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.

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.

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.

Rare is the person who could expertly comment – in a single interview! – on the rise of NFTs and their origins in the virtual worlds of gaming, the logic of the emerging regime of techno-feudalism, and the folly of El Salvador’s Bitcoin-heavy negotiating tactics with the IMF. Luckily, we have found this person in Yanis Varoufakis, the prominent economist, politician, and public intellectual, who is also former Greek finance minister. Yanis was kind enough to grant us an extensive interview, which provides a panoramic (and, at times, rather critical) view of what is going at the intersection of money, macroeconomics, and the digital.

~ Evgeny Morozov

In the early 2010s, before your stint in the Greek government, you worked as economist-in-residence for Valve, a prominent gaming company. In what ways were your skills as an economics expert in game theory useful for dissecting the economics of virtual worlds? And, in turn, what kinds of insights, if any, on the inner workings of the real economy did you gain through that experience?

Ten years ago, the metaverse was already up and running within gaming communities. Valve’s games had already spawned economies so large that Valve was both excited and spooked. Some digital assets that had previously been distributed for free (via the game’s drops) began to trade for tens of thousands of dollars on eBay, well before anyone had thought of NFTs.

What if the prices of these spontaneously lucrative items and activities were to crash? That was what kept the people at Valve awake at night. You can see this from the email with which I was approached: ‘I have been following your blog for a while… Here at my company we were discussing an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments, when it occurred to me “this is Germany and Greece”, a thought that wouldn't have occurred to me without having followed your blog’.

My reasons for getting involved were many. One was the prospect of studying an economy as an omniscient researcher: Since I would have access to the full data set in real time, I did not need statistics! Another was the lure of playing ‘god’; i.e. being able to do with these digital economies things that no economist can do in the ‘real’ world, e.g. alter rules, prices, and quantities to see what happens. Another objective was to forge empirically supported narratives that transcend the border separating the ‘real’ from the digital economies.

What did I learn back then? The key insight was that observed behaviour utterly demolished some key neoliberal fantasies: Barter does not give way to sound money, in the form of some digital gold simulacrum. (Nb. We established that various goods/items vie for dominance as numeraires, without ever dominating.) Selflessness is always present (evidenced by substantial doubly anonymous gifting). Social relations emerge (even in these faceless digital worlds) which then ‘infect’ prices and quantities in a manner that bears little connection to the neoliberal view of exchange values formed in a political and moral vacuum.

Today, a decade later, it is clear that gaming communities like the one I studied at Valve have been operating as fully-fledged metaverses (to use Zuckerberg’s term). Gamers were drawn to them by the game but, once ‘inside’, they stayed to live out a large part of their life, making friends, producing goods for sale, consuming entertainment, debating, etc. Zuckerberg’s ambition is to insert his billions of Facebook non-gamer users into a Steam-like digital social economy – complete with a top-down platform currency that he controls. How can I resist the parallelism with a digital fiefdom in which Zuckerberg dreams of being the techno-lord?

NFTs are all the rage these days. Their rapid rise can be traced to CryptoKitties, a blockchain-based computer game that took off in 2017. There are now also many gamers who oppose NFTs and the rather problematic ideas of ownership that they embed. Was something like NFTs already on the horizon during your time at Valve? Do you think that NFTs will change our ideas about ownership, scarcity, and remuneration in ways that might be of help to the broader progressive project? This, at any rate, is the belief of some advocating for Web3.

Hats in TF2! Team Fortress 2 (or TF2) players were obsessed with digital hats. Initially part of free drops, some hats that were discontinued later became collectibles. Players began bartering within the game (e.g. I will give you two laser guns for this one hat of yours). Then, when the demand for some hat rose sufficiently, the players would step out of the game, meet up on eBay, trade the hat for (sometimes) thousands of dollars, before, finally, returning to the game where the vendor would hand the hat over to the buyer. Note the unbelievable levels of trust between strangers this transaction involved: the vendor could have walked away with both the money and the hat. Valve decided to reduce the need for so much trust, cut eBay out, and make a neat profit too by creating trading rooms within the game (i.e. create an in-game market for digital items owned and supervised by Valve).

NFTs differ in two respects from digital assets like the hats in TF2: The blockchain cuts out the company (e.g. Valve). And it allows the digital asset to emigrate from the game/realm that spawned it to any other digital realm.

Do I think that NFTs have subversive potential? Let’s see. In a digital environment, NFTs are like all other commodities. They reflect the triumph of exchange value (with which capitalism trounced experiential or use value) within a metaverse (Valve-like or Zuckerberg-style). In that sense, NFTs offer nothing new within digital worlds, except perhaps that they turbocharge the ideology of capitalism (exchange value rules supreme). In the analogue world, NFTs have value only to the extent that bragging rights offer utility to those who care for them. Even though in so doing, they force outfits like Sotheby’s and Christie’s (which used to monopolise the trade in bragging rights) to change their ways, NFTs in no way subverts the structure of property rights creating and underpinning the oligarchy’s exorbitant power over the many.

So, no, I see little radical potential from NFTs. Having said that, a good, future, liberal techno-communist society may find ways of using them as part of a broad network of technologies helping us keep records of our identities, property, etc.

As long as we do not have these mechanical slaves catering for humanity as a whole (and not just producing commodities owned by the 1% of the 1%), the idea that people must now play like robots to earn a living so as to be human in their spare time is, indeed, the apotheosis of misanthropy.

Much has been made of the fact that in some countries of the Global South (e.g. the Philippines) blockchain-based games like Axie Infinity are creating a parallel economy, allowing players to redeem virtual tokens – their value has recently skyrocketed – in fiat money. The founder of Reddit, for one, has recently argued that all future games will follow this play-to-earn model, adding that ‘90% of people will not play a game unless they are being properly valued for that time’. What are we to make of this? Is it yet another dystopia of global capitalism? Or is it a minor improvement from sweatshop labor, perhaps, the consequence of the global pandemic keeping many people stuck at home playing games?

When I worked with Valve, ten years ago, there were thousands of young people in China, in Kazakhstan, and elsewhere making a mint out of providing services to members of Valve’s gaming communities. Gifted players made good money paid by other players keen to watch them play. So, there is nothing new to the idea of a parallel economy that allows people in poorer countries or regions to earn as they play, or from offering in-game services.

Was that a good or a bad thing? Of course, it was good for a young person in Shenzhen who managed to earn $60k a year designing digital hats on his PC – instead of destroying his body in a sweatshop. The question, however, is: Could all workers in Shenzhen (and beyond) be rescued from sweatshops by migrating to a metaverse? The answer is: Not before we have robots working for all of us so that we can reproduce the material conditions of our lives. As long as we do not have these mechanical slaves catering for humanity as a whole (and not just producing commodities owned by the 1% of the 1%), the idea that people must now play like robots to earn a living so as to be human in their spare time is, indeed, the apotheosis of misanthropy.

One of your critiques of Bitcoin as a currency (which you clearly state it is not and cannot be) is that it limits policy space available, such that, when there is a pandemic, it won’t be possible to increase the money supply. I suppose this also covers ‘printing money’, with all of the perverse consequences of QE that you yourself have documented elsewhere. Wouldn’t the Bitcoin maximalists be at least coherent in arguing that this inability to print money is a feature, not a bug, of the system?

When ‘Bitcoin maximalists’, as you call them, wax lyrical about the inability to print money (and celebrate this inability as Bitcoin’s feature, rather than its bug), they are being terribly unoriginal – banal, I dare say. Capitalism nearly died in 1929, and tens of millions did die in the war that ensued, because of this toxic fallacy that underpinned the Gold Standard then and Bitcoin now. Which fallacy? The fallacy of composition, as John Maynard Keynes called it.

Its essence is a tendency to extrapolate from the personal realm to the macroeconomic one. To say that if something is good for me – if a practice is sound at the level of my family, business, etc. – it must also be good for the state, government, humanity at large. For example, yes, parsimony is a good thing for me, personally. If I can’t make ends meet, I need to tighten my belt; otherwise, I shall sink more and more into debt. However, the exact opposite holds for a macroeconomy: If, in the midst of a recession, the government tries to tighten its belt as a means of eliminating its budget deficit, then public expenditure will decline at a time of falling private expenditure. And since the sum of private and public expenditure equals aggregate income, the government will be – inadvertently – magnifying the recession and, yes, its own deficit (as government revenues fall). This is an example of one thing (belt-tightening) being good at the micro-level and catastrophic at the macro level.

Similarly with gold, Bitcoin, and all other ‘things’ of exchange value: If you have gold, it is good for you if its supply is limited, fixed if possible. Same with Bitcoin, silver, dollars. (Nb. It is why the rich and powerful traditionally opposed expansionary monetary policy, crying ‘hyperinflation’ at the drop of a hat.) So, yes, if you are invested in Bitcoin, or for some reason you are elated every time its dollar exchange rate rises, you have every reason to think that its algorithmically fixed supply is a good thing, a feature. But, there is a price for that: A fixed money supply translates into a deflationary dynamic which, in a system prone to under-employing its people and under-investing in things society needs (i.e. capitalism), is a catastrophe in the making.

The Gold Standard is, indeed, a great source of insight into how dangerously primitive Bitcoin maximalist thinking is. Suppose Bitcoin were to take over from fiat currencies. What would banks do? They would lend in Bitcoin, of course. This means that overdraft facilities would emerge allowing lenders to buy goods and services with Bitcoins that do not yet exist. What would governments do? At moments of stress, they would have to issue units of account linked to Bitcoin (as they did under the Gold Exchange Standard during the interwar period). All this private and public liquidity would cause a boom period before, inevitably, the crash comes. And then, with millions of people wrecked, governments and banks would have to abandon Bitcoin. In short, just like gold, Bitcoin is eminently… abandonable (once it has done enormous damage). Put differently, either Bitcoin will never take over from fiat money or, if it does, it will cause huge unnecessary pain (before being abandoned).

To believe that you can fix money, or that you can fix the state, is to demonstrate a devastating innocence regarding the larger exploitative system with which they are integrated.

