Vitalik Buterin, the creator of Ethereum, has some strong opinions about how politicians are using the crypto industry for their own gain. In a new article, Vitalik pointed out that over the past few years, “crypto” has become a hot topic in political discussions.
Governments around the world are considering various bills to regulate blockchain activities. In the EU, there’s the Markets in Crypto Assets regulation (MiCA). In the UK, they’re trying to regulate stablecoins. In the US, the SEC has been mixing legislation with regulation-by-enforcement.
Vitalik thinks some of these bills are mostly reasonable, but there are fears that governments might take extreme steps, like treating almost all coins as securities or banning self-hosted wallets.
In response to these fears, there’s been a push within the crypto community to become more politically active. Some people are starting to support political parties and candidates based almost entirely on whether they are friendly to crypto.
Vitalik thinks this is a bad idea. He believes that making political decisions this way carries a high risk of betraying the values that brought people into crypto in the first place.
Crypto is more than just money
Vitalik believes there’s a tendency within the crypto industry to focus too much on money. People often see the freedom to hold and spend money (or tokens) as the most important political issue.
Vitalik agrees that this is an important battle. “In order to do anything important in the modern world, you need money,” he says.
If you can shut down someone’s access to money, you can shut down your political opposition. The right to spend money privately is also crucial. The ability to issue tokens can empower people to create digital organizations with real economic power.
But Vitalik warns that focusing almost exclusively on cryptocurrency and blockchains is not what originally created the crypto movement. “Crypto was born from the cypherpunk movement,” he explains.
This movement had a much broader ethos, arguing for free and open technology to protect and enhance individual freedoms.
Back in the 2000s, the main theme was fighting restrictive copyright legislation pushed by corporate lobbying organizations like the RIAA and MPAA, which the internet dubbed the “MAFIAA.”
Vitalik reminds us of the cypherpunk movement’s battles. A famous legal case that caused a lot of outrage was Capitol Records, Inc. v. Thomas-Rasset, where the defendant had to pay $222,000 in damages for illegally downloading 24 songs over a file-sharing network.
The main weapons in the fight were torrent networks, encryption, and internet anonymization. The importance of decentralization was a lesson learned early on.
As Satoshi Nakamoto, the creator of Bitcoin, once said, “You will not find a solution to political problems in cryptography.” But Satoshi also said that:
“We can win a major battle in the arms race and gain a new territory of freedom for several years.”
Governments are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seemed to hold their own.
Bitcoin was seen as an extension of this spirit to internet payments. It could be used to compensate artists for their work without relying on restrictive copyright laws.
Vitalik himself participated in this early crypto culture. When he wrote articles for Bitcoin Weekly in 2011, he developed a mechanism where the first paragraph of two new articles was published, and the rest was held “for ransom,” releasing the content when the total donations to a public address reached a specified quantity of BTC.
More than just freedom of payment
Vitalik explains that the mentality that created blockchains and cryptocurrency was about more than just money. In his words:
“Freedom is important, decentralized networks protect freedom, and money is one important sphere where such networks can be applied.”
But there are several other important places where decentralized networks are not needed. The right application of cryptography and one-to-one communication is enough.
He argues that the idea that freedom of payment is central to all other freedoms came later, possibly as an ideology to justify the rising value of cryptocurrencies. Vitalik lists other technological freedoms that are just as foundational:
- Freedom and privacy of communication: This includes encrypted messaging and pseudonymity. Zero-knowledge proofs can protect pseudonymity while ensuring important claims about authenticity.
- Freedom and privacy-friendly digital identity: Blockchain applications here allow revocations and various use cases of “proving a negative” in a decentralized way. However, hashes, signatures, and zero-knowledge proofs are used more frequently.
- Freedom and privacy of thought: This will become more important as our activities become mediated by AI. Without any major change, more of our thoughts will be intermediated and read by servers held by centralized AI companies.
- High-quality access to information: Social technologies that help people form high-quality opinions in an adversarial environment are crucial. Vitalik is bullish on prediction markets and Community Notes.
Crypto and internationalism
Vitalik has always valued internationalism, a cause dear to many cypherpunks. He points out that statist egalitarian politics often ignore global inequality. Policies aimed at protecting domestic workers, like tariffs, can harm workers in other countries.
The internet, in theory, makes no distinctions between wealthy and poor nations, and cryptocurrency extends this ideal to money and economic interaction. This can flatten the global economy, and Vitalik has seen many examples where it already has.
However, Vitalik stresses that if you care about crypto because it supports internationalism, you should judge politicians by how much they care about the outside world. Many politicians fail on this metric.
While attending EthCC, Vitalik received messages from friends who couldn’t attend because it was hard for them to get a Schengen visa. Visa accessibility is a key concern when deciding locations for events like Devcon.
The USA also scores poorly on this metric. The crypto industry is uniquely international, so immigration law is crypto law. Which politicians and countries recognize this?
Vitalik warns that just because a politician is crypto-friendly now doesn’t mean they will be in the future. He suggests looking up their views on crypto and related topics like encrypted messaging from five years ago.
“Particularly, try to find a topic where ‘supporting freedom’ is unaligned with ‘supporting corporations,’” he says. This can give a good idea of how their views might change in the future.
He points out a potential divergence between decentralization and acceleration. Regulation can harm both by making industries more concentrated and slowing them down. But sometimes these goals diverge.
For AI, a decentralization-focused strategy involves smaller models running on consumer hardware, avoiding a privacy and centralized-control dystopia. An acceleration-focused strategy, meanwhile, is enthusiastic about everything from tiny chips to massive AI clusters.
Within crypto, we haven’t seen a large split along these lines yet, but Vitalik thinks it’s plausible that we will. He advises exploring the underlying values of “pro-crypto” politicians to see which side they will prioritize if a conflict happens. Charles Hoskinson, Vitalik’s fellow Ethereum founder, reacted to the article saying:
“My first goal has always been to keep government out of crypto completely. In the places where that’s not possible, the choice is pretty clear. If they want a CBDC, sue non-custodial wallets, systematically jail the leaders of Crypto, call everyone a security, and bully and harass exchanges, then we don’t vote for them. Politics is a game of cause and effect.”
Charles added that if politicians understand that bullying and harassing the crypto industry will make them lose the elections, then of course they’re gonna avoid doing that.
“It’s not complex nor should invent massive cognitive hierarchies to excuse one’s personal distaste of particular people. A vote for Biden is a vote for the death of the American crypto industry. In 2024, be a single issue. Vote for pro crypto candidates,” Charles said.
This article was updated to include Charles Hoskinson’s reaction
