Cryptocurrency Will Not Liberate Us

Deflating the egalitarian fantasies of digital currencies.

By Hadas Thier | January/February 2022

This article is from Dollars & Sense: Real World Economics, available at

issue 358 cover

This article is from the
January/February 2022 issue.

Subscribe Now

at a 30% discount.

“It’s the ultimate egalitarian system ... anyone can participate, you don’t need a bank, you don’t need anyone’s permission.” So explains Bitcoin billionaire Michael Saylor in a recent interview with Fox News host Tucker Carlson. The point of Bitcoin, Saylor goes on, is to “fix the money, and money is energy, and energy is life.”

Cryptocurrencies, like Bitcoin, Ethereum, Dogecoin, and more than 10,000 others, are digital currencies that allow people to buy and sell things online. Cryptocurrencies (or “crypto,” as they’re known) come in the form of digital coins or “tokens,” though they function as assets for investment more easily than as means of exchange. Over the last few years—and during this past year in particular—cryptocurrencies have gone from being a fringe investment made mostly by hardcore crypto adherents into a $2 trillion industry, including many mainstream investors getting in on the action.

Crypto uses a technology called “blockchain,” and Bitcoin, by far the most widely held cryptocurrency, uses what’s known as “proof of work” blockchain technology. A blockchain is a digital database that, rather than being owned by an individual and stored on a single computer, is distributed among computers on a shared network. A blockchain’s database is secured through the cooperation of many computer “nodes” in the system. In the case of proof of work, this requires computers in the network to verify each transaction by creating and solving complex mathematical questions. In solving increasingly complex, random puzzles, the owners of these computers participate in building out a public, virtual ledger of all transactions, and are rewarded with new Bitcoins for their troubles (this is known as “Bitcoin mining”).

How Do Blockchains Work?

A blockchain is a database, but unlike a traditional database, which is owned or secured by a single entity, a blockchain is “distributed,” i.e., it is shared among a network of a computers (or “nodes”). Rather than storing data in tables, a blockchain holds information in groupings of data known as “blocks.” Every time a new block of transactions is formed, it gets timestamped and given a code (known as a “hash”) created by a mathematical function. Every new entry is validated through a “consensus mechanism” (an agreed upon method of validation), most commonly either “proof of work” (computer nodes must compete to solve complex mathematical equations in order to validate the block) or “proof of stake” (computer nodes are randomly assigned the power to validate a new transaction, based on how many “tokens,” or digital coins, the node holds). All the other nodes in the system have some time to verify the winning computer’s work. The block is then attached to the chain of previous blocks of data, creating an immutable and permanent record. A blockchain has been compared to a digital notary, since like a notary public, it functions to verify or certify information and prevent anyone from tampering with it.

An enormously wasteful computer arms race has taken off to facilitate this process. Millions of computers around the world work ceaselessly around the clock to solve riddles whose solutions mean nothing and whose actions produce nothing, at great environmental cost. It is estimated that Bitcoin processes annually exhaust the same amount of energy as the entire country of Argentina. A single transaction requires 707 kilowatt-hours of electricity, emitting half a ton of CO2. According to Digiconomist’s Bitcoin Energy Consumption Index, one Bitcoin transaction uses as much power as an average U.S. household uses over 73 days. A study published in Nature in 2018 estimated that the process of verifying and mining Bitcoin could on its own raise global temperatures above 2 degrees Celsius by 2048. (This was before the most explosive growth of Bitcoin trading took off; Bitcoin’s energy consumption has almost tripled since that time.) Yet with tens of millions of people around the world owning crypto assets, and with thousands of fervent believers, cryptocurrencies seem to have something for everyone. Conservatives like Carlson love Bitcoin’s supposed anti-inflation mechanisms; millennial millionaires geek out on making money through disruptive technologies; handfuls of Redditors have gotten rich overnight; and techno-libertarians imagine a world governed by autonomous individuals unfettered by the state.

Crypto for the Left?