What about other crypto-currencies, though, which do allow for very sophisticated operations and incentive structures, including algorithmically programmed demurrage? Would they be closer to being defined as currencies?

No, that will not work either. The problem with Bitcoin is not just its fixed supply. It is the presumption that the rate of change of the money supply can be predicted and foreshadowed within any algorithm. That the money supply can be de-politicised. So, it is not a question of how sophisticated and complex the algorithm is. It is, rather, that a purely political, unknowable, process can never, ever, be captured by an algorithm. It cannot and, therefore, it should not.

Because of the growing interest in Ethereum, there has been a strange resurgence of interest in mechanism design and game theory among the crypto-community; some papers on crypto-economics proudly cite Leonid Hurwicz and Oskar Lange. If one studies this nascent discipline a bit closer, however, one is struck by its choice of focus: microeconomics is everywhere but macroeconomics – save for some Austrian critiques of fiat money – is nowhere, not even in the orthodox Samuelson version.

You put your finger on the nail. This is, again, the fallacy of composition: imagining that what works for you must work for society at large; that what makes sense in the micro-world makes sense in the macro one too. Crypto-enthusiasts with strong views on money, in this sense, fall under the category of people best described by Keynes as ‘resembling Euclidean geometers in a non-Euclidean world’. Keynes was referring to classical economists who thought of money as a commodity, as a thing. The crypto-monetarists are repeating the same conceptual error.

From the very early days – i.e. the early 2010s – you have been arguing that ‘blockchain is a fantastic solution to the problem we have not yet discovered. But it is not the solution to the problem of money’. But are we that ignorant? One could say that the blockchain, as a project inspired by the cypherpunk ideology, has always been a solution to the problem of the state: it promises to take the state out of domains as diverse as law (with the rise of smart contracts) or arts funding (with the fractionalization of ownership through NFTs) or, most obviously, central banking (with its critique of fiat money).

To think that Bitcoin can solve the problem of money, or the problem of the state, is to misunderstand what money is or what states do. Every exploitative socio-economic system is predicated on what the minority running it can make the rest do for them (who does what to whom, as Lenin famously put it). Money and the state are epiphenomena of this system. To believe that you can fix money, or that you can fix the state, is to demonstrate a devastating innocence regarding the larger exploitative system with which they are integrated. No smart contract can, for example, subvert the labour contracts that underpin society’s layered patterns of exploitation. No NFT can change an art world where art is a commodity within a universe of commodified people and things. No central bank can serve the interests of the people so long as it is independent of the demos. Yes, blockchain will be useful in societies liberated from the patterned extractive power of the few. However, blockchain will not liberate us. Indeed, any digital service, currency, or good that is built on it within the present system will simply reproduce the present system’s legitimacy.

Assuming you are still upbeat about the blockchain, how do you reconcile this anti-statist bias with what you see as its potential in an emancipated society? What does that potential consist of exactly? Even if one assumes there’s some value in both game theory and mechanism design, what use are they to the progressive project stripped of any macro perspective?

My answer lies in my sci-fi novel, Another Now (in particular, Chapter 6). In it, I present a blueprint of a post-capitalist, non-exploitative social economy. Blockchain features there as a technology used both by central banks and local communities to create a public, distributed ledger for two things: Money, of course. And title leases for properties in a County’s commercial zone (which are on a perpetual auction, the proceeds of which are used to maintain and expand the County’s social zone). From this, you can see that I consider blockchain, and Ethereum-style mechanisms, as technologies that will prove extremely useful once private property in the means of production ends. But, on their own, these technologies will not liberate us from the extractive power of the few.

You have described yourself as an ‘erratic Marxist’, pointing out that you do have strong libertarian tendencies. In Italy, where I’ve been living for quite some time now, there’s, of course, this long-running tradition of Autonomous Marxism, which shares many of these beliefs. It has always been critical of the state and state bureaucracy, with its rigid, centralized ways of organizing society. Now, it seems there is a new promising solution to this age-old problem: DAOs, short for decentralized autonomous organizations, which promise to put transparent algorithmic rules in place of the Weberian charismatic leaders. Do you find anything of value in such new institutional forms? Or do they smack of the same technocratic credo – with its belief that political problems can be solved by designing clever mechanisms and incentives – that they claim to be attacking?

Karl Marx was erratic. He changed his mind all the time, infuriating his friends and comrades. He wrote furious repudiations of his earlier ideas. And he could not stand those who called themselves… Marxist (e.g. famously saying ‘If they are Marxists, I am not’). So, I described myself as an ‘erratic Marxist’ to signify two things: That I am not dogmatic. And, that I am at odds with those ‘official’ Marxists who seek personal power from a dogmatic custodianship of Marx’s thinking. In fact, I went one step beyond, referring to myself as a ‘libertarian Marxist’ – a self-description that was immediately derided by several libertarians and most Marxists. My reason? Like the anarcho-syndicalists in Spain and the Autonomous Marxists of Italy that you mentioned, I fail to see how one can genuinely cherish freedom and tolerate capitalism. And also: how one could be both illiberal and left-wing.

On the question of DAOs, I must say that I look at them with sympathy. But, again, as with my attitude to the blockchain, I am convinced that these are tools that will very much come in handy once a broad internationalist movement overthrows the oligarchy’s property rights over the means of production (including the cloud servers!). As I try to outline in my Another Now, a digital anarcho-syndicalist future society will use many of these DAO-like tools. But, and this is a gigantic but, DAO-like tools will not bring about this new society in which DAO-like tools are useful. (Nb. We can already see how DAOs are being usurped by regressives and real estate moguls in the United States.)

Within our present oligarchic, exploitative, irrational, and inhuman world system, the rise of crypto applications will only make our society more oligarchic, more exploitative, more irrational, and more inhuman.

Observing the crypto space from the sidelines, I get the impression that it has allowed many of the old neoliberal policy ideas to come back. I’m thinking especially about the use of market-based instruments in fighting climate change: all of a sudden, the blockchain promises to revive many of the ideas related to natural ecosystem services, while the rise of often anonymous activist organizations like KlimaDAO has helped boost what was once a languishing market in carbon emissions. As a result, the reputation of the market as a problem-solving device has been restored, even if temporarily. How should progressives react to such developments? Are these crypto-projects, which promise to reverse climate change via finance, occupying the empty activist space that should have been filled by central banks before they got somewhat sidetracked by the advice they are getting from BlackRock? What should the central banks be doing about this green-tech-finance axis?

Precisely my point. In the name of liberating us from moguls, states, and even climate change, crypto zealots are turbocharging the ideology of commodification (i.e. neoliberalism). What should we do? The only thing that will work is: To take over parliaments so as to legislate a corporate law that ends tradeable shares, and introduces the one-share-one-employee principle in its stead. To take over central banks and make them issue digital currencies on a distributed ledger that makes basic income possible. To take over governments and implement personal ownership of our data. In short, no algorithm will remove the need for a genuine revolution.

One of the interesting consequences of the ongoing currency crisis in Turkey has been the growing popularity of stablecoins such as Tether among the Turkish population. This is even more remarkable given that Tether has been rumored to have problems of its own, which many in the crypto community expect to explode sooner or later. Erdoğan’s hands seem to be tied, as Turkish cities brim with ads for crypto services, which are genuinely popular with the local population. You’ve spoken, somewhat dismissively, about stablecoins in the past but how do you see them changing the dynamics of a currency crisis like the one in Turkey? How should the government be reacting to them, if at all?

Bitcoin was, as I claimed earlier, the digital-algorithmic reincarnation of the Gold Standard – supported by the same vacuous arguments and the same underlying oligarchic motives. Stablecoins are yet another reincarnation of yet another primitive, failed idea: the so-called currency board.

The idea behind the Gold Standard was that national currencies gained credibility because their state/central bank gave up the right to print money at will. By fixing the exchange rate of a national currency to the price of gold (e.g. $35 for one ounce of gold), and freely allowing two-way convertibility, it was common knowledge that, if the authorities printed money in total value exceeding the value of the gold in the central bank’s vaults, at some point people holding paper money would demand gold that the central bank did not have.

A currency board (e.g. the system underpinning Bulgaria’s national currency today) is similar in that the central bank fixes the national currency’s exchange rate to equal the average price of a basket of hard currencies. Again, as long as there are no capital controls and the national currency is fully convertible to the hard currencies in the currency board, if the central bank prints more money than is equivalent (under the fixed exchange rate) to its foreign currency reserves, it risks a run on its reserves. As with the Gold Standard, currency boards have proven fragile – at the sign of economic crisis, war, or other types of stress, they are abandoned.

A stablecoin is a currency board with the difference that it applies to a stateless digital currency (like Tether), not a national currency. This means that there is no state to legislate that the system administrators honour the fixed exchange rate; that they not create stablecoins in excess of the value of their reserves, cash them in, and do a runner. In other words, in addition to the inherent instability of currency boards, stablecoins are ripe for fraud.

In conclusion, the fact that stablecoins or Bitcoin itself acquire the aura of saviours in countries hit by inflation, like Turkey, is nothing more than a measure of the desperation of the people: they will clutch at straws. Stablecoins offer Turks no respite from inflation that buying euros or dollars cannot offer. So, why buy Tether instead of dollars or euros? Why rely on the shadowy characters running a private currency board? Only because the latter deploy good marketing to exploit desperate people.

What do you make of China’s recent efforts to rein in both its FinTech market and the crypto industry, as well as to accelerate the development of the e-yuan? Are they an example for Europe and the US to emulate? And if so, what are the elements worth borrowing?

I am immensely impressed by these moves, especially when looked at as a package. The Chinese authorities are, at once: (1) deflating the real estate bubble (by taking down Evergrande, blow-by-blow); (2) aiming to reduce aggregate investment from 50% to 30% of GDP as a precondition for boosting the wage share of GDP; (3) ending the oppressive tutoring system for pupils that crushes young souls without helping nurture creative thinking; (4) sponsoring sci-fi writing and game design; (5) restricting the power of Big Tech; and, last but certainly not least, (6) bringing the digital yuan online.

