Author: Charlie Warzel
Translator: BitpushNews Yanan
For years, critics of cryptocurrencies have been puzzled: what is the meaning of all this? While supporters of cryptocurrencies have been tirelessly seeking compelling answers. They firmly believe that blockchain technology, as the technological foundation of cryptocurrencies and many similar applications, is a groundbreaking innovation. It ingeniously achieves precise record of online ownership, and has powerfully promoted the flourishing of digital communities. Moreover, they believe that blockchain is the core element in building and supporting the third-generation hyper-financialized internet. In this brand new era of the internet, without any human intermediaries, you can easily purchase a digital art piece featuring a cartoon ape image for $3.4 million.
Then there are the cryptocurrencies themselves: Bitcoin, Ethereum, and the endless stream of Memecoins and startup tokens. Most of them are highly volatile, speculative assets - some use them for trading, posting parody content, storing value, and sometimes getting rich overnight, but they can also lead to financial ruin. At the same time, they are often used for illicit purposes, such as the notorious money laundering, illegal funding of startups, and planning complex financial fraud. Nevertheless, cryptocurrencies do have their use cases. However, the long-standing criticism of them is that the technology is too complex and does not provide functions that the modern financial system cannot achieve - in other words, for those who do not intend to use it for criminal purposes, cryptocurrencies are a technology solution in search of a problem.
I tend to agree with this view. I have spent time reporting on NFTs and cryptocurrency-based decentralized autonomous organizations (DAOs), such as the one that tried to buy the first edition of the US Constitution in 2021. I have also read the obscure whitepapers of some Web3 startups and decentralized finance (DeFi) protocols that use smart contracts to facilitate financial transactions without the need for large banks. However, I have never found the so-called "killer app".
However, after the presidential election, I had a different perspective on the influence of cryptocurrencies.
Cryptocurrencies, the technological innovations in this field, have an impact far beyond a single service domain, but have given rise to a unique cultural atmosphere. This culture has an innate distrust of traditional institutions, while having a certain degree of sympathy for those who try to challenge or undermine these institutions. The recent election results, to some extent, reflect a questioning of the authority of traditional institutions (such as the federal government, the public health system, and the media), and the cryptocurrency industry has played a role in fueling this process. The industry has set up a super political action committee called "Fairshake" that has raised over $200 million to support political figures friendly to cryptocurrencies, whether they are from the Democratic or Republican party.
Particularly noteworthy is that Donald Trump has shown great enthusiasm for cryptocurrency technology. During the campaign, he not only heavily promoted a new cryptocurrency platform focused on decentralized finance (DeFi) called "World Liberty Financial", but also vowed to remove Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), who has been under public scrutiny for strict regulation of the cryptocurrency industry. Gensler's resignation plan is scheduled for January, which is a routine operation when a new government takes office.
Furthermore, Trump has also promised to relax relevant regulatory policies in order to "make America the global center of cryptocurrencies and the superpower of Bitcoin". He openly stated in his campaign activities: "If you support cryptocurrencies, then voting for Trump will be your best choice."
In the short term, cryptocurrencies seem to have spawned a persistent and complex cultural phenomenon, with faithful believers, tech utopian dreamers, as well as speculators, criminals, victims, investors, and politicians trying to cater to voters. The financial impact of this technology has made many people overnight millionaires, and they are using these resources to try to build a world that fits their vision.
Although the Bitcoin manifesto, the whitepaper that laid the foundation for the entire cryptocurrency field, did not directly address political issues, cryptocurrencies have quickly won the favor and admiration of cyber-libertarians. The core beliefs of these cyber-libertarians can be traced back to the "Declaration of the Independence of Cyberspace" published in 1996, which clearly stated that governments should not interfere in the management of the Internet.
Bitcoin and other cryptocurrencies are built on blockchain technology, and the decentralized nature of blockchain naturally has an anti-establishment flavor. Their operation does not rely on any central authority or intermediary. The late digital culture scholar David Golumbia, in his 2016 work "The Politics of Bitcoin: Software as Right-Wing Extremism", insightfully analyzed: "Among the most ardent supporters of Bitcoin, many depict the Federal Reserve as an essentially corrupt institution, a tool manipulated by the bankers of conspiracy theories who seek to 'control every aspect of people's lives'."