As crypto moves into mainstream financial circles, many of its proponents are trying to redirect attention from its disastrous climate implications and associations with money laundering by giving the technology a left-wing makeover. Cryptocurrency, left crypto devotees argue, is a leaderless movement to unseat the plutocrats who have benefitted hand over fist from our centralized banking system. A recent article by Alex Gladstein in Bitcoin Magazine, “Check Your Financial Privilege,” argues:

Critics in the dollar bubble miss the bigger global picture: that anyone with access to the internet can now participate in Bitcoin, a new money system with equal rules for all participants, running on a network that does not censor or discriminate, used by individuals who do not need to show a passport or an ID and held by citizens in a way that is hard to confiscate and impossible to debase... Until now, governments and corporations have controlled the rules of money. That is changing... Anyone with internet access now has an escape from their unreliable and exploitative national monetary system.

Gladstein has penned a series of lengthy articles, each of which claim that Bitcoin will answer one or another variety of global inequality. Africans living in countries that had been colonized by France, and which, despite their independence, still have their economic fates determined by French banks, could free themselves from the monetary domination of the French-backed currency (the C.F.A. franc). Palestinians in Gaza who are not only physically barred from free movement, but are also economically dependent on their oppressors, can now “buy the dip” and make money off Bitcoin investments (i.e., buy Bitcoin when its value has dropped, and make a profit when and if the value bounces back up).

Echoing this same sentiment, Jack Mallers, the founder of Strike, a digital wallet company (a “digital wallet” is an app that stores crypto tokens), gave an emotionally wrought speech at this summer’s Bitcoin2021 conference in Miami, Fla. as he reported on his recent mission to El Salvador. Mallers spent three months in El Salvador and worked with the neoliberal, authoritarian administration of President Nayib Bukele to introduce Bitcoin as legal tender there (a law stipulating that businesses must accept Bitcoin as a form of payment was later passed by El Salvador’s Congress in the middle of the night). Through tears, 27-year-old Mallers told attendees about El Salvador’s dirt roads and broken ATMs, and the many unbanked Salvadorans that he met. “It was sad. There just wasn’t a lot of hope. I gave talks, I talked to kids. I told them, ‘Man, we’ve got this. Bitcoin’s here, we’ve got this.’”

Mallers, whose father founded one of the largest futures brokerages in Chicago and whose net worth is unknown but is most certainly in the millions, told attendees that he’s proud of everyone in the room. “I hope you find solace in knowing that you helped those that haven’t been helped in 250 years.” Forget the haters, Mallers assured the audience: “The kid I went to high school with is gonna lean over a bar in Manhattan and drink a $35 old-fashioned and tell me Bitcoin doesn’t matter. Privileged fucking asshole.”

A Question of Class Power, Not Technology

But there are a few glaring problems with this narrative. To begin with, the results thus far in El Salvador are underwhelming at best. Remittances—salary transfers from Salvadorian migrants in the United States to families back home—make up about a quarter of the nation’s gross domestic product. So having a means of transferring money across borders without fees or intermediaries could be helpful. In fact, Bitcoin transactions do come with (often high) fees. More importantly, Bitcoin’s value fluctuates wildly, and most Salvadorans have been hesitant to use it because of this volatility. Whatever they may gain from avoiding exploitative Western Union fees, they may lose much more from the fluctuating values of remittances that come in the form of Bitcoin.

The adoption of Bitcoin in fact triggered mass protests in El Salvador, where according to a recent poll conducted by El Salvador’s chamber of commerce, 93% of Salvadoran people are opposed to its adoption. Nevertheless, the government created a “Chivo Wallet” app to send and receive Bitcoin transactions and gave $30 worth of Bitcoin to anyone who adopted the wallet. The New York Times reported that many ATMs ran out of dollars soon thereafter, as Salvadorans rushed to convert their Bitcoins to dollars and withdraw cash. The Chivo Wallets themselves have also been vulnerable to hackers who have stolen funds from hundreds of Salvadorans with no recourse. Now President Bukele has announced plans to build a Bitcoin city at the foot of a volcano, designed in the shape of a coin. The city will harness the volcano’s geothermal energy to power Bitcoin mining.