That last move, the digital yuan, constitutes a revolution: when fully-fledged, it will equip every resident in China, but also anyone from around the world who wants to trade with China, with a digital wallet – a basic digital bank account. In one move, therefore, the commercial banks will have been ‘dis-intermediated’; or, in plain English, they will have lost their monopoly over the payments system. This is genuinely a radical break from finance as we have known it. And, yes, it is one that we should emulate in Europe and in the United States – which is, of course, why Wall Street and the rest of the West’s financiers will do their best to stop it, preferring to blow up the world rather than allow themselves to be… dis-intermediated.

Are you familiar with the plans for the ‘digital dollar’ advanced by the likes of Robert Hockett and Saule Omarova, which, in essence, insist on the need to build a democratically accountable CBDC? How likely do you think the Fed is to implement something like this, especially given how much opposition – including from the crypto industry – there was for Omarova’s nomination to the Biden administration? We have also recently heard from Congressman Tom Emmer, who, while proclaiming that Washington should be building crypto with ‘American characteristics’, wants to prohibit the Fed from any experiments with a CBDC. One of Emmer’s stated reasons for such action was to ‘maintain dollar dominance’.  What do you think is behind such proclamations? Do they mean we are likely to see Facebook’s earlier efforts to launch its own stablecoin – now called (ironically) Diem – given an official stamp of approval?

The situation sounds complex but it is very, very simple. Most dollars, pounds, euros, and yen are already digital. The digitisation of money is not the issue. The issue is the monopoly of the payments system. Today, you use digital money (phone apps or plastic cards) to buy a cup of coffee at your local Starbucks. But, to do so, you first need an account with a commercial bank. In other words, to grant you access to digital fiat money, the state forces you to fall into the embrace of the commercial banks.

So, today, the state guarantees a monopoly over payments to commercial banks. And that is only one gift to the oligarchy. A second, even greater gift, is that only commercial banks are allowed to have an account with the central bank. So, when a recession hits, and the central bank decides to stimulate the economy, the central bank lowers the interest rate of the overdraft it grants commercial bankers – who then exploit this to profit from arbitrage (by lending the money on to customers at a higher interest rate). And when the recession gets even worse (as has been the case since 2008 and now with the pandemic), the central bank prints digital dollars or euros and credits them directly into the accounts the commercial banks have with the central bank. This is the definition of exorbitant privilege!

So, this is why Wall Street prefers to see the world explode, time end, or Armageddon arrives, rather than allow the Fed to proceed with the digital dollar: because a digital dollar would mean that every resident in the US, and anyone beyond US borders trading with Americans, will be granted a digital wallet. That would be detrimental to the power of commercial banks. First, because people would no longer be obliged to open a bank account with them (think of all the lost fees!). Secondly, because there will no longer exist a rationale as to why the Fed or the ECB, etc., cannot – when they think they must stimulate the economy – drop helicopter money on everyone. Why credit dollars only to the accounts commercial banks keep at the Fed and not credit the people’s digital wallets directly? Indeed, why give money to commercial banks at all?

One of the persistent critiques of cryptocurrencies like Bitcoin and Ethereum is their immense energy use, which, on the surface, seems like the price to pay for not trusting the state as the arbiter of truth/provider of trust. The solution proposed by the Ethereum Foundation has been to shift from today’s energy-intensive mechanism of Proof of Work to the less environmentally damaging Proof of Stake. Yet, the latter, once you look closely at the details, solves the energy problem by making the entire system more plutocratic, because, in essence, it runs on the principle ‘one dollar (or ether) = one vote’. What makes this crypto-plutocracy tolerable to many of its advocates is their jaded view of today’s financial system, which they see as even more plutocratic and hell-bent on appropriating even more of the bailout money. How does one answer such critiques?

The environmental costs of crypto are very large, undoubtedly. But, even if there existed a magic wand whose waiving would make blockchain run on zero watts, crypto currencies would remain more of a problem than a solution – for reasons I explained above. In brief, within our present oligarchic, exploitative, irrational, and inhuman world system, the rise of crypto applications will only make our society more oligarchic, more exploitative, more irrational, and more inhuman. This is why, in opposing the crypto enthusiasts, I never even bother to mention their environmental repercussions.

If one looks closely at some of the influential crypto projects, they feature a bizarre mix of ideologies. There’s, for example, a very ambitious project called Cosmos – it bills itself as ‘the Internet of blockchains’ – which is set up as a cooperative, an institutional form dear to the heart of many leftists. Yet its co-founder and CEO is a big believer in ‘free banking’, an ideology espoused by many libertarians in the US. Do you think the left has been too slow to make sense of the crypto/digital currency space? It seems that even on an earlier set of issues before crypto – complementary and alternative currencies, for example – there seems to be no coherent leftist position, so that today they can be easily appropriated by the crypto start-ups pushing the tokenization of everything…

The Left, radicals, progressives, etc. have either refused to acknowledge the genuine ingenuity of blockchain or have fallen for it. We seem to have forgotten how Marx and Engels had the nous and the ability, on the one hand, to admire and celebrate the technological and scientific wonders of their era and, on the other hand, grasp that these potentially liberating technologies were bound to enslave the many if they became instrumentalised by the very few. The two Germans believed in the emancipatory potential of the steam engine and of electromagnetism. But, they never believed that society would be liberated by the steam engine and/or electromagnetism. Liberation required a political movement that first overthrows the bourgeoisie and only then presses these magnificent technologies into the service of the many. This seems to me an excellent way of approaching today’s potentially liberating technologies, including blockchain.

You are acquainted with Michel Feher, the Belgian activist-philosopher. I don’t know if you’ve read his Rated Agency, but it does capture many arguments advanced by those who see something politically significant – something to be used by progressive forces – in the structural transformation of global finance associated not only with the rise of crypto but also with the popularity of day-trading apps like Robinhood. At least on the surface, the latter do allow retail investors to pool their efforts together and engage in financial activism that was previously available only to hedge funds (Feher himself had an interesting interpretation of the GameStop saga). I can see this logic working for coordinating divestment campaigns. Yet, apart from crowdfunding for, say, micro-municipal bonds, I can’t yet see a more proactive deployment of such power – except, perhaps, when driven by the desire to ‘stick it’ to the hedge fund industry and spoil their carefully engineered shorting of stocks like GameStop. How do you see this landscape? Is there much value in getting the left to proactively develop some capacities that would allow it to ‘move’ markets?

In Chapter 6 of my Another Now, I imagined how capitalism fell to a variety of techno-rebels who used a mix of financial engineering, worldwide consumer boycotts, and conventional industrial strikes/activism. A year later, I remember receiving calls from US journalists asking me: ‘Are your Crowdshorters in action?’ I was very amused to hear them talk of the Crowdshorters as if they were a real techno-rebel group. Of course, what occasioned the journalists’ questions was the GameStop mini-rebellion that saw millions of small-stake investors take on a couple of vile hedge funds, using the Robinhood platform. So, clearly, I am mightily excited by the idea of a techno-rebellion. If you want to see how I imagine it, on days when hope trumps pessimism, that chapter is my long answer.

I anticipate an almighty struggle for the right to a digital ECB wallet that will bring back memories of the struggle for universal franchise.

You’ve argued against depoliticizing money, which also explains, at least in part, your critical stance on Bitcoin. There have been plans, as you well know, for the digital euro. It would probably be more political than Bitcoin, as it would have a direct connection to the ECB. But as long as the ECB remains seen as a technocratic and apolitical institution, so would the digital euro. You’ve written and spoken extensively about it in the past but what would it mean, in practical terms, to politicize an institution such as the ECB? Stated more broadly, what would keeping the ‘political’ dimension of money in the picture imply in terms of practical politics?

European bankers loathe the idea of a digital euro just as vigorously as Wall Street bankers hate the idea of a digital dollar. It would end their monopoly over payments and make it hard to justify the exclusive umbilical cord connecting them to the printing presses of central banks (see above). What makes the Eurozone special is that it features no Eurozone Treasury, no common debt, no federal decision-making body. This is, lest we forget, a design feature of the Eurozone, one that Europe’s oligarchy adores. Come to think of it, the non-existence of any government with a capacity to transfer substantial wealth from financiers and corporates to the many (not even the German one can do this) is any oligarchy’s wet dream. Why would they want to spoil this triumph either by creating a democratically elected federal government or a digital euro?

But here is an interesting thought: The peoples of Europe have failed to push for a federal democracy in Europe. However, the Chinese central bank digital currency may prove harder to ignore: If a Dutch or German firm that trades with China can acquire a digital wallet from the Chinese central bank, they will most certainly use it. That means that the euro’s dominance will be challenged even within Europe. So, the pressure on the ECB to create a digital euro is enormous. But so is the oligarchy’s counter-pressure to ensure that, even if a digital euro is created, the people of Europe should not be allowed a digital euro wallet with the ECB. In this sense, I anticipate an almighty struggle for the right to a digital ECB wallet that will bring back memories of the struggle for universal franchise.

What do you make of what is going on in El Salvador? Not only has it made Bitcoin legal tender (shortly after announcing the Chivo Wallet with some money placed in it to incentivize use) but it will also be issuing the so-called Volcano Bonds, which have attracted their share of controversy. Is there a way to look at these bonds as a tactic that expands El Salvador’s options in negotiating with the IMF? Based on your own experience negotiating with that institution, do you think they stand any chance of success?

It is a preposterous stunt. For the life of me I cannot even begin to answer those who say to me: ‘Had you, Yanis, adopted Bitcoin back in 2015, all of the Greek people’s problems would have gone away!’ Why would they? The poor of Greece or of El Salvador would have no way to get their hands on Bitcoin anyway. Then the only beneficiaries would be Bitcoin hoarders (of whom very few live in El Salvador or Greece), who suddenly benefit from a spike in Bitcoin demand and from being able to spend their stash in El Salvador without the cost of converting them to dollars. The only poor El Salvadorians who may gain something are the expats sending money home in the form of remittances – people who are, now, fleeced by Western Union and the like.