For those staunch believers at the time, cryptocurrencies were like a beacon of technological utopianism, illuminating the path to resist the fragmented, exclusive and exploitative financial system. They firmly believed that this technological innovation would either reshape the financial system or completely overturn it.
However, today, the cultural ecosystem of cryptocurrencies has become increasingly diversified. Platforms like Coinbase and Robinhood have made it easy for anyone with a bank account and a smartphone to enter this once mysterious trading world. It is true that there is still a group of "hardcore believers" who have unwavering faith in cryptocurrency technology; but at the same time, we have also seen celebrities and "meme kings" launching new coins, attracting attention through hype, and a large number of day traders trying to find opportunities for overnight wealth in these speculative tokens.
The profits of cryptocurrencies are often closely related to hype and marketing, and this characteristic has given rise to a unique digital culture. This culture not only attracts those who crave a sense of belonging, but also investors who are tempted by the "thousand-fold return" dream, as well as players who simply enjoy the pleasure of "annoying the establishment" with cryptocurrencies. Even as cryptocurrencies are gradually becoming mainstream, many loyal supporters still see their investment and community as a symbol of counterculture.
Therefore, it is not surprising that cultural warriors on the right, such as Jordan Peterson and Joe Rogan, who are now quite influential, still see themselves as "outsiders" and show a strong interest in cryptocurrencies. Similarly, venture capitalists like Marc Andreessen, whose company is deeply involved in the cryptocurrency field, have also gradually leaned towards more conservative political positions, a change that is also worth noting.
Here is the English translation:Mocking the hype cycle of cryptocurrencies is really easy - you can scoff at the crazy rise and fall of Bored Apes NFT prices, and you can look down on the shameless hype in the Memecoin culture. When it comes to the controversial figures who have launched Memecoins, one cannot help but mention Hailey Welch, who has transitioned from an internet celebrity to a podcast host, better known by her online name "Hawk Tuah girl". The Memecoin she launched saw a rapid price surge in a short period of time, only to quickly collapse, angering many loyal fans. If you can relate to this description, I apologize, but at the same time - I'm sure you've understood the subtext.
The cryptocurrency culture is filled with obscure internet slang and unique visual symbols, making it seem out of touch with the mainstream and even repulsive. And the frequent Ponzi schemes and frauds that victimize retail investors in this industry - such as the insolvent FTX and the bankrupt platforms like Celsius - have made it untrustworthy. However, despite these turbulences, or perhaps because of them, the cryptocurrency realm has still managed to create a batch of millionaires, billionaires, and massive corporate capital reserves. Now, they are leveraging these accumulated wealth to exert influence on the political stage.
This brings us back to Trump. Whether he truly comprehends the deeper logic of cryptocurrencies - beyond recognizing them as an effective means of garnering votes and a way to amass wealth - remains ambiguous. Yet, the alliance between Trump and cryptocurrency supporters does have its philosophical rationality. Trump himself is a figure driven by a voracious appetite for money and not lacking in a tinge of corruption. For his supporters, the appeal of the Trump administration partly stems from his promise to weaken the power of the federal government, retaliate against political opponents, and reshape America's institutions. It is not hard to see how the "Make America Great Again" (MAGA) vision intersects with a "fringe culture" that is deeply resentful of the existing system, viewing it as corrupt and untrustworthy. This intersection is also reflected in some tech executives, such as David Sacks, the venture capitalist who opposes "woke culture" and has been appointed by Trump to oversee artificial intelligence and cryptocurrency affairs.
I discussed these views with Molly White, a long-time observer of the cryptocurrency industry. She pointed out that there is another similarity between cryptocurrency advocates and the MAGA camp - they both crave to become the powerful institutions they profess to despise. "Bitcoin, and to some extent other cryptocurrencies, embody an anti-government, anti-censorship spirit," she explained to me. White stated that the original intent of cryptocurrencies was based on the idea that large financial institutions and governments should not interfere in this emerging field. However, "many cryptocurrency advocates have amassed vast wealth by holding these assets, thereby gaining immense power. Over time, the notion has shifted from 'we don't want those institutions to wield power' to 'we want to wield power'."
