The crypto world, with its numerous and rapidly expanding communities, can be very difficult to navigate, let alone understand. For all their insistence on rehabilitating the Homo Oeconomicus through perpetual contracting and economic transactions, many of these communities are full of their own ritualistic practices and quasi-religious celebrations, which would keep many anthropologists busy.

We have, thus, decided to turn to one such anthropologist, Inês Faria, to talk about her ethnographic work among various crypto communities over the years. Inês has authored a number of insightful papers, where she draws on theories of religion, myth, faith, and ritual, to add to our understanding of what makes crypto communities tick – and the role that blockhain plays in, as she and her co-authors put it, "re-invigorating enchantment and material romanticism towards finance and technology."

~ Evgeny Morozov

You have co-authored an interesting article (based on an ethnographic study), which documents the ‘quasi-religious romanticism of the crypto-community towards blockchain technologies.' Apparently, one does find plenty of myth, faith, charisma, and ritual in this world. Various (prominent) members of this community have been anointed as ‘Bitcoin Jesus’, surely in explicit recognition of their proselytizing.

Could you give some concrete examples of how some of these phenomena manifest themselves in the crypto world and comment on the role they are playing? If some of them are, as you argue, a form of modern re-enchantment, what do you think is driving it? What could the study of the crypto-community tell us about the role of religion, magic, and ritual in today’s world?

In the article, we (me, Sandra Faustino, and Rafael Marques) give some examples of such manifestations explored with a bit more depth, but, briefly, some of these examples are cyclical celebrations, such as the Bitcoin Halving and the Bitcoin Pizza Day, but also moments of gathering, which include meetings and networking events with the function of consolidating and expanding the crypto-community.

One of the examples we give in the article is Bitcoin Wednesday in Amsterdam. At the time (2016/17), there was already collective awe regarding cryptocurrencies and blockchain, which, at these events, was almost palpable. At this specific one, Andreas Antonopoulos, a so-called Bitcoin evangelist, was speaking – there was clearly a reverential tone and a mix of curiosity and admiration surrounding this character. We listened to his talk, and it was pretty much a pitch – a pitch that was taking advantage of the speaker’s own charisma, and of the mysticism surrounding the hyped Bitcoin and blockchain software – which people wanted to understand and bet on, depositing faith in its power to bypass financial intermediaries and make them obsolete. The latter of which was a central argument in Antonopoulos's talk.

Technical mastery has long been part of religious or spiritual awe, as well as a means to create or strengthen power relations – we can see this, for instance, in the prows of Trobrianders’ canoes explored by Alfred Gell, or even in the architectural and decorative features of some churches. Bitcoin and all the aura surrounding its creation had this same characteristic, creating a strong appeal to novelty, to change, to technological prowess, and to its power to heal social, economic, and political ailments. An appeal that often attracted people coming from different (and often conflicting) economic and political positioning.

This enhanced the romantic view of the technology, making it very appealing – as a tool, as a medium for radical change, or as a vehicle for speculation and rapid money-making. We played a bit with this appeal, and the idea of re-enchantment, while thinking that this is really driven by various factors: the post-crisis situation, of course; but also, as other authors have also observed, the need for something that allows for a redemption of financial institutions and financialized gambling practices.

In that co-authored paper, you also emphasize the significance of the myth of Satoshi Nakomoto to the broader quasi-religious resonance enjoyed by the founding of Bitcoin. What is the right way to read that legend? What exactly made you compare it to the legend of King Arthur? How much do you think the peculiar actions of Satoshi – complete anonymity, refusal to come out publicly, the decision to leave the huge stack of initial bitcoins unspent, etc. – have contributed to the mystique that propelled the initial crypto-community?

I don’t think there is a right or a wrong way to read that legend, or the parallel we establish with the legend of King Arthur. We read it in a particular way – that also points to why we established this parallel – as a legend concerning a ‘noble altruist’, who brings a solution to a problem by resorting to mysterious tools, and is seen as a savior from crisis and the despotic centralization of power.