On Volcano Bonds, this is a dangerous development. A government is inviting speculators to buy cryptocurrency backed by an impoverished state. Early Bitcoin enthusiasts were motivated, partly, by a loathing of governments that took on unsustainable debt – before indulging domestically in financial repression and austerity – in order to be able to extend-and-pretend their debt. The worry was that, at some point, Wall Street and other grubby conventional financiers would start building similar pyramids on… Bitcoin. And, the ultimate fear was that the state would join in. Well, Volcano Bonds are making this nightmare a reality, allowing speculators to speculate on a cryptocurrency using an impoverished sovereign state as backup.

More generally, and lest we forget, El Salvador’s public debt is in dollars, and thus impervious to whether Bitcoin is made legal tender or not. Making Bitcoin legal tender just adds enormous costs on small businesses, and ensures that those who do accept Bitcoin effectively exit the domestic fiscal system – leading to a substantial loss of fiscal space for the government, a development that increases its long term dollar debt burden.

As for the argument that, by adopting Bitcoin, Bitcoin will flood into the country thus boosting investment and giving the government more degrees of freedom vis-à-vis the IMF, again I cannot see the logic here. Bitcoin business moved into the Baltics, Puerto Rico, and elsewhere because of low costs, low taxes, and negligible regulation of their activities. They did not care if the local corner store is forced by law to accept Bitcoin. (In any case, most of these businesses are ultimately using Bitcoin to earn large amounts of… dollars!).

In view of the above, I cannot see why anyone would think that, in making Bitcoin legal tender, the El Salvador government is improving its bargaining position vis-à-vis the IMF. The fact that the IMF is utterly opposed to Bitcoin being granted legal tender status in El Salvador, as well as to its president’s Volcano Bonds, does not mean that the IMF is worried that its bargaining power vis-à-vis the El Salvador government is weakened. Quite the opposite: They predict that the Bitcoin experiment will deplete the El Salvador government’s fiscal space, boost the IMF’s power over El Salvador, but, at the same time, put more pressure on the IMF to commit more bailout funds to a failed El Salvador. After the recent IMF fiasco of huge bailouts to the radically right-wing Macri government in Argentina, it is not something the IMF folks cherish.

You have claimed, in an interview, that there are feudalistic elements to Bitcoin, for there is no democratic mechanism to determine who gets how many Bitcoins, thus favoring the early adopters. Interestingly, you contract feudalism to democracy here rather than to capitalism. Because if you think about capitalist competition – but also all the shady stuff that Marxists tend to lump under ‘primitive accumulation’ – one can easily argue that there’s nothing non-capitalist in what you describe: those who moved in early got the largest share of the pie, while crypto-mining, as it exists today, favors those with larger capital expenditures. Why describe this system as ‘feudalist’ when ‘capitalist’ would do just as well?

Assets, by themselves, are neither feudalist nor capitalist. Whether we are talking about gold, cucumbers, or Bitcoin, assets are assets – end of story. What makes an asset feudal or capitalist or socialist is the manner in which it interacts with a society’s social relations of production, the pattern of property rights it shores up, etc. My point, when referring to Bitcoin’s early adopters as a crypto-aristocracy, as crypto-lords, was that, when an asset like Bitcoin (whose exchange value is built on engineered scarcity) is embedded in any oligarchic exploitative system (capitalism, kleptocracy, techno-feudalism, etc.), it acquires the basic character of the (pre-capitalist) feudal order: a small minority are empowered to collect rents in proportion to the chunks of the asset that they began with. To recap, Bitcoin is neither feudalist nor capitalist per se. It is simply oligarchic.

Recently, you’ve taken up the theme of ‘techno-feudalism’, pointing out that capitalism is no longer what it once was. If I understand your thesis correctly, what makes the current system ‘feudal’ is that A) markets are no longer key to the making of profits (e.g. the QE experience suggests as much), while B) tech platforms have amassed immense political power, which is unprecedented in capitalism. Is it a correct summary of your argument?  Are there other important dimensions to ‘techno-feudalism’ that this summary doesn’t capture?

The question is this: Is capitalism undergoing one more of its many metamorphoses, thus warranting nothing more than a new epithet, e.g. rentier capitalism, platform capitalism, hyper-capitalism or xxxxx-capitalism? Or are we witnessing a qualitative transformation of capitalism into a brand new exploitative mode of production? I think the latter. Moreover, this is not just a theoretical issue. If I am right, grasping the radicality of this transformation is crucial to opposing this new systemic exploitation.

Puzzlement is, of course, an understandable reaction to my claim – which needs a great deal of explanation and substantiation. Unable to offer it here in full (Nb. I am dedicating my next book to the subject), here is a flavour:

Capitalism is everywhere we look. Capital is accumulating rapidly and beating labour over the head everywhere and in cruel new ways. So, how come I argue that this is no longer capitalism – but, rather, something worse and distinct? Let me begin by reminding our readers that back in the 1780s, feudalism was everywhere and feudal lords were stronger than ever. However, surreptitiously, capitalism was already infecting feudalism’s roots and a new ruling class (the bourgeoisie) was in the process of taking over.

My claim is that, similarly today, capitalism – like feudalism in the 1780s – is being usurped by a far more exploitative and very distinct new extractive/exploitative system (which I call techno-feudalism), one that is arriving complete with a new ruling class.

Critics of my thesis will point out, correctly, that capitalism has undergone many transformations – from its early competitive phase, to monopoly-oligopoly capitalism (1910–onwards), its Bretton-Woods period (during which finance was kept on a leash with capital controls, etc.), financialised capitalism (from 1980–onwards) and, more recently, rentier capitalism. All these capitalisms were distinct and interestingly different from one another. BUT, they were each a version of capitalism.

What makes a system capitalist? The answer is: It is a system driven by private profits (Nb. not rents) extracted within markets. (To compare and contrast, feudalism was driven by rents extracted outside of markets.) Has that changed? I believe so. What has replaced profit on the one hand and markets on the other? My answer: Central bank money has replaced private profit (as the system’s main fuel and lubricant) and digital fiefdoms/platforms have become the realm in which value and capital are extracted from the majority by a tiny oligarchy.

Let me explain this in greater detail:

Hypothesis 1: Central bank money replaced private profits as the system’s driver

Profitability no longer drives the system-as-a-whole, even though it remains the be-all and end-all for individual entrepreneurs. Consider what happened in London on August 12, 2020. It was the day markets learned that the British economy shrank disastrously – and by far more than analysts had expected (more than 20% of national income had been lost in the first seven months of 2020). Upon hearing the grim news, financiers thought: ‘Great! The Bank of England, panicking, will print even more pounds and channel them to us to buy shares. Time to buy shares!’

This is just one of countless manifestations of a new global reality: In the United States and all over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares – whose prices are thus decoupled from profits. The new barons, as a result, expand their fiefs, courtesy of state money, even if they never earn a dime of profit! Moreover, they dictate terms on the supposed Sovereign – the central banks that keep them ‘liquid’. While the Fed, for example, prides itself over its power and independence, it is today utterly powerless to stop that which it started in 2008: printing money on behalf of bankers and corporates. Even if the Fed suspects that, in keeping the corporate barons liquid, it is precipitating inflation, it knows that ending the money printing will bring the house down. The terror of causing a bad debt and bankruptcy avalanche makes the Fed a hostage to its own decision to print and ensures that it will continue printing to keep the barons liquid. This has never happened before. Powerful central banks, which today keep the system going singlehandedly, have never wielded so little power. Only under feudalism did the Sovereign feel similarly subservient to its barons, while remaining responsible for keeping the whole edifice together.

Hypothesis 2: Digital platforms are replacing markets

Amazon.com, Facebook, etc. are not markets. As you enter them, you leave capitalism behind. Within these platforms, one algorithm (belonging to one person or to very few persons) decides what is on sale, who sees which commodity is available, and how much rent the owner of the platform will keep from the profits of vassal-capitalists allowed to trade within the platform. In short, more and more economic activity is shifting from markets to digital fiefs. And that’s not all.

During the 20th century, and up to this day, workers in large capitalist oligopolistic firms (like General Electric, Exxon-Mobil, or General Motors) received approximately 80% of the company’s income. Big Tech’s workers do not even collect 1% of their employer’s revenues. This is because paid labour performs only a fraction of the work that Big Tech benefits from. Who performs the bulk of the work? Most of the rest of us! For the first time in history, almost everyone produces for free (often enthusiastically), adding to Big Tech’s capital stock (that is what it means to upload stuff on Facebook or move around while linked to Google Maps). And, moreover, this capital takes a new, far more powerful form (see below, where I talk about command capital).

At the same time, firms operating in normal capitalist markets – outside Big Tech and Big Finance – see their profitability collapse anyway, their dependence on central bank money grow exponentially, and their ownership be gobbled up by private equity and SPACs. Ergo, as feudal social relations of production were on the wane (and replaced by capitalist social relations) in the 1780s, today it is capitalist social relations of production that are being replaced by what I call technofeudal social relations.

Summing up:

Capital is getting stronger but capitalism is dying. A new system is taking over in which a new ruling class owns and runs both the state money that lubricates it (instead of profits) and the new non-market realms in which the very, very few make the many work on their behalf. Capitalist profits (in the sense of the entrepreneurial profits as understood by Adam Smith and Marx) are disappearing, while new forms of rent are accumulating in the accounts of the new techno-lords in control of both the state and the digital fiefs, in which unwaged or precarious work is performed by the masses – who begin to resemble techno-peasants.

A common refrain in arguments about the rise of techno-feudalism is that tech platforms are just passive rentiers who are deriving immense profits from user data for which they pay very little. To put this in the most extreme way possible, these are lazy, mostly immaterial rentiers, who, having amassed a lot of IP, are now resting on their laurels. This reading also informs many of the enthusiastic accounts of Web3, which promise to share data wealth with the users who generated it. Yet, if one looks at the balance sheets and earnings statements of these firms, a different picture emerges: they actually invest more – rather than less – in material and tangible assets than non-tech firms (and more than they themselves did a decade ago), all while incurring immense R&D and capital expenditures (e.g. Amazon’s for 2020 was over $40 billion; Alphabet’s was almost $30 billion). This seems to fit rather well with the view of these firms as capitalist enterprises that, while controlling some markets, still compete in others (Google, Facebook, and Amazon in advertising; Google, Microsoft, Amazon, and Alibaba in cloud computing and AI services). Aren’t we running the risk of minimizing the really-existing capitalist dynamics of this tech economy when we emphasize those related to feudalism?