These problems stem from the fact that Bitcoin and other digital tokens should more aptly be called “crypto assets” rather than “cryptocurrencies.” Speculators have made (and lost) phenomenal amounts of money through trading crypto and crypto-based derivatives, but so far cryptocurrencies have gained very little traction as a practical medium of exchange, due to the volatility of their value and the logistical impracticalities associated with transactions. (The claim that cryptocurrency cannot be debased is also laid to waste by this volatility. The value of the dollar may erode because of inflation, but it has never seen its value cut in half in a single day.)

There’s a deeper problem still: Even in a best-case yet unlikely scenario, where cryptocurrencies could play a stable and seamless role in facilitating monetary transactions in the developing world, it assumes that the main roadblock to global equality is that people don’t have access to financial products, microloans, and property rights. But capitalism has created deep geopolitical and social problems that cannot be overcome with a monetary technofix. The key global challenge that we face is not one of technology, but of class power.

The profoundly unequal and U.S.-dependent economy in El Salvador, for instance, has its roots in a monocrop export economy first developed under Spanish colonization and later enforced by U.S.-driven free-trade agreements. And of course, a 12-year, U.S.-backed civil war devastated Salvadoran society and the economy. The country is now in a deep economic crisis, and the adoption of Bitcoin has only triggered further instability. On top of this, entangling El Salvador within CO2-emitting Bitcoin mining schemes will diminish the country’s limited energy supply and make the population more vulnerable to the ravages of climate change.

The proposition by Gladstein that Bitcoin could bring liberation to Palestine is an even greater stretch. Unironically opening an article about Bitcoin and Palestine with the observation that the Palestinian he interviewed only has access to electricity a few hours per day, Gladstein moves on to ask: “Why can’t Palestinians easily order goods on Amazon or receive money from abroad?” as though Amazon orders are high on the list of Palestinian concerns. He rightly chronicles the kneecapping of the Palestinian economy by the Israeli occupation, but eventually concludes that “money lies at the very root of [Palestinian] struggles... They do not have control of their currency.”

The systematic undermining of the Palestinian economy in fact reflects a much deeper colonial ill. Will Bitcoin overturn decades of ethnic cleansing, occupation, control of resources, and continued brutality and annexation? Or will it simply provide Palestinians, who already suffer from deep economic precarity, a means to speculate with meager funds (assuming they have access to the internet to do so)? On the other hand, Venezuela, where the economy has been in a years-long hyperinflationary free fall, provides a good test case for Bitcoin and other digital tokens. Cryptocurrencies have become popular in Venezuela as a tool to receive remittances, a medium to exchange the floundering Venezuelan bolivar for foreign currencies, and a means to help businesses hedge against the inflation of the bolivar. Yet crypto use is mostly limited to Venezuelan businesses and the wealthy, while the majority of Venezuelans have neither stable internet connections nor enough money to dabble in crypto trading.

Even Bitcoin devotees know this. In an interview with Bitcoin Magazine entitled “Bitcoin can’t fix everything,” Peter McCormack explained with not-so-subtle disdain: “When I went to the slums, it became painfully clear that these people aren’t going to download a Bitcoin wallet and back up their private keys, right?” Venezuelan crypto supporter Diana Aguilar similarly reported for CoinDesk:

The fallacy that bitcoin could “save” a country’s whole economy assumes the country meets all the requirements for mainstream adoption. Just to start, there would be needed widespread computer and financial literacy, reliable electricity infrastructure, stable internet service and an economy that not only allows the majority of citizens to count on a device to keep their digital wallets but also the safe migration from fiat money to digital money.

The crypto community desperately wants to prove that digital tokens like Bitcoin can be used as currency, and that they can save failing economic systems. But when given the exact perfect storm of hyperinflation, government support for cryptocurrencies, and growing popularity of digital tokens, the project still falls flat. Beyond the logistical impracticalities of making it work are the deeper geopolitical causes of Venezuela’s failing economy, at the heart of which is a century-old dependence on oil. When oil prices collapsed in 2014, this brought about a spiraling economic crisis. Combined with ongoing U.S. interference and devastating economic sanctions, these factors have created a political and economic pressure cooker in Venezuela.