The legend of King Arthur resonates with the idea of a prowess that people do not really understand, but whose results they can experience, and projects the expectation of making things right into a character. As with Satoshi, there is mystery around King Arthur, and the romantic tales told about this character are often romanticized and more mythical than historical. However, the historical events that led to the growth of this legend were very real: the anxieties about Saxon invasions and a hero who fought them off and gave people hope.

The idea of Satoshi as a noble altruist proposing a solution to bypass centralized power speaks to systemic anxieties as well: about centralized finance and power in the post-2008 crisis period, resonating with people coming from various ideological stands. This is done through the creation of a strong narrative around the decentralization capabilities of Bitcoin and blockchain, and the consequent liberation from financial intermediaries associated with the financial crisis.

Satoshi’s uninterested position, anonymity, and unspent bitcoins feed an imaginary of altruism and pure technical genius that seems to allow for a moralization of this character as good, and an identification of some projects’ morals with that capacity to make things right. So, as a form of reasoning and faith this is not new, but it appears so when applied to a particular technology and the crypto-community.

As an anthropologist, you have succeeded in uncovering layers of meaning inside objects and practices that might look mundane to the crypto-community itself. Thus, for example, you have emphasized the cultural and social role played by the whitepapers. What other kind of ‘work’ – besides just explaining some technical processes – do these whitepapers do for the crypto-community? In what ways are they similar to ‘sacred texts’, as you allude to in the co-authored paper?

I believe whitepapers are important elements in every project, and carefully prepared. The Bitcoin whitepaper was a primordial one and is particularly technical, while nevertheless laying the basis for all that came after that – there is a lot more work done by these whitepapers besides being technical resources.

From a more pragmatic point of view, the whitepaper seemed to us more or less like the life sign of a project, and the teams and projects we encountered considered them as such as well: you need to have one, and it has to be good. They are also the places and scripts where each projects’ moral matrixes and ideological stands are imprinted, and key pieces in the dissemination of projects’ potential and future actions. Finally, and importantly, they are also their business card. By explaining the more black-boxed technical aspects embedded in the execution plan of the project's narrative, they show technical originality and attract investment.

With the intensification of mainstream financial institutions' presence, there was a tendency for more technocratic approaches to prevail, much in line with the improvement of functional dimensions, and less with the development of platforms with any clear public discourse regarding financialization, capitalism, or the financial crisis itself.

You situate blockchain technology’s growing appeal to the lay public against the background of growing suspicion of the financial industry that got bailed out after the 2008 financial crisis. While the financial system did take some proactive measures to improve its image via all sorts of ethical discourses and its commitment to vague projects like ‘stakeholder capitalism’, the crypto community (if we are allowed this generalization) doesn’t seem to buy this ethical turn, hoping to instead install new regimes of ‘algorithmic’ truth and authority by means of the blockchain. Could you expand a little bit on these dynamics? You’ve done extensive ethnographic work among various blockchain communities – perhaps, you could reflect on the attitudes towards traditional finance, and the 2008 crisis in particular – that you observed there?

I observed various – often overlapping and ambiguous – positionings and attitudes towards the financial practices that underlay the 2008 crisis and the rescue politics that followed. Many of these, mixed with other, more personal, organizational, and ideological motivations, played a role in the development of the cases I observed and followed throughout my research. If, on the one hand, Bitcoin appeared as a clean slate possibility in an environment of increasing awareness about financial and financialization practices – as we can see in the genesis block – with many announcing that mainstream financial institutions’ incumbency days were over, on the other hand, the real functioning of the cryptocurrency attracted a much more diverse crowd with various interests.

Within this variety of more or less pragmatic uses of crypto were openly politicized projects, seeking alternatives to the financial status quo, but also financial institutions’ innovation labs, where a myriad of processes of experimentation took place. These labs were not striving for radical change, but looking to profit from the software’s possibilities for improving digital organizational tools and bureaucratic streamlining – including trading and settlement, digital identification, or payment services, among others. However, the boundaries between mainstream finance and more radical blockchain projects seem less permeable in theory than they were in practice.

Overall there seemed to be a certain belief in the corrective power of blockchain technology. This was felt from the part of financial institutions and projects seeking alternatives to mainstream finance through more decentralized proposals – many authors came across similar, and now widespread, narratives where the emphasis is on how the technical and security features of the system would allow for better financial supervision and secure financial operations. It was also felt from the part of the many crypto projects that developed, and that see in blockchain and cryptocurrencies, spaces to create economies where they thought human bias and corruption could be avoided through algorithmic mediation and management.