I agree with you in this sense: Jeff Bezos, Elon Musk, et al. invest massively and are nothing like the lazy aristocrats of the original feudal era. But that does not mean that their investment is part of a standard capitalist dynamic. Techno-feudalism is not merely feudalism with gadgets. It is simultaneously much more advanced than capitalism and reminiscent of feudalism.

Let me be more precise. The massive investment of Big Tech that you mention is crucial. Not just because of its size but, primarily, because of what it produces: a new form of capital that I call command capital. What is command capital?

Standard capital comprises produced means of production. Command capital, in contrast, comprises produced means of organising the means of industrial production. Its owners can extract huge new value without owning the means of industrial production; merely by owning the privatised informational networks that embody command capital.

Command capital, to be more precise, lives on privately owned networks/platforms and has the potential to command those who do not own it to do two things: Train the machines/algorithms on which it lives to (A) direct our consumption patterns; and (B) directly manufacture even more command capital on behalf of its owners (e.g. posting stuff on Facebook, a form of labour de-commodification).

In more abstract terms: Standard capital allows capitalists to amass surplus exchange value. Command capital, in contrast, allows techno-lords (i.e. Jeff Bezos, Elon Musk, et al.) to amass surplus command value. Command value? Yes: Any digital commodity has command value to the extent that its buyer can use it to convert expressive everyday human activity into the capacity to train an algorithm to do two things: (A) make us buy stuff, and (B) make us produce command capital for free and for their benefit.

In the language of Marx’s political economy, the magnitude of command value contained in any digital commodity is determined by the sum of: the surplus value of the commodities it makes us buy (see A above) + the labour time socially/technically necessary for us to produce a unit of command capital (under B above), to be appropriated instantly by the techno-lords.

In summary, what Bezos, Musk, et al. are accomplishing through their massive investments cannot be understood in terms of either feudalism or capitalism.

• Feudalism was based on the direct extraction of experiential/use value from peasants.
• Capitalism was based on the extraction of surplus labour from waged labour.
• Technofeudalism is a new system in which the techno-lords are extracting a new power to make the rest of us do things on their behalf. This new power comes from investing in a new form of capital (command capital) that allows them to amass a new type of value (command value) which, in turn, grants them the opportunity to extract surplus value from (i) vassal-capitalists, (ii) the precariat, and (iii) everyone using their platforms to produce on their behalf, unconsciously, even more command capital.

If I am right, by continuing to call this new environment… capitalism, we would miss the opportunity to appreciate the radically different, and new, processes determining our lives in the here and now. Techno-feudalism, I think, comes much closer to capturing this brave (albeit, dystopic) new world.

Yanis Varoufakis is a member of Greece’s Parliament and parliamentary leader of MeRA25, the Greek political party belonging to DiEM25 – Europe’s first transnational paneuropean movement. Previously, he served as Greece’s Finance Minister during the first six months of 2015.

Varoufakis read mathematics and economics at the Universities of Essex and Birmingham and subsequently taught economics at the Universities of East Anglia, Cambridge, Sydney, Glasgow, Texas and Athens where he still holds a Chair in Political Economy and Economic Theory. He is also Honorary Professor of Political Economy at the University of Sydney, Honoris Causa Professor of Law, Economics and Finance at the University of Torino, Visiting Professor of Political Economy at King’s College, London, and Doctor of the University Honoris Causa at University of Sussex.

He is the author of a number of best-selling books, including Another Now: A novel (Penguin UK & Melville House US),  Adults in the Room: My struggle against Europe’s Deep Establishment (London: Bodley Head, 2017); Talking to My Daughter About the Economy: A brief history of capitalism (London: Bodley Head, 2017), And the Weak Suffer What They Must? Europe, Austerity and the Threat to Global Stability (London: Bodley Head and NY: Nation Books, 2016); and The Global Minotaur: America, Europe and the Future of the World Economy (London: Zed Books, 2011, 2015). His academic books include Economic Indeterminacy (London: Routledge, 2014); Foundations of Economics (London: Routledge, 1998); and Rational Conflict (Oxford: Blackwell, 1991).

In his own words, Varoufakis was “thrust onto the public scene by Europe’s inane handling of an inevitable crisis”. In January 2015 he was elected to Greece's Parliament with the largest majority in the country and served as Greece’s Finance Minister (January to July 2015). During his term he experienced first hand the authoritarian inefficiency of the European Union’s institutions and had to negotiate with the Eurogroup, the European Central Bank and the International Monetary Fund. Varoufakis resigned the finance ministry when he refused to sign a loan agreement that perpetuated Greece’s debt-deflationary cycle.

In February 2016 Varoufakis co-founded DiEM25, the Democracy in Europe Movement – Europe’s first transnational movement. In March 2018 DiEM25 founded MeRA25, its Greek political party. Led by Varoufakis, MeRA25 entered Parliament with nine MPs in the July 2019 General Election.

One of the aims of The Crypto Syllabus is to gently nudge our public intellectuals to take cryptocurrencies and their associated technologies (such as the blockchain) seriously. To his credit, Adam Tooze, one of the finest economic historians at work today, needed no such nudge from our end: in March 2021, he already penned a short essay about cryptocurrencies for his excellent newsletter, Chartbook.

One of the most interesting things in the interview that follows is Adam's critique of the belief, shared by many crypto-enthusiasts, that fiat money is not backed by anything. As a veteran observer of the recent financial crises, Adam is well-positioned to note the role that macrofinance plays in "backing" fiat money as we know it. As he puts it below, "What backs money is the entire gigantic apparatus of macrofinance. It is backed not just by 'everything' but by 'everybody,' or perhaps one should put it more precisely, by 'everyone who is anyone.'"

This remark points to a certain one-dimensional formalism, which I've noted in other discourses that circulate around crypto. These technologies do present solutions to institutional deficiencies and problems of various kinds. However, their account of the underlying institutions that generate them either is extremely simplistic, grounded in all-too-rigorous interpretations of formal definitions (e.g. "fiat" = "no backing"; "governance" = "voting"; "institutions"= "entities with an org chart"; "law"= "contracts"). Perhaps, a closer, attentive engagement with the discipline of history – Adam's specialty – is the way to fill in these analytical gaps.

~ Evgeny Morozov

EM: Before we delve into the specifics, perhaps you could give us a short outline of how you read cryptocurrencies and their broader political and economic import. Are they money? Why or why not?

AT: In a simple functionalist way, you can define the role of money as consisting in some combination of three things: means of payment, store of value, unit of account. Clearly, in certain circuits folks have begun to price things in cryptocurrencies – NFTs, digital art objects, etc. – so crypto is serving as some kind of unit of account. But crypto is not a particularly useful unit of account because its value in terms of other units of account fluctuates so much, which also means that crypto is a bad store of value (unless you have a high preference for speculative gambles) and is unlikely to become widely accepted as means of payment. (In an upswing, the risk is that, in using it, you undervalue your tokens. In a downswing in crypto prices, only a highly risk-tolerant merchant would accept payment in crypto, unless at a large discount.)

If we depart from such functionalist accounts of money and stress instead the role of money in constituting community, founding polities, etc., then crypto has clearly gained purchase in certain communities and helped to configure and constitute them. The question then is, how stable, robust, and widespread are these social groupings that have organized themselves around this money and/or how powerful are their opponents?

EM: In one of your newsletters from March 2021 – your first public foray into analyzing crypto – you cite Gramsci and write that “crypto is the morbid symptom of an interregnum, an interregnum in which the gold standard is dead but a fully political money that dares to speak its name has not yet been born. Crypto is the libertarian spawn of neoliberalism’s ultimately doomed effort to depoliticize money.” Could you expand a bit more on what this “fully political money” might look like, perhaps by contrasting it with the money that we have now?

AT: I should admit upfront that the idea of a “fully political money” is nothing more than an aspiration, a telos, a direction of travel. Indeed, you might ask whether we can live with anything that is “fully political.” After all, our politics regularly lurches into anti-political foundational gestures, not dissimilar to the gestures that we make when we try to found money on gold, or central bank independence, or a mechanical monetary policy rule, or an algorithm.

In this sense I absolutely agree with my friend Stefan Eich when he says: “there [have] always been hysteric pronouncements about the fragility of fiat money, but… we might actually want to look at these voices as themselves part of the politics of money.” The politics of money includes an anti-political strain.

After all, the same goes for the law, which I would think of as the closest we have to a fully political architecture of social organization. In the limit, all too often, legal structures seek to anchor themselves in some more solid foundation than that provided by more or less widely accepted and deliberate societal agreement. Constitutions reach for god, or nature, to do the work for them. Perhaps we cannot do without such gestures. But that is what I am gesturing to: the possibility of organizing ourselves around money that is accepted for what it is, i.e. a conventional set of arrangements ultimately arising out a complex of social and political interactions, part of the material constitution of our society, warts and all.

EM: I get what you say about neoliberalism’s influence on crypto and the connections you draw to the broader Hayekian vision for denationalizing money, which Stefan Eich so brilliantly documents in his essay and his forthcoming book. But I think there’s a second source of legitimacy – from the left – for many less visible but, perhaps, more ideologically important crypto projects, which is often ignored by such critics. For many decades now, the ideology of what we can call “localism” captured the imagination of the left, especially of those currents that look very favorably on the communitarian legacy of the early 1970s: these are people who celebrate cooperatives, time-banks, and, inevitably, alternative and complementary currencies (here I’m thinking especially of Peter North’s book Money and Liberation).