Persistent Plutocracy

Underlying the conviction that cryptocurrencies can level the global playing field—or the domestic one—is the assumption that the decentralized technology behind blockchains is inherently equalizing. It isn’t.

To the contrary, researcher and writer Olivier Jutel has chronicled the ways in which American hegemony over the governing infrastructure of the internet and platforms on the network have only exacerbated global inequalities. Jutel notes that the Pacific Islands have become a tech-frontier for blockchain because of “regulatory openness based upon imperial power imbalances,” allowing for tax shelters and tax-free economic development zones. “Tech experimentation in the developing world has the benefit of connecting companies to aid-funding streams and outsourcing risk to some of the most fragile environments in the world with value extracted for the benefit of stakeholders including private entrepreneurs and large companies.”

What Is an NFT?

NFTs (“non-fungible tokens”) are digital assets such as media files (think digital images, audio files, or videos) that live on the Ethereum blockchain. They are not “fungible,” i.e., replaceable, because each has its own unique identification code. Each NFT contains ownership details and can also include “metadata”—accompanying information describing the underlying data (for instance, digital art work can include a smart contract to pay out royalties to the artist every time the NFT trades hands). NFTs essentially assign a certificate of ownership to media files. The media file itself may still be completely public and downloadable. But the ownership tag on it (a “token”) can only reside with one entity. As Jacob Silverman has described: “People who own [NFTs] don’t technically own the media you interact with, they own a description of that media.” Nevertheless, NFTs have functioned as digital collectibles, with the potential of being highly speculative assets. You might buy the NFT of Jack Dorsey’s first tweet for $2.9 million one day, with the expectation that you’ll be able to sell it to someone else for $4 million the next. While NFTs were supposed to help artists get fair compensation, they may end up being the Beanie Babies of the digital age.

There may be blockchain technology or future blockchain innovations that could be used for good. Not all cryptocurrencies use the climate-destroying proof-of-work process, for instance. And not all blockchain technology powers cryptocurrencies per se. There are some who argue that blockchain-powered decentralized autonomous organizations (DAOs) provide models to cooperatively run businesses, or that non-fungible tokens (NFTs) can help artists realize better compensation through royalties that are programmed into a digital art work’s metadata. (See box, “What Is an NFT?”) But the underlying logic of cryptocurrencies entrenches rather than subverts free-market capitalism in several ways.

First, the market determines which crypto assets and technologies are invested in. For instance, there are alternate blockchain processes, such as “proof of stake,” that are less damaging to the environment (see box, “How Do Blockchains Work”?). In order to participate in verifying blockchain transactions, participants in those currencies prove their trustworthiness by locking away a certain amount of crypto coins rather than by solving mathematical problems. But Bitcoin’s hegemony within the crypto industry incentivizes investment to flow to the energy-guzzling proof-of-work blockchains. Thus coins using proof-of-work algorithms currently make up over 65% of the crypto market. The dynamic isn’t different from the one which forces the planet into an interminable wait for the market to properly incentivize a transition away from fossil fuels. And in fact, it’s worse: Cryptocurrencies aren’t regulated by the EPA or any other institution. Nor do they have a centralized headquarters to protest or tens of thousands of workers within the industry who have the potential to organize against it. The logic of the market rewards profitability above all else. The world of cryptocurrencies reflects this same logic, but with no government regulations to enforce any restraints. Second, crypto assets have promoted the commodification of everything, from Twitter CEO Jack Dorsey’s first tweet (the proof of “ownership” of this tweet sold for just under $3 million) to virtual land grabs on the “metaverse” (a digital plot of land in Decentraland—an open-source 3D virtual world platform—recently sold for $2.5 million), and the financialization of our daily interactions. As co-founder of the DAO software company Syndicate, Ian Lee, put it to the Financial Times, the goal is to turn internet “users and contributors into investors, and vice versa.”