With the passing of time, however, and with the intensification of mainstream financial institutions' presence in experimentation and investment circles, there seemed to be a tendency for increasingly more technocratic approaches to prevail, much in line with the improvement of functional dimensions, and less with the development of more politicized, or radical, platforms with any clear public discourse regarding financialization, capitalism, or the financial crisis itself.

There is some strange fascination with nationhood in the broader crypto community, which explains, perhaps, why we see so much blockchain and crypto-activity in the Pacific and the Caribbean, with many smaller island nation states getting into the crypto action (the most emblematic of such efforts is, of course, the recent Cryptoland video, which went viral). You’ve studied one of the earliest efforts in virtual nationhood – a project called Bitnation. Could you say more about what it was, what kind of agenda it pursued and with what motivation, and why it eventually ran out of steam? What kind of assumptions about governance, sovereignty, and nationhood underpin the thinking of the people behind the project? Could you say a bit more also about the ideological/intellectual influences on the founders of the project?

The Bitnation and Pangea project proposed an anarcho-capitalist/Austrian economics-inspired market platform (a DAO) for digital jurisdictions and corresponding services. All services are private and digital nations can be freely created. The motivation for this was the project’s founders’ disappointment with democracy and the role of nation states, including conflict or borders, for instance.

Underneath the Pangea platform is a monetized reputation system where people are graded according to ‘good’ behavior in specific actions mediated by smart contracts. The monetization is carried out through the evaluation of users by a bot – Lucy – that converts good behavior points into platform tokens (the project's whitepaper explains this with a lot more technical detail). The functioning of the platform is connected to a prevalent idea in the crypto community that monies can be created on blockchains, and that changing money, and how and by whom it is issued, can change a/the world.

The Bitnation and Pangea project assumes decentralized and competition-based social organization is better than existing forms of governance. The platform intends to ensure stateless control through the algorithmically managed, monetized reputation system that works as a soft inclusion/exclusion mechanism and incentive scheme. This is an almost literal encoding of Hayek's private money theories, added to Austrian economics’ wider views of society (Mises, Rothbard, Friedman) and intersecting with the decentralization promises of blockchain technology.

Within the very open functioning of the project’s wider organization, crosscut by the so-called ‘crypto winter’ of 2018 and lack of the expected success in the ICO, the project reconfigured, and the seemingly lively community of followers faded away.

Broadly speaking, without a solid community that trusts it and needs it, no project or new money proposal seems to prevail easily. Bitnation and Pangea appear as attempts to provoke an economic, relational, and transactional change without a consolidated community that wants such changes. This sheds light into how projects, monies, and proposals for transformation are better planned with and for particular places and society, and not marketed as solutions for its problems afterwards.

Dutch Blockchain Hackathon, 2017 – courtesy of Inês Faria

While a lot of recent discussions about the governance mechanisms of blockchain-based projects focus on tokenization, your work goes a few steps further in linking tokens to novel forms of reputation creation and assessment. What do you think is novel about such token-enabled reputation systems? And how can we situate them in a broader historical and political context, e.g. by viewing them, say, through a Foucaldian perspective?

I believe that the novelty with these kinds of reputation systems, when compared to other numbering or measurement practices, is the fact that they purportedly intend to replace more fluid, or flexible, means of relational trust ties and social reputation, and add a fixed, quantified, and monetized feature to these components of human social relations. This, I believe, constitutes a novel process of fixed valuation that rewards what programmers, or project founders, consider ‘good’ or ‘bad’ human and behavioral traits. This happens in a system where people would voluntarily enroll in constant collective surveillance.

If there are already numerous works concerned with governing by numbers, valuation, rankings, and reactivity, these kinds of reputational currencies and public and fixed reputation scores bring about new concerns. Under narratives where freedom and voluntarism are emphasized, algorithmically mediated reputation systems in a DAO appear as a sort of distributed panopticon – where one is always visible, partly scrutinizable, and rewarded for behaving according to the norm, and encoding, of what is considered to be ‘good’. This is a form of technological determinism and a perilous sorting mechanism that fixes and makes rigid the plasticity of social lives.

