Is Bitcoin a Trojan Horse that can tear down authoritarian rulers?
In the 14 years since Satoshi Nakamoto published the Bitcoin whitepaper, cryptocurrency has been presented — by true believers and grifters alike — as a vehicle for solving the shortcomings of legacy financial systems enshrined by the post-war order.
For all of the transformative rhetoric bandied about by cryptocurrency’s interested proponents, there is a paucity of specifics. How can an append-only, distributed ledger with a notorious user experience undercut the hegemony of financial systems backed by centuries of accumulated wealth and power?
Alex Gladstein, the chief strategy officer for the Human Rights Foundation (HRF), believes Bitcoin solves for the challenges presented to people living under authoritarianism and left out by traditional financial structures. Since 2020, HRF has contributed funds to support development in the Bitcoin ecosystem.
With Gladstein as its champion, the organization has funded projects that educate people and develop answers for problems of privacy, fungibility, and usability through its Bitcoin Development Fund.
Yet questions to be answered by supporters of this vision still remain. They are the same questions that should be asked of any person or group championing transformative change and the ostensible improvement of human rights; how does this transformative change occur, and perhaps most importantly, for whom?
Gladstein and six recipients of HRF’s grants sat down with Protos to discuss how and for whom human rights are improved by the rise of Bitcoin.
Bitcoin is Gladstein’s Trojan Horse
Gladstein has worked at HRF since 2007, almost two years before Bitcoin’s genesis block was mined.
For Gladstein, the expansionist monetary policy of the last 50 years is to blame for rising inequality and increasing dominance of multinational corporations. The tandem effect of inflation and quantitative easing, “has resulted in upward redistribution from smaller businesses to larger ones,” he said.
HRF, which has put more than $900,000 into its Bitcoin Development Fund, is one organization in a cryptocurrency space known for a preponderance of soaring rhetoric about the transformative possibilities of blockchain, with Bitcoin as a conduit.
The Bitcoiners’ economic principle, which states the value of their investments will appreciate exponentially, is embodied in the mantra, “number go up.” A similar justification is made for using a human rights non-governmental orgnanization (NGO) in HRF to promote Bitcoin; Gladstein says Bitcoin makes “freedom go up.”
And yet, it’s hard to ignore that the interests of authoritarians opposed to dollar hegemony seem to align with the interests of Bitcoiners rallying against the legacy financial system.
- Take an authoritarian like Nayib Bukele, who last year legalized Bitcoin as tender in El Salvador.
- Or, consider Belarus’ Alexander Lukashenko, who five years ago attempted to drive development in his country by legalizing crypto transactions.
- In Kazakhstan, which housed 18% of Bitcoin mining last August, President Kassym-Jomart Tokayev responded to anti-government protests with an internet blackout that interrupted a significant portion of the cryptocurrency’s hashrate.
If the interests of Bukele, Lukashenko, and Tokayev seem removed from any notion of increased freedom in central America, eastern Europe, or central Asia, then Gladstein will ask you to consider the epic poem Aeneid.
In Virgil’s Aeneid, the conclusion of the Greek’s 10-year war with the Trojans is brought about by Odysseus’ plan to infiltrate Troy using a giant wooden horse filled with Greek soldiers.
Gladstein uses this metaphor to explain the embrace of cryptocurrency by authoritarians. Despots opposed by western power often struggle to access its financial institutions, which incentivizes these authoritarians to legalize and legitimize cryptocurrency.
In this process, they open the door for their citizens and other competing factions to benefit from access to uncensorable peer-to-peer transactions via Bitcoin.
Of Bitcoin’s role in opposing authoritarianism, a HRF grant recipient and Foundation Devices’ Head of Business Development told Protos:
“When you’re looking at these authoritarian governments, the biggest weapon of the state is surveillance and that’s the most powerful weapon used to silence dissent. So, using technology like Bitcoin can give people that freedom of speech back in their hands because everything we do starts with how we communicate financially.”
Richard Myers, who is a two-time recipient of the HRF grant, emphasized Bitcoin as another way technology can be used to leverage human rights causes.
Noting that mobile phones are widespread now in most of the developing world, Myers said Bitcoin builds on the benefits of that technology.
“It’s for privately communicating or it’s for privately transacting or for receiving money without going through the central government,” Myers explained.
Who benefits from hyperbitcoinization?
Bitcoin’s proponents often laud the fact that it will someday become deflationary because the protocol caps mining at 21 million BTC.
If Bitcoin becomes a dominant or even competitive world currency, as its proponents say it will, then the value of Bitcoin will increase dramatically until everything in the world is priced in absurdly expensive BTC.
- This means that for early adopters and people with enough existing wealth to buy in later, they will become the new ruling class of that post-fiat world.
- Meanwhile, if inflationary fiat currency collapses and a deflationary Bitcoin is used to purchase existing debt, then the value of that debt would increase while wages fall.
- Today, consumer and household debt constitutes more and more of the average person’s net-worth in the U.S. and elsewhere.
So who stands to benefit the most from the rise of Bitcoin? Ask the HRF grant recipients.