I wouldn’t say that these movements criticize the state the exact same way that the neoliberals do; they do complain about hierarchical, rigid, and bureaucratic structures – but it’s mostly a humanist rather than economic critique. A lot of this passes under the banner of “solidarity economy” or “alternative economy,” and it’s not very hard to see how this would fit into a conception of a post-capitalist society that is more decentralized, more autonomous, and, perhaps, more democratic. To start with, most of these “alternative economies” operate on tokens – so a shift to crypto is quite natural. I myself am critical of such localist tendencies, as I find them unable to offer any counterpoint to the likes of BlackRock or Amazon. But I can easily see how the crypto allows them to revive many of those earlier utopian undertakings and package them in a much more innovative way. What do you make of such efforts in general? Should this “fully political money” that you advocate be global rather than local in outlook? Are people trying to find localist uses to crypto mostly living in a fantasy world – not that different from, say, ethical consumption?

AT: Actually, I have a lot of sympathy for that kind of local money project. After all, it explicitly recognizes the societal project or counter-project it is involved in and I happen to be more sympathetic to its politics than that of the libertarian, anarcho-capitalists. If we are trying to think through what a fully political money entails, then we cannot shrink from political judgment. That is what makes it so disconcerting as an idea. If money is a tool of collective organization then it is the purposes of the collective project that are first and foremost important. What I regret about some localist visions is not the localism as such but the idea that localism should then be tied to a foundationalist move, i.e. to something which is in fact not part of the community at all, but outside it.

Furthermore, even local monies are going to need monetary policy. As a good Keynesian I can never forget Paul Krugman’s analysis of the babysitter community and the liquidity trap suffered by the Capitol Hill Babysitting Co-op. Small scope promises no escape from politics. And that should not be regarded as a curse but rather the opposite, an opportunity for collective learning-by-doing and experimentation. That is another way of putting the essential point. Monetary policy is not a curse to be driven out by some non-political binding mechanism, algorithmic or otherwise, but an opportunity to expand the range of our politics and collective self-organization.

What backs money is the entire gigantic apparatus of macrofinance. It is backed not just by “everything” but by “everybody,” or perhaps one should put it more precisely, by “everyone who is anyone.”

EM: The whole new field of “cryptoeconomics” seems to ignore the macro-level and just focuses on getting the Homo Economicus to behave through better-designed incentives… If one were to write an intellectual history of cryptoeconomics, it’s going to be almost exclusively dominated by mechanism/market design and game theory, its non-existent macro-economics stuck in denial somewhere between the extremes (all on the far-right) of someone like Murray Rothbard and his libertarian opponents who preach Free Banking. This ignorance of the macrofinancial is premised on what seem like wrong-headed ideas about the nature of fiat money and it not being “backed” by anything… Could you briefly tell us why in your opinion the standard crypto critique of fiat money makes a mistake in ignoring the ways in which the structures of macrofinance actually do back, say, the US dollar?

AT: Well it is a vertiginous realization isn’t it? That money is not backed by “anything.” I’ve shocked year after year of smart college students by forcing them to face that reality. There are always a significant minority who cling to some version of the gold standard. They actually do believe that when you “take the note to the central bank,” you will get “something” in exchange. It’s not an easy idea to give up. It’s not unlike the vertiginous feeling that is engendered by realizing that language is not “backed” by anything. We are familiar with solutions to this problem. Create a physical object that can be used as a reference for a word, a definition, a standard, etc.

But then I also find that it is not difficult to reverse the flood of skepticism and nihilism and simply reply: "No. Money is not backed by 'any one thing.' It is far better than that. It is backed by 'everything.' What backs money is the entire gigantic apparatus of macrofinance. It is backed not just by 'everything' but by 'everybody,' or perhaps one should put it more precisely, by 'everyone who is anyone.'" Or, if you are headed towards state theories of money, you can add and what really matters is that it is "backed by the one power that matters," i.e. the people with coercive power.

That generally induces a sense of relaxation. "Ah, yes…"

But if this is a fair account of the emotional politics of money, it is also diagnostic. In the background of true believing cryptothought is some kind of model of societal collapse brought on by irresponsible politics, either democratic or authoritarian. This is a line of thought that goes back at least to the 18th-century theorists of modernity, Hume et al. The best (truly deep) book on this is by Mike Sonenscher, Before the Deluge.

Not for nothing, in theories of sovereign debt we speak of “original sin,” i.e. the ability of sovereigns to default without serious penalty. In the fear of fiat money lurks a fear of original sin. And in the modern, secularized world there lurks in that space the fear of the famous openness of “the political” as diagnosed by Lefort, Gauchet, and company.

At the global level, we are a very, very, very long way from Bitcoin et al. challenging the global hegemony of the dollar to the point at which one could talk about a broader systemic effect.

EM: We have interviewed Andres Arauz, the former Ecuadorian minister who also ran in the presidential elections last year. One of the salient points he made with regards to Bitcoin and cryptocurrencies in general is that they do undermine, in a way, the bargaining power of the IMF and the US as well as the dominance of payment systems like SWIFT (which are often used as a bargaining tool, as we have seen during the war between Russia and Ukraine). Is there, perhaps, a charitable reading to be made of crypto as unwittingly helping the anti-systemic forces, many of them on the left, even if the underlying crypto-assets are designed and promoted by ardent libertarians, mostly in the US?

AT: Presumably we would want to distinguish different types of anti-systemic effects and also ask what kinds of new systemic risks and new hierarchies of power might emerge in a world in which crypto was more prominent. The issuance of central bank digital currencies or the creation of alternatives to SWIFT may indeed be part of a sovereigntist strategy. They are an update of classic strategies of economic sovereignty for a digital age. At the global level, we are a very, very, very long way from Bitcoin et al. challenging the global hegemony of the dollar to the point at which one could talk about a broader systemic effect. And one should surely expect regulators to crack down hard, well before we reach that point. Meanwhile, various types of asset-backed crypto generate their own hierarchies and their own risks of financial instability and thus financial compulsion.

EM: Related to this, how do you assess El Salvador’s move to issue Volcano Bonds? We have heard quite a wide variety of opinions on it. If we were to once again be charitable, by what logic could we say that, say, Varoufakis’s flirtation with starting his own digital currency in Greece was a clever bargaining tactic in negotiating with the European Commission but Bukele’s flirtation with Bitcoin bonds is not? Would you condemn both as populist and irresponsible? What if Bukele’s stance does help to secure more favorable conditions from the IMF though?

AT: A digital central bank currency, or digital Treasury-backed currency is a totally different beast from a situation in which a small, vulnerable country hitches its bandwagon to a highly speculative and volatile vehicle for private speculation, which is what Bitcoin is at this point. Why does it make sense for El Salvador, given its desperate need for infrastructure, to borrow $1 billion, half of which will be invested in an asset (bitcoin) whose value to the dollar has fluctuated since the spring of 2020 by a factor of almost ten? Will you end up with $500 million, $5 billion, or nothing? Only a truly desperate situation would warrant such a gamble. Unsurprisingly, El Salvador’s outstanding dollar debt sold off hard on the news. So there is real risk of collateral damage here.

EM: It’s common to hear that the rise of crypto is a direct consequence of the global financial crisis of 2008, a subject on which you’ve written extensively. On the one hand, given the historically low or even negative interest rates, investing in Bitcoin or Ethereum does seem like a way to make some non-trivial returns in an economy that no longer works for retail investors. (I’m not saying I buy this argument, as whatever these investors are losing in bonds they can recuperate on the stock markets and via ETFs but this argument does get made a lot.) On the other hand, given the post-OWS and post-Tea Party atmosphere of distrust in the financial system, it’s logical that people would buy into the idea of trustless money, where all the political work is done by the blockchain. As such, the mainstream appeal of crypto is a useful barometer of distrust towards both central banks and Wall Street. Short of a vast crypto crash, do you think that there is a way back to those pre-2008 times, when the trust in both public and private institutions of finance ran a bit higher? Wouldn’t one say that the Covid-related bailouts – a form of escalating neo-feudal plunder, if Robert Brenner is to be believed – only reinforced this broader distrust and now there’s surely no way back? Could CBDCs do the job of restoring this public faith somewhat?

AT: I don’t disagree with that broad diagnosis. All sorts of morbid symptoms are appearing at this moment, hence the appeal of the famous Gramsci line. But we should see them for what they are and put them in context. They are morbid symptoms, confined to a small but very vocal minority, particularly vocal in the tech/social media space, so they grab a lot of attention. As to the more general explanatory framework, if you look at data for trust in the Fed, then the collapse in confidence actually happened not after 2008 but under Greenspan, after dot.com.

And in Europe, despite the nightmare of the Eurozone crisis in which the ECB was largely culpable, confidence in Eurozone institutions is fairly high. I discussed some of the more recent research on that issue in my newsletter (Chartbook #62). This shows remarkably high levels of confidence in the ECB across the Eurozone, and strikingly most of all in the hard currency Northern European countries that you might expect to be most tempted by anti-fiat tendencies. Standing even further back, I take issue with Brenner’s simplistic account of the 2020 crisis response. I laid out my alternative interpretation at length in Shutdown. But that is for another time.

EM: There are voices on the left who insist that the democratization of finance epitomized by the rise of Robinhood-like apps (and, to some extent, many crypto infrastructures and assets) is something that progressives should be exploiting rather than condemning. This ties, somewhat, to the long-running efforts to, say, have workers play a greater role in deciding how pension funds invest their money; have the citizens of Norway more actively shape the activities of the country’s sovereign wealth fund; etc. So one can envision that, instead of dumping all these new crypto riches into NFTs, progressive organizations can, in fact, form their own financial vehicles in order to support progressive causes and also, perhaps, ensure that there are other criteria – beyond just profitability – that are taken into account by the cabal that is the world’s leading credit agencies. Some intellectuals and academics – I’m thinking of Michel Feher and Robert Meister – have made such arguments in the past. Do you think this is a viable project, especially if one considers what is already going on in the ESG space and the “social turn” by the likes of BlackRock and Vanguard? What I find so intriguing about such proposals is that they don’t advocate philanthropy – so you make money through hedge funds and then redistribute through foundations, the way, say, Soros has done – but they actually want to make money through finance and then also use it for political battles that are enacted through finance itself. Any thoughts on this?