An article in CoinDesk explained:

Crypto can turn ... passive efforts [on the internet]—scrolling, exploring, socializing—into financial transactions. What would it mean to live in a world where every single image, song, health record, Twitter “like” and blog post has a discrete token attached? ... Things don’t “go viral” without a massive network of individual interactions. In a tokenized future, an early “like” on a post that eventually becomes popular could be a kind of historical artifact; trading it on the secondary market might prove lucrative. Same goes for a highly rated comment in a comment section.

Whereas the internet created a vast and replicable abundance of digital content, crypto assets introduce enforced scarcity to the digital world in order to claim ownership. An NFT assigns a digital receipt to an item, which is verified on a blockchain. NFTs can thus commercialize any digital item, and bind it to a system of ownership, financial transactions, and speculation. Meanwhile DAOs set up organizational structures in which you must purchase tokens to participate in discussions.

Lastly, as media studies professor Nathan Schneider has put it, both proof-of-work and proof-of-stake technology entrench a “persistent plutocracy,” whatever the libertarian aspirations of their creators. Both processes, he notes, “grant governance rights roughly in proportion to a given node’s buy-in on the network—through computing power or token holdings, respectively.” The more machines are put to work solving puzzles, the greater the chances of mining a Bitcoin. “As the complexity of the computations increases, it becomes harder for the average person to profit, since one must have thousands of machines to remain competitive,” Schneider explains. “And so the system begins to resemble a traditional centralized capitalist system that remains profitable—to the very wealthy.” The very unequal access to mining cryptocurrencies belies the argument made by Gladstein and others that “anyone with access to the internet” can equally participate in the system and be subject to the same rules.

Indeed, a recent paper by finance professors Antoinette Schoar and Igor Makarov found that as of the end of 2020, the top 1,000 investors controlled about three million Bitcoins, out of just under 19 million. The top 10,000 Bitcoin accounts hold five million Bitcoins. As the Wall Street Journal pointed out recently, this means that “approximately 0.01% of bitcoin holders control 27% of ... bitcoin in circulation. By comparison, in the U.S., where wealth inequality is at its most extreme in decades, the top 1% of households hold about a third of all wealth.” That’s an almost 100-fold increase in inequality as it compares to the dollar economy.

This underscores an important point: Decentralized technology does not necessarily translate into less hierarchy or greater democracy. As Schoar points out: “Somebody who can easily spend a hundred million dollars’ worth of Bitcoin and sell it or buy it can have a massive price impact in the market,” while as “a regular retail investor, you might suddenly find yourself x percent down because of massive volatility, which might be created by a few large investors randomly deciding to sell some of their holdings.” The Financial Times reported on exactly this phenomenon when cryptocurrency investments tanked at the beginning of December 2021, likely due to the actions of one or two big players unloading large amounts of bitcoin. 

Investors who are powerful enough to influence the value of a coin through the movement of their assets are reverently referred to as “whales” in crypto circles. The financial clout held by whales is also magnified by the large social media presence many of them possess—such that a single tweet from Elon Musk, the billionaire founder of Telsa, can send the value of currencies skyrocketing or plummeting. Since speculative growth depends on people’s perceptions of rising value, having the ability to hype up a large audience grants crypto influencers a lot of power.

Cyber-Libertarianism or Democratic Accountability?

In 2018 Phil Gramm and Hernando de Soto penned an op-ed entitled “How Blockchain Can End Poverty” for the Wall Street Journal. Gramm had previously been the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs and sponsored the Gramm-Leach-Bliley Act in 1999, which removed Depression-era laws regulating banking and finance. (Ending these regulations, especially Glass-Steagall, contributed greatly to the financial crisis of 2008.) De Soto is a Peruvian neoliberal economist, at the forefront of policies favoring deregulation and property rights. They argued:

The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t... If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

The technology that powers cryptocurrency is varied, and its underlying philosophy runs a spectrum. But at the heart of crypto culture lies a belief that financialized property is the key to human advancement, and that economic incentives lead to personal autonomy. In fact, that’s not so different from mainstream capitalist ideology. Arguably it’s worse: Crypto libertarians want to trade a world run by institutions that benefit the wealthy by design, but are somewhat regulated by democratic processes, for a world that is controlled completely by the ultra-wealthy, with no mechanism for democratic control.