“In the Middle Eastern countries, if you’re talking about the poor people who are only limited to cash, I’ll be disconnected from reality if I tell you that these people can go out and buy Bitcoin and invest,” said the founder of Bitcoin Arabic, a recipient of funding from HRF’s Bitcoin Development Fund.
Nonetheless, the pseudonymous founder of Bitcoin Arabic (identified as Arabic HODL) shares a common assumption with HRF and Bitcoin’s proponents more broadly; technology is a tool for leveraging people’s rights.
This logic echoes the fiscal principles associated with neoconservative economic doctrine, “Technology always first comes to the people who can have it. The people who can afford to buy it and use it and try this stuff and then it trickles down,” said Arabic HODL.
“So now I have better ability to pay the people here, to pay the guy who cleans my car, the guy who does stuff in the street. I now can pay them better, even in the local currency, but I can now protect my wealth enough so I can pay them better.”
Fodé Diop, another grant recipient and founder of the Bitcoin Developers Academy, sees this same contrast between the types of people who can invest in Bitcoin and the people who will benefit from creating the infrastructure around it.
“Africa has the youngest population in the world. When you see a university in Senegal, it’s just a crazy number of kids,” Diop said, “So how are we going to basically give all these kids employment?”
Diop noted part of the answer can be Bitcoin, which represents a meaningful employment opportunity for the increasingly college educated youth in his country.
But the most commonly cited benefit of Bitcoin for people in the developing world is that it enables remittances: the money sent back to people in a country from those who have emigrated in search of higher paying jobs elsewhere.
Diop said remittances are still the most likely benefit for the people living in the Francophone parts of Africa where he is based. “If you look at the core of Africa, why it is the way it is today is only because of two things — colonialism and slavery. They depleted the capital.”
“What are my biggest concerns? We know what it is; how to send money to my mom through my phone in Senegal,” added Diop. According to a recent study, 70% of people sending remittances have been subject to a fee from a financial institution, fees that garnish the hard earned wages of migrants supporting family in another country.
The HRF grant recipients interviewed for this story demonstrate an understanding that the question of who benefits from the rise of Bitcoin requires acknowledgment of the complex and uneven landscape of 21st century socioeconomics.
It’s certainly conceivable that any person might have their assets seized or their transactions censored by a tyrannical state. But it’s quite another thing to argue that this is a significant human rights issue when 55% of people in the world have wealth that is worth less than $10,000, and many have far less than that.
Clearly, the most significant beneficiaries of an ascendant Bitcoin will be those who have something to save and something to invest.
Bitcoin and human rights
Thor Halvorssen, the chief executive officer of HRF, knows what happens when people with savings and wealth are repressed.
While he was a senior in the University of Pennsylvania’s Wharton School in 1993, Halvorssen’s father was imprisoned in Venezuela. In Caracas, the elder Halvorssen (of the same name) was a real estate developer and owned an insurance company. He was appointed to positions in both of President Carlos Andres Perez’s administrations.
Perez was a social democrat who established a dominant political party in Venezuela and became known for extravagant government spending financed by his policies on oil exportation.
During Perez’s second term, Halvorssen’s father was appointed to serve as the director of Venezuela’s anti-narcotics division and later to a position investigating money laundering.
After cracking down on the Medellin cartel’s activity in Caracas and mounting an investigation of the now-defunct Banco Latino, he was charged and imprisoned for conspiring to profit from a series of car bombings.
The conspicuous timing of the charges against Halvorssen’s father led Amnesty International to take up the case, while the British parliament and US Senator Strom Thurmond weighed in. After 74 days, Halvorssen was released from prison amid mounting pressure from outside the country.
Banco Latino, now known to be one of the largest perpetrators of bank fraud in Venezuelan history, folded just three weeks later.
Read more: [Read this before criticizing El Salvador’s adoption of Bitcoin as legal tender]
Once released, Halvorssen (who had already participated in some human rights activism in the 1980s) went on to a position on the Pan-American committee for the International Society of Human Rights, which holds observer status in the United Nations.
Defending the civil and political rights of elites and officials against overreaching central governments is one of the things human rights activism does most effectively.
But there were not always NGOs like Amnesty to draw attention to abuses like these; nor has there always been an international legal framework to which such organizations can appeal.
In the wake of the Second World War, diplomats for the victorious nations sought a new declaration of rights that would supersede the arena of national politics.
The horrors wrought by fifty years of conflict in Europe and around the world had left little doubt among the ruling class that a robust international regime was necessary to stop the next war and its constituent horrors.
If the modern state was necessary to ensure individual rights could exist, then how could its capacity for industrial scale atrocity be restrained?
- The diplomats hoped they had found the solution when the Universal Declaration of Human Rights (UDHR) was ratified on December 10, 1948.
- No longer did individual rights emanate from the state as Enlightenment era philosophy held.
- Instead, rights would be intrinsic to the individual, regardless of citizenship.
The answer to this question was debated by both sides of the ideological ferment in the mid-20th century. Western capital prioritized civil and political rights, those which restrained the state from suppressing the will of those it defined as citizens.