AT: In Shutdown I described the Robinhood bros as the people who in the spring of 2020 “connected up the dots.” Rather than waiting for radical monetary politics to deliver central bank accounts for every citizen and people’s QE, they took their stimulus checks and dumped them into the stock market and thus rode the same escalator as the better-off investors courtesy of the Fed. There is an argument for investing a larger share of pension funds in the stock market, precisely so as to secure some of those gains. The risk, of course, is that it becomes a privatization boondoggle for overpaid fund managers.

One solution is index funds. But this kind of public investment is precisely what the big Sovereign Wealth Funds do. One can even make a case for making such bets on a leveraged basis. You don’t have to wait for a fund to accumulate before you speculate. “Only suckers do that.” Borrow money on the strength of future flow of contributions and invest that. What you would need, of course, is a safety net, hedging, all the usual safeguards. But let’s be clear, the entire American university system – in which so many of the folks contributing to this debate earn their living – operates on this basis. What do people think sustains the luxurious grants and conditions in graduate school in the US? In the inner circle of elite schools, both public and private, it is, to a considerable degree, endowment income generated in precisely the manner you describe. It is a two-way relationship. Yale’s endowment is one of the most highly rated investors. They have access to the most exclusive circles of unconventional assets, private equity, etc. And if you believe Coindesk, Harvard, Yale, and Brown have all been buying crypto.

If you think that money as we know it is backed by nothing, why do you think Facebook is so interested? After all, what is Facebook “backed” by?”

EM: Do you think that the rise of crypto might, paradoxically, reinforce China’s standing on the world stage? It took the most drastic measures to regulate crypto currencies; it moved very fast to introduce its own state digital currency, the e-yuan. Previously, it moved very aggressively to regulate FinTech and digital payments. Sure, its economy has its own problems like Evergrande, but, overall, it seems to be taking steps to limits its exposure in the eventual crypto-collapse but also to free up its hands when it comes to public policy in the monetary realm: they don’t want to share their monetary sovereignty with Alibaba, let alone Bitcoin or Ethereum. Do you think this strategy would eventually be vindicated? And what do you think of central bank digital currencies in general, and of the Digital Euro in particular?

AT: Central bank digital currencies seem to me an entirely logical development of the fiat system for the digital era. In fact, I struggle to understand the difference between what is proposed with such fanfare and the systems we already have in place for all large transactions. Clearly, in China’s case the aim is for something truly transparent to the state and the regime. In their case, this is particularly dramatic, not only because the regime’s ambitions to control are so sweeping, but because their entire banking system as we know it today, the entire gigantic edifice, is only 25 years old. So, the fear that haunts the West, that digital currencies could render private banking institutions irrelevant, has a more dynamic, historical character in China. Perhaps commercial banking there will be a brief interlude. It seems that concern for the profits of the incumbent private banking system is one of the main reasons not to push forward rapidly in Europe and the US. The banks will threaten us with “stability concerns.” Those claims seem like something we should investigate critically. Perhaps digital central bank currencies are interesting precisely because they offer us a way to change the terms on the incumbent financial system, not as a private venture (as with crypto) but as a public enterprise.

EM: The US and Europe are not China and such drastic measures are not very feasible, at least not in the short-term. What do you think the regulatory priorities should be and how feasible are they to implement, at least in the US, where some of the senators charged with regulating the crypto-industry have been found to be active investors and traders in it themselves? As we could see from the confirmation hearings of Saule Omarova, both Democrats and Republicans get very itchy when it comes to anyone with a more adversarial position with regards to both crypto and Wall Street… So it’s hard to imagine Robert Hockett’s ideas around the Democratic Digital Dollar getting much traction in Congress…

AT: Indeed. Apart from passing legislation to prevent active trading by elected officials and Fed staff, the priority should be to ensure that crypto models like Tether do not generate serious run risks. They are supposedly asset-backed. They are, for all intents and purposes, a hybrid of banks and ungated funds, which themselves are too much like banks. They need to be regulated as actively and thoroughly as banks, more so given their limited track record. 2020 revealed once more how dangerous the risks in the shadow banking system continue to be.

EM: Do you think we are too quick to write off Big Tech – the likes of Facebook and Google and Amazon – when we think about the future of money? In theory, they do have far more resources, technological know-how, and already existing technological networks (e.g. WhatsApp) through which to conquer the consumer market. Facebook has had a rough start with Libra (now rechristened Diem) but it’s still very much alive. And the European Parliament even issued a report, back in 2019, saying that “synthetic central bank digital currencies” – a public-private partnership of sorts – whereby the likes of Facebook will get to run these officially-sanctioned stablecoins in exchange for access to the central bank reserves. Do you find this vision plausible, especially given that, when situated against crypto, Big Tech look like angels?

AT: Big Tech is an established, dynamic, rapidly growing global power. I agree that putting them in the same pot as insurgent, two-bit crypto makes no sense. But for the same reason, we should be intensely vigilant with regard to any project to extend the already immense grip of the likes of Facebook, Google, and Amazon. But I hardly need to lecture you of all people on that point.

Shoshana Zuboff’s concept of the “Big Other,” stripped of its ominous Big Brother connotations, is actually not a bad way of thinking about how money functions in general. One might ask indeed, “If you think that money as we know it is backed by nothing, why do you think Facebook is so interested? After all, what is Facebook 'backed' by?” But to allow Big Tech into this arena is a specularly high-stakes gamble. Their infrastructural power is immense and we are only beginning to come to terms with it. So too, of course, is that of macrofinance. When you talk about bringing those two together you are really talking about two tectonic plates rubbing up against each other. Right now it is hardly as though we can be confident that we have the technical, legal, economic, or political capacity to regulate either of them, let alone the two of them in some kind of synthesis.

The convergence may be hard to stop. We may have to allow it. But let us not rule out other options. And let us not fall into deterministic talk. Remember Larry Summers dismissing Raghu Rajan as a luddite for expressing concern about financial instability. And then came 2008!

Adam Tooze holds the Shelby Cullom Davis chair of History at Columbia University and serves as Director of the European Institute. In 2019, Foreign Policy named him one of the top Global Thinkers of the decade.

Adam was born in London. He grew up between England and Heidelberg, Germany. Having received his BA in Economics from King’s College Cambridge in the summer of 1989, he had the good fortune to witness the end of the Cold War in Berlin, where he began his postgraduate studies. He went on to take his PhD from the London School of Economics. Since 1996 Adam has taught at the University of Cambridge, Yale and since 2015 at Columbia University in New York City.

Adam’s books have been translated into eleven languages. He writes widely for the global press. He is contributing writer for the New Statesman and a columnist for Foreign Policy.

Adam writes the Chartbook Newsletter at adamtooze.substack.com

Follow him @adam_tooze and on the Ones and Tooze podcast.

Much of what we hear about cryptocurrencies comes from the Global North or some small island nations in the Pacific or the Caribbean (whatever territory wins the lottery to become the next Cryptoland). That’s why I thought it would be a good idea to speak to Edemilson Paraná, a Brazilian sociologist who has published widely on the rise of digitsed finance, with a particular focus on how digital technologies were transforming the Brazilian finance industry.

Having read Paraná’s 2016 book on the subject, I was pleasantly surprised to discover that he has also recently published a book about Bitcoin and how we should think about crypto-currencies in light of their emergence in the wake of the 2008 financial crisis. Called Bitcoin: a utopia tecnocrática do dinheiro apolítico, it came out in Brazil in 2020. My Portuguese is good enough, so I enjoyed reading it in the original; the rest of you might have to wait for the English translation coming from Brill.

Our conversation starts off with Paraná articulating his broader theory of how digital technologies and modern finance relate to each other. We then proceed to discuss the ideological origins of Bitcoin; how cryptocurrencies mobilize the digital to “de-virtualize” money; why Brazil is likely to introduce its own Central Bank Digital Currency, but also why it might not be as progressive as one might think; and, finally, the composition of crypto-boosters in the country.

~Evgeny Morozov

Before we get to crypto, let's outline some of your general views on finance, technology, capitalism. For example, your early work discusses a broad shift from the post-war regime of accumulation that we know as Fordism-Keynesianism to the contemporary one dominated by finance. You identify digital technologies as one the main enabling factors behind this shift. How exactly do digital technologies fit into the new finance-led capitalism? Is it by providing stability or, rather, by creating new opportunities to extract profit, or, perhaps, in some other way?

There is certainly a structural causality between the development of digital technologies and the new dominance enacted by finance. For one, without these technologies, the special type of financialisation that took hold in the 1980s and still continues today would simply not be possible. Financialisation itself has evolved; it’s now increasingly data-centred and algorithmic. Without digital technologies, some of today’s financial instruments simply would not exist.

This is why my work refers to “digitalised finance”: the concept seeks to describe the new sociotechnical management system for the valorisation of financial capital. This valorisation occurs by deploying cutting-edge, automated technologies, which accelerate the compression of space-time flows to obtain short-term liquid financial gains on a global scale.

To paraphrase our Chinese comrades, one could say that this is a “financialisation with digital characteristics” or a “digitalisation with financial characteristics.” Its logic is that of creating new opportunities to extract profit and, definitely, not that of providing transparency and stability.

In your previous book, where you discussed the rise of dark pools and high-frequency trading, you wrote that the penetration of technology into the financial system leads to the proliferation of new risks and instabilities. How exactly does this happen?

In my study of different financial markets, I observed the recurrence of a certain pattern that I’ve described as “the spiral of complexity of digitised finance.”  This spiral is a feedback process that fuels the growing complexity of financial markets. As a result, many of the financial operators themselves – not to mention the regulators – don’t exactly know what is happening in the markets. The so-called “flash crashes,” where markets behave in strange and unexpected ways, are a good example.

The spiral illustrates how completely rational individual decisions could produce irrational social outcomes. There are three basic steps to it.

