ing new dig­i­tal tokens, which are usu­al­ly offered through ini­tial coin offer­ings, puts him square­ly in the edgi­est, most scam-filled slice of the cryp­tocur­ren­cy busi­ness.

    New com­pa­nies have raised bil­lions through these I.C.O.s, which allow them to bypass reg­u­la­tors and oth­er mid­dle­men and go straight to investors. That has also led to plen­ty of scams, and author­i­ties through­out the world are start­ing to crack down.

    Mr. Bannon’s involve­ment in cryp­tocur­ren­cies has raised eye­brows among peo­ple try­ing to move the busi­ness toward the main­stream. They fear he will fur­ther cement the technology’s rep­u­ta­tion as a play­thing of fringe ele­ments.

    “It almost seems like a nat­ur­al pro­gres­sion for a man who gained promi­nence by shov­el­ing out unfound­ed con­spir­a­cies to now shilling com­plex tech­nol­o­gy and finan­cial instru­ments to an unso­phis­ti­cat­ed invest­ing pub­lic,” said Col­in Platt, a cryp­tocur­ren­cy researcher and advis­er.
    ...

    But, in fair­ness, there is one idea Ban­non is propos­ing that does sound at least kind of inter­est­ing: coins tied to actu­al nation­al wealth, like an Ital­ian coin tied to Ital­ian mar­ble deposits:

    ...
    Mr. Ban­non is par­tic­u­lar­ly inter­est­ed in the pos­si­bil­i­ty that coun­tries could cre­ate coins tied to nation­al wealth — an Ital­ian coin tied to mar­ble deposits in the coun­try, for instance.
    ...

    Keep in mind that one of sig­nif­i­cant prob­lems with many cryp­tocur­ren­cies, like Bit­coin, is the fact that there’s a cap on the total num­ber of coins ever cre­at­ed (21 mil­lion for Bit­coin). It’s a remark­ably stu­pid fea­ture to have for a nation­al cur­ren­cy. But if you want­ed to some­how rep­re­sent own­er­ship of non-renew­able nation­al resources, like mar­ble, well maybe some­thing like ‘mar­ble­coins’ could be use­ful?

    Grant­ed, such a scheme would prob­a­bly be used to make it even eas­i­er to force finan­cial­ly dis­tressed coun­tries to sell off and pri­va­tize all their nation­al wealth and that’s prob­a­bly one of Ban­non’s goals in all this. But at least in the­o­ry there might be some pos­i­tive appli­ca­tions for such a coin. And assum­ing the nation itself is actu­al­ly issu­ing the resource coins at least it’s much less like­ly to be a fly-by-night scam.

    And there’s one poten­tial­ly real­ly nice fea­ture of ‘resource coins’ that could pos­i­tive exploit one of the ‘fea­tures’ of Bit­coin that, under nor­mal cir­cum­stances, would be high­ly unde­sir­able for an actu­al cur­ren­cy: if you lose the keys to your coins, they are gone for­ev­er. For Bit­coin, some­where between 17–23% of exist­ing Bit­coins were already lost as of last Novem­ber accord­ing to a study. And that’s a gener­ic prob­lem that applies to any cryp­tocur­ren­cy: if the own los­ing the keys to their coins those coins are lost for­ev­er.

    Who knows, maybe Steve Ban­non acci­den­tal­ly came up with a great sys­tem for pre­serv­ing nat­ur­al resources: issue a lim­it­ed num­ber of coins tied to exist­ing non-renew­able resources and then wait for peo­ple to start los­ing them for­ev­er.

    So that appears to be one of the many ‘dis­rup­tion’ projects Ban­non is work­ing on these days. Pri­va­tized cur­ren­cies cre­at­ed for the prof­it of Ban­non and his oli­garch bud­dies will set you free.

    Posted by Pterrafractyl | June 14, 2018, 3:11 pm

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