The argument from crypto’s left proponents is that a technocratic social order will free us from hierarchy and state domination. Ultimately this is a faux-left position that has no proven track record in the actual practice of trading in cryptocurrencies. Instead, the world that has been erected around blockchain technology is characterized by the increased concentration of wealth and power.

Insofar as there are anti-establishment goals within the crypto community, they stem from a cyber-libertarian ideology that distrusts states and public institutions. That’s an understandable position to arrive at—a reaction against decades of neoliberal states hollowing out government services, attacking the working class, and creating profound inequality. Trust in depleted and broken government institutions is abysmally low.

Yet the answer is not to toss out the entire edifice of the state and representative government, but to push for greater accountability and reforms, including public control of banks and redistributive fiscal policies. At minimum, there are simpler and less planet-warming solutions on hand to solve many of the problems that crypto purports to address. The state, if it’s pushed by collective action, can play a positive, interventionist role: for instance, banking the unbanked through postal banking, or making money transfers accessible by regulating financial services companies and capping transfer fees. It’s true that the government will not, on its own, implement reforms for the greater good. But utilizing the features of representative democracy offers us a better shot at making change than the shadowy world of cryptocurrencies.

Ultimately liberation doesn’t come from atomized action and individual economic power. It flows through democratic movements for civil and economic rights for every human on the planet, whether they possess a digital token or not.

is an activist and writer in New York, and the author of A People’s Guide to Capitalism: An Introduction to Marxist Economics (Haymarket Books, 2020). She tweets @hadasthier.

Sources: Camilo Mora et al., “Bitcoin emissions alone could push global warming above 2°C,” Nature Climate Change, August 2019 (; Alex Gladstein, “Check Your Financial Privilege,” Bitcoin Magazine, May 12, 2021 (; “El Salvador Becomes The First Country to Declare Bitcoin Legal Tender,” Bitcoin Magazine YouTube channel, June 5, 2021 (; Alex Gladstein, “Can Bitcoin Be Palestine’s Currency of Freedom?” Bitcoin Magazine, July 22, 2021 (; Olivier Jutel, “Blockchain Imperialism in the Pacific,” Big Data & Society, February 18, 2021 (; Nathan Schneider, “Cryptoeconomics as a Limitation on Governance,” available at OSFHOME (; Igor Makarov and Antoinette Schoar, “Blockchain Analysis of the Bitcoin Market,” SSRN, October 14, 2021 (; Julie Ryan Evans, “62% of Cryptocurrency Investors Believe They’ll Get Rich Off Those Investments,” Magnify Money, April 13, 2021 (; Phil Gramm and Hernando de Soto, “How Blockchain Can End Poverty,” Wall Street Journal, January 25, 2018 (; Anatoly Kurmanaev, Bryan Avelar, and Ephrat Livni, “Bitcoin Preaches Financial Liberty; A Strongman Is Testing That Promise,” New York Times, October 7, 2021 (; Gary Silverman, “Crypto’s wild ride raises new liquidity concerns,” Financial Times, December 11, 2021 (; “Bitcoin Energy Consumption Index,” Digiconomist (; Miles Kruppa and Hannah Murphy, “Crypto assets inspire new brand of collectivism beyond finance,” Financial Times, December 27, 2021 (; David Hollerith, “Despite Utility, Bitcoin Cannot Fix Venezuela,” Bitcoin Magazine, February 25, 2020 (; Diana Aguilar, “Bitcoin Can’t Fix Venezuela: I Should Know,” CoinDesk, May 2, 2019 (; Andrés Engler, “After Identity Theft, Salvadorans Now Report Funds Disappearing From Chivo Wallets,” CoinDesk, December 30, 2021 (; Jacob Silverman, “Bursting the NFT Bubble,” Tech Won’t Save Us with Paris Marx (podcast), April 8, 2021 (

end of article

Please consider supporting our work by donating or subscribing.