But on the other side sat the communists and the early post-colonial states of Africa and Asia. It was primarily they who advocated for economic, social, and cultural rights to be included in the UDHR.
There were separate treaties adopted by the United Nations on December 16, 1966 that represented these two poles of the human rights debate: the International Covenant of Civil and Political Rights (ICCPR) and the International Covenant of Economic, Social, and Cultural Rights, which are considered the UDHR’s “Bill of Rights.”
Despite efforts throughout the 20th century in Tehran and Vienna to associate the universality of human rights with notions of indivisibility and interdependence, the machinery of the international regime is housed first and foremost by western institutions and non-governmental organizations that saw economic, social, and cultural rights as secondary entitlements.
This is because for the first 20 years of its existence the UDHR was of little significance to rhetoric or policy. But beginning in the 1960s and then culminating in the 1970s, the number of NGOs using human rights as the basis for rhetoric and activism increased dramatically.
As these organizations were meaningfully incorporated into the international legal structures of the postwar order, the language of human rights became pervasive in politics and media. The international human rights movement was born, not only of the post-war agreements or grassroots mobilization, but of NGOs.
The international human rights movement helmed by these NGOs has carefully established a hierarchy within the universal human rights regime.
The locus of institutional power derived from the agreement resides among the third sector, non-profit organizations in the west. Therefore, the rights emphasized in rhetoric and enforced in international court tend to be those civil and political rights favored by westerners and their donor class.
Gladstein and HRF are among those organizations that see a clear distinction between these two sides. “Human rights are divisible. There’s liberties and there’s entitlements,” Gladstein said. The civil and political rights enshrined in the ICCPR represent what he’s called the “lodestar” of HRF. For the organization, the most significant of these rights are the right to speech and the right to property.
This preference is particularly visible in two of the projects backed by the Bitcoin Development Fund. A SeedSigner creator and HRF grant recipient interviewed for this story said the human rights dimensions of the project were not initially a factor.
But their hardware wallet runs on a single-board computer like Raspberry Pi, which can be purchased and assembled from the privacy of users’ homes. “Dissidents who may live in areas where Bitcoin is either discouraged or banned, or maybe they just don’t want to publicly signal their intent to save with Bitcoin or use Bitcoin for operational purposes,” the SeedSigner creator said.
SeedSigner and Passport are two of the hardware wallet projects supported by HRF. Aside from privacy, they represent a portable, air-gapped method for transporting savings and wealth in moments of repression and civil duress.
The right to property and its corollary right to transact without censorship are both a core of what this simple but effective Bitcoin technology offers. It’s the embodiment of the two rights held in the highest esteem by HRF.
Bitcoiners inheriting the Earth
As the world confronts the ecological, fiscal, and political crises of the 21st century, it seems likely that something fundamental must change.
Maybe that change will be embodied in the protocols and ideologies of Bitcoin. But if that’s to be the case, then it might be time to do more than laugh ironically from the citadel about the vast majority of humanity that’s “not gonna make it.”
If these are the bearers of the future, then they should be able to explain what Bitcoiners will do when they get there.
When asked if a dominant, non-state, deflationary currency would produce an entrenched elite comparable with historical aristocracy and a kind of neofeudalism, Gladstein was very direct, “Today is neofeudalism,” he said. “Rich people are already good, they’re comfy,” he said of the wealthy’s interest in cryptocurrency.
But if today is neofeudalism, and the Bitcoin maximalists mean to chart a path away from this reality, then they should be prepared to explain what happens to social mobility in the context of deflation. When asked what happens to social mobility in this future, Gladstein suggested this concern was tantamount to Marxism, “[Bitcoin] isn’t going to be good for Marxists,” he said.
It is striking that social mobility, a rhetorical hallmark of American capitalism since the Gilded Age, draws such an association for Gladstein. Deflation ties debtors to their status.
If Bitcoin is moving society away from neofeudalism, then it’s up to the maximalists to explain what happens to these debtors — who will be tied to their college loans and mortgages the way a peasant was once tied to a 100-year lease.
There is a chance they do not care, that the seeming defects of Bitcoin are actually features. But that’s hard to square with the purported values of human rights organizations.
In fact, nearly all the HRF grant recipients interviewed for this story were thoughtfully concerned about these questions of who Bitcoin benefits and how it improves human rights.
It was clear that some had not really been asked to consider it before. One HRF grant recipient who declined to be interviewed just replied to questions about the human rights dimensions of their project by sending links to articles written by Gladstein.
One recipient said they filled out a two-page application about how their project related to the organization’s objectives. Others described a much less formal process where projects were identified internally by HRF and selected to receive a grant.
Whether a person is a proponent or detractor of Bitcoin or HRF’s project, one thing is certain: it’s time to take seriously the hard questions of what happens to human rights and to society after state controlled fiat currency has perished from the Earth.
It may be necessary to ask what it means if the bearers of that future do not have an answer.
Mike Spencer is a history professor and podcaster. He studies the international human rights movement and US foreign policy in Latin America.
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Edit 16:20 UTC, May 10: Corrected the surname of the quoted two-time HRF grant recipient from Byers to Myers