White believes the cryptocurrency industry has evolved into a replica of the very system it initially sought to oppose. "Look at what companies like Coinbase are doing - their actions are remarkably similar to the financial institutions that Bitcoin's founder Satoshi Nakamoto criticized. These companies not only maintain close cooperation with the government, but also perform identity verification operations like traditional banks," she analyzed. "They seem to be rebuilding a financial system, but with even less protection for consumers."
It is evident that if Trump were to be re-elected, the cryptocurrency industry and its bigwigs may indeed get their wish fulfilled. The industry may face a new regulatory framework, with tokens defined as commodities rather than securities, significantly relaxing trading restrictions and potentially driving deeper integration between large banks and crypto assets. Last week, Trump nominated former SEC commissioner and cryptocurrency supporter Paul Atkins as the new SEC chairman. This news immediately caused Bitcoin's price to surge, breaking the $100,000 mark (in comparison, Bitcoin's price was less than half of this figure during the same period last year).
You don't need to be a cynic to perceive the flywheel effect: the rise of cryptocurrencies as a formidable political force is not due to their technology having widespread and undisputed practical utility, but because it has created a class of ultra-wealthy individuals. This industry has leveraged its wealth to court politicians, while politicians cater to the demands of their donors. Ultimately, candidates who support cryptocurrencies win, causing Bitcoin prices to soar, further enriching the same group and allowing them to exert even greater political influence.
Although Trump has not yet officially returned to the White House, the signs of this potential chain reaction are already emerging. Justin Sun, a prominent Chinese cryptocurrency figure, recently spent $30 million to heavily purchase Trump's "World Liberty Financial" tokens - a transaction that may prove lucrative for Trump, but also raises concerns that the incoming president's investments in the cryptocurrency realm could become a convenient channel for bribery. There are rumors that Trump may fulfill his previous promise to establish a strategic Bitcoin reserve in the US, potentially even requiring the federal government to purchase up to 200,000 Bitcoins per year, possibly using the nation's gold reserves as collateral. For cryptocurrency whales, this would undoubtedly be an attractive plan - a feast of the government transferring wealth to cryptocurrency tycoons. In fact, this would allow cryptocurrency holders to sell their assets at high prices to the government, further driving up asset prices. For a technology that was originally based on the principle of decentralization, using the government to prop up Bitcoin's price is undoubtedly a highly ironic operation.
During Trump's second term, cryptocurrencies may become the "lubricant" for government operations, but what is more concerning is the potential consequences if the cryptocurrency industry's executives achieve all their goals. My colleague Annie Lowrey recently wrote that "rules favorable to the industry will flood the crypto market with money, not only making existing crypto asset holders even richer, but also potentially exacerbating market volatility and exposing millions of Americans to scams, fraud, and swindles."
White also expressed similar concerns, especially as cryptocurrencies become further integrated with the global economy. While the collapse of FTX has caused severe losses for some users, it has not truly triggered a systemic chain reaction across the broader financial system. She told me, "At the time, cryptocurrency companies were not yet large enough to be 'too big to fail', nor did they require government bailouts. However, if we allow banks to become more deeply involved, and if cryptocurrencies become more tightly integrated with traditional finance, I fear the industry will balloon to an even greater scale, and when it collapses, the damage will be far more devastating."
The future of cryptocurrencies remains shrouded in uncertainty, but at least in the short term, their impact seems clearer than before November 5th. It has been proven that cryptocurrencies have indeed found a very specific application scenario - as a technology, they have firmly grasped the culture that sees greed and speculation as virtues, and have further fueled this trend, while also readily accepting market volatility. The only thing that seems certain about cryptocurrencies is that they attract and shape a diverse group of individuals - they may be full of adventurous spirit, overly optimistic about the benefits of technology, or deeply suspicious of traditional institutions. And these characteristics precisely match the turbulence and distrust of the 2020s, as well as the nihilism and corruption inherent in the Trump era.