So indeed, within similar sorting reputation systems, individuals become voluntary subjects of particular ideological power structures under new forms of social norm capillarity. These have the power to affect peoples’ lives dramatically if not deconstructed and spoken about.

Bringing attention to these is, in my view, warranted, as quantified incentive and reputational and scoring mechanisms based on our data are increasingly ubiquitous in our digital lives and interactions, but also very real in our economic and socio-political lives – see, for instance, targeted ads, credit scoring and profiling, social media and politics, the social media echo chambers, or political pilots for social credit systems – and affect and influence how people interact with one another and the world.

Related to this, one of your other articles discusses Pangea, the libertarian DAO-like entity with its own cryptocurrency, the Pangea Arbitration Token (XPAT). In the article, you make a passing but very interesting remark, comparing Pangea’s decentralized reputation-oriented tokenized system to China’s centralized social credit system: both treat reputation as a resource for articulating ambitious visions for socio-economic order. Are we now past the point of no return, with reputation being the raw material out of which future governance mechanisms will be built?  Why do you think the libertarian-leading part of the crypto-community is so excited about tapping into reputation mechanisms for governance purposes?

I think there was already a tendency for this at a wider level, with maximizing shareholder value governance models, financial capitalism at large, and people profiling and credit ratings. The digital ubiquity of market interactions in peoples’ everyday lives expanded this. I do not think we are past the point of no return, and I believe being sensitive to the problems of reputation systems in general, and monetized and openly exclusionary ones in particular, is one of the reasons why we are not past a point of no return – I believe there is much more going on beyond these, and people always find ways to do/not to do things and to circumvent limitations.

However, from a political and more institutionalized point of view, I believe these reputation systems to be more problematic. I suppose that libertarian-leaning crypto communities find them attractive because they appear as an easy fix to market-based decentralized governance, fitting a laissez-faire and monetizing discourse, without really doing so in practice, since whoever programs the reputation system and idealizes the platform has a considerable degree of power.

Algorithmically mediated reputation systems in a DAO appear as a sort of distributed panopticon – where one is always visible, partly scrutinizable, and rewarded for behaving according to what is considered to be ‘good’.

What I found very illuminating about your work is the way in which you deploy the concepts of plasticity/rigidity to show that while the digital world is, in theory, very plastic, the reputation-based layer that is emerging out of blockchains/smart contracts recreates rigidity in it. This striving for rigidity is not very surprising though, for the broader dialectic of stability/disruption is probably inscribed in the capitalist system itself. It’s just a bit hard to reconcile this insistence on ‘governing by reputation’ with the anarchist part of crypto-anarchism, the broader ideology that informs some of the projects that you’ve studied. How did your informants reconcile this need to put people in rigid reputations systems with their general anarchistic outlook?

I think there are various possible answers to this… I believe the reasoning of projects proposing reputation systems differs from one project to another, even within a crypto-anarchist spectrum. However, concerning the people I have spoken to, there was not much effort or tension in this reconciliation, at least from a more public discourse point of view, since, again, the reputation was sort of remitted to a more technical level of planning and executing things. The more anarchist part was projected onto the wider narrative of the project concerning the voluntary basis of participation, and, for the case of Bitnation/Pangea, the possibility of tailoring specific functioning rules, acquiring services, and interacting online with smart-contract mediation. For this case, the market/capitalist part of this anarchism fit the monetized reputation system embedded in the jurisdiction market. In this sense, the rigidity of it all seemed to be an attempt to replace much more malleable social reputation and trust dynamics.

You have also carried out some work on the other side of the fence, so to say, studying how traditional institutions – central banks and regulators – navigate this new crypto domain. Writing about the Dutch case, you emphasize the importance that the country’s officials attach to the idea of the ‘regulatory sandbox’. Could you expand on the assumptions made by the officials you studied about the inevitability of the blockchain/cryptocurrencies as a new force to contend with? What kind of imaginaries shape their imagination about the future?

Both industry players and the financial supervisor had similar positionings and imaginaries regarding an eventual inevitability of blockchain and cryptocurrencies as a new force – likely because of their co-dependence in making markets. This was, at the time, of doubt, caution, and interest. My research interlocutors in different institutions were dealing with the technology as they did with others – creating and taking part in experimentation and ‘innovation’ hubs; testing and assessing utility; getting on board and connecting with others, including, importantly, startups, so they would not fall behind if a technology went mainstream. The supervisor did the same, with interest in the technology for monetary and supervision/regulatory purposes. The regulatory sandboxes appear as a safe experimentation space, a supervised one, and this collaborative ethos served various purposes, including collaboration itself, but also a quest for legitimization at two levels.

The first was legitimizing blockchain technology within a crypto universe permeated by money laundering, informal and illegal commerce, and those with whom finance ‘should not be seen’. But the second was legitimizing fintech projects using blockchain technology – the idea of having the regulator on board was important, as were narratives about transparency and security, but also about cautiousness regarding the technology.

I believe the kinds of imaginaries here were related to added value philosophies (related to maximizing shareholder value corporate governance), digitization, and tech interoperability. In this sense, I think they were pragmatic and technocratic imaginaries, more than revolutionary proposals. The imagination about the future was one about innovating, collaborating, creating ecosystems and competitiveness (as a jurisdiction and between companies), but maintaining the status quo, under a different narrative.

Inês Faria

When reading your article about the Dutch blockchain ecosystem, I was struck by the absence of formal democratic processes or citizen participation in setting the broader policy on crypto. There are, of course, all these meetings between officials and entrepreneurs, many of them taking place informally. Yet one also gets a feeling that the officials do treat crypto as something that is here to stay and that needs to be harnessed and deployed for the purposes of making the Netherlands more attractive to crypto-entrepreneurs. In your ethnographic work, have you noticed any efforts by the bureaucrats that you studied to actually engage the public beyond the crypto community, e.g. by getting their views, say, on the immense energy costs of crypto or any of its other controversial aspects? Likewise, have you noticed those that work inside these crypto-communities expressing some doubts or concerns about the potential political and democratic consequences of their economic activities?

At the time of my research in the Netherlands, these efforts to create the Dutch blockchain ecosystem were in the early days and were efforts that seemed definitely much more business, or infrastructure, oriented than focused on any kind of participatory approach to their definition. There were, however, some unrelated events, sessions, talks, and a couple of projects I came across that were concerned with proposing a more participatory approach to crypto, which later on partnered with municipalities for instance.

I did come across people in the crypto community with more critical approaches – and concerns about sustainability after the hype, money laundering, and energy costs – but most were not connected to major financial actors and were more related to independent projects. Within the more entrepreneurial side, there seemed to be a dominant technology ‘pitch’ discourse, as a lot of smaller and bigger projects were appearing at the time. For these, in general, most concerns were not about the consequences of the technology on political, democratic, or economic activities at large, but mostly on how to put it forward and become competitive in the area. The consequences were generally analyzed as part of the more technocratic approach, within innovation labs, startups, or the regulatory sandbox environment. From the part of the financial supervisor, there was, of course, a concern about systemic risk.

You have kept a close eye on the crypto-community since the mid-2010s. Do you see many changes in terms of their ideological outlook and political beliefs? Are anti-systemic attitudes more or less prevalent today?

I believe the anti-systemic attitudes were stronger in the beginning. At this point, you can see some more subversive projects in other struggles, for instance for implementation, or survival. There seems to be a need for a softening of political discourses and anti-systemic attitudes in order for projects to function and be funded, comply with regulatory frameworks, and be able to operate in actual jurisdictions. I observed that radical discourses tend to fade and become more entrepreneurial-like, in order for the projects to continue. This is not always the case but it is often so. I also came across smaller, more participatory projects, which took the form of pilots circumscribed to particular urban territories.

Inês Faria is a researcher at the CSG-SOCIUS/ISEG, University of Lisbon. Since 2016 she has been developing research about the uses of blockchain technology as part of the project Finance Beyond Fact and Fiction. Currently, Inês continues working on the relations between technology and society regarding the areas of finance and economy, but also of healthcare, in European and sub-Saharan African contexts.