First, in highly digitalised finance, the search for unexploited financial gains incentivises leading players to invent, deploy, and refine the means needed to overcome the technological or regulatory obstacles that stand in the way of speculation. Second, the wide adoption of these new technologies leads to the emergence of new institutional configurations, new modes of action, and new operating dynamics; as a result, markets are reconfigured, partly in response to the political and social conflicts that erupt. Finally, the ensuing emergence of new institutional and technological environment encourages the development and implementation of even newer technical solutions. This cycle of growing complexity comes to entangle investors, regulators, tech companies, and other (often unwilling) participants. New systemic risks and instabilities proliferate as a result.

You also argued that digital technologies actually help consolidate the dominance of modern finance over our lives. Could you explain a little bit how exactly this happens?

Perhaps I can invoke another concept to explain the dynamics involved: the “cycle of operations of digitalised finance.” As I’ve already said, the main impact that digital technologies have on the market is to shorten space-time flows, i.e. they make everything faster and nearer. This increases the number and volume of trade operations and transactions. The digital systems behind those trades and transactions are immensely complex, they operate at immense speed, and have tremendous learning and adaptive abilities. They make the job of regulating markets far more challenging; there is too much opacity and uncertainty involved. As regulators find themselves at a loss, there occurs further concentration and centralisation of capitals within and between markets: those with more advanced technologies enjoy higher profits, so it’s natural that such centralisation occurs. This entrenches the hegemony of financial capitalism.

In your previous book, you already alluded to the conditions of possibility behind the rise of crypto: as the global financial system became more unstable, opaque, and unpredictable – not least because of high-frequency trading and other innovations – it somehow needed to ground its operations in something that promised certainty, transparency, and predictability… Bitcoin and the blockchain provided just that. Could you say more about this?

In some sense, it is the actualisation of an old paradox. While capitalists need to amass information in order to tame uncertainty, they themselves want to live in a low-information environment, avoiding the scrutiny of consumers, citizens, governments, and the media, at least as far as their own profit-making strategies are concerned. So, businesses always want almost full transparency onto everyone but themselves. Their competitors – as well governments and technocrats – have similar goals, producing uncertain, risky, and rather “opaque” scenarios.

So, the struggle between these two tendencies – their particular combination in different contexts – is, in my view, the key to understanding information governance within capitalism. It expresses the fundamental capitalist contradiction, i.e. that production is a collective social process that, however, is privately conducted and controlled. Disputes over the control of information need to be approached this way. Since the underlying contradiction can never be properly resolved, all that these disputes can do is somehow precariously accommodate these self-canceling tendencies.

One obvious example is the “spiral of complexity” that I’ve already mentioned. It’s marked not only by a chaotic and uncontrollable dynamic but also by a highly confusing one: few experts and operators can actually navigate it well. The growing opacity of the markets becomes an element of control, leaving the management of strategic information in the hands of a closed elite of investors.

Governments and regulators, but also small investors, those acting on the edges, become increasingly dependent on large funds, brokers, and financial institutions to manage their investments. This is usually done with very little transparency. And all of this in the name of efficiency, stability, predictability. Opacity is the “other,” the truth of the capitalist transparency.

In your most recent book, you present Bitcoin as a weird consequence of the financial crisis of 2008, with its contradictory dynamics. In what ways has that financial crisis shaped the initial reception of Bitcoin as well as its subsequent development? After all, it has hardly blossomed into the means of payment that Nakamoto wanted it to be, triggering a massive “asset bubble” – not unlike those blamed for triggering many of the earlier financial crises…

Hitting the public radar after the 2008 crisis – and doing so at a time when the “really existing” neoliberalism was struggling with a serious crisis – the “anti-establishment” libertarianism of cryptocurrencies attests to the intensification of neoliberal ideology, all while illustrating its many problems, limitations, and contradictions as a practice of government. Bitcoin, thus, appears as one more aspect of the creeping zombie-neoliberalism in which we live, as a strident high-tech “morbid symptom” of our times.

In the book, I define Bitcoin as “neoliberalism's rebellious son.” It is well-known that many inside the Bitcoin community advocate the core ideas of neoliberalism (Milton Friedman’s monetarism, Friedrich Hayek’s catallaxy, etc.). At the same time, Bitcoin – and the broader anti-statist, radical, openly confrontational rhetoric around it – does embarrass many inside the “really existing” neoliberal establishment, with their “pragmatic” problem-solving.

It is true that the rise of Bitcoin – and the broader resurgence of the Austrian School – speaks volumes about the political mood of the post-2008 era. Presenting itself in opposition to the political establishment widely perceived as self-referential, corrupt, and undemocratic, Bitcoin claims to represent an allegedly “apolitical” and “honest” form of money. Ironically, cryptocurrencies like Bitcoin also come to exacerbate, in countless ways, the very principles of the neoliberal era, turbo-charging the process of the speculative assetisation of everything.

This is the boringly-obvious Oedipus tragedy of Bitcoin. It is as if this histrionic  “rebellious child” of neoliberalism suddenly began demanding consistency from the father, the neoliberal establishment. After the financial crisis, the father was exposed as an old and vicious hypocrite, preaching one thing, but, in bailing out the banks, doing its exact opposite.

So, the libertarian radicalism of Bitcoin gains ground precisely by demanding, in a technocratic way, that neoliberalism fulfill its initial promises: promote competition as a way of generating “innovation,” defend individual property, advance the projects of commodification and privatisation, and so on. Bitcoin, despite its technically innovative aspects, is not much more than the transmutation of this very same agenda to the field of monetary management.

Your analysis of Bitcoin presents it as a combination of three ideological currents: neoliberalism; anti-establishment populism; technological utopianism. Do all these three ideologies add up to a coherent common project, and if so, what is it?

In my view, the structural core of the Bitcoin ideology is represented by the theoretical principle, so important to economic orthodoxy, that money is and must remain neutral. The same ideology holds that money, as a creature of the market, is merely a veil, a lubricant, a technical enabler, and a vehicle for commodity exchange. In this view, money is a “thing” that, due to its particular qualities, comes to perform its specific functions in the market. Money, on this view, must be regulated – or, better, self-regulated – via the market itself.

Accordingly, something like inflation is recast as a tyrannical way of eroding individual property to promote serfdom; it’s always seen as a monetary phenomenon, which arises, by and large, from the external intervention in the monetary realm by – who else? – the terrifying figure of the State. The latter represents authoritarian collectivism: a vicious and inefficient political invasion of what would otherwise be the purely technical, functional existence of money. This is the fantasy that unites many neoliberals, the anti-establishment populists, and the technological utopians associated behind Bitcoin.

Another very astute observation in your analysis of crypto-supporters has to do with their insistence that the political and the economic could be cleanly separated, so that the economic would be managed by the algorithmic systems that rely on the laws of mathematics and physics rather than on trust and politics and all this dirty human business. Do you think this tendency to see the two as separate originates in neoliberal or technocratic thought? I suppose someone like Hayek, with his insistence on “dethroning politics,” might very well agree on the need to keep the political out of the economic as much as possible. But someone like Thorstein Veblen, with his belief in the power of engineers, might actually believe that too…

Technological determinism and economic liberalism tend to walk together, although they are not the same thing. We can trace this back even to David Ricardo and his contemporaries: markets and money are a matter of self-regulation, it’s a technical question that should not be corroded by politics and values, we should resolve it without discussing values, beliefs, culture, history, institutions, common goals and understandings, social needs and so on. All that matters are transhistorical markets and individuals, with their magically neutral autonomous technologies; only they constitute the road to liberty and prosperity.

Sure, there are all sorts of nuances in terms of how these principles are combined in various forms of liberalism, but, to various degrees, they are always present. The political must be out, it has nothing to do with the economic; they have to be clearly separated and the border between them has to be policed. This is, by the way, where technology enters the picture. Not only in terms of enabling “innovation” and “creative destruction” but also as a way of materialising proprietary colonial paranoia against the social, against everything that cannot be encapsulated in terms of the market and its rationality.

It is hardly a coincidence that Milton Friedman himself suggested, in the early 1990s, that the Federal Reserve was to be replaced by a computer, programmed to automatically increase the money supply based on projections of population growth. This way, the need for economic policy would be extinguished – along with the need to maintain something like a Central Bank.

Well, in certain sense, it is exactly what Bitcoin has tried to realise in its utopia of programmable money. However, contrary to the beliefs of neoliberals like Friedman, money is a social relation, not a thing. As such, it doesn’t matter whether it’s physical or not, whether it’s paper, silver, or digits on the screen: in a certain sense, it is already “virtual” – otherwise, it could not properly function as money. The “virtuality” of money has nothing to do with its “digitality.”

What Bitcoin tries to do is deploy digital technologies to “de-virtualise” money, that is, to turn it from a “social relation” into a “thing.” That this thing is bound to be “digital” should not distract us from grasping the underlying objective. In this sense, the Bitcoin ideology is not that different from the imaginary that gave us the gold bugs and the money metalists. Again, this is no coincidence that so much of its technical language is based on the physicalist metaphors related to gold: to mine, to mint, to dig, so on. Bitcoin is digital metalism.

Building on your earlier argument about cryptocurrencies also serving a certain legitimating function for global capitalism, could one say that, in retrospect, the chief contribution of Bitcoin in these past 13 years has been to keep the mainstream critique of capitalism – and of central banking – that blossomed in the post-2008 environment strictly within systemic contours, i.e. without actually challenging capitalism as such? It’s hard to see Wall Street and the financial system feeling particularly anxious when all of the anti-systemic anger gets vented through Reddit communities such as WallStreetBets, with money flowing to Robinhood and various so-called DeFi apps? How do you see this playing out in Brazil?

Yes, it is true. And it is very striking to see this happening in Brazil, a huge and complex country full of very interesting but also tragic contradictions. When I launched my first book on Digitalised Finance, in 2016, I made a book tour through various Brazilian cities. Given the nature of the subject, most of these conferences were in the business and economic schools of important universities.

The Brazilian university environment, especially that of the public universities, was, for decades, even during the hard times of the dictatorship, traditionally progressive. Although these tend to be more conservative, this also applies to some important economic schools as we have had a strong tradition of influential heterodox economists in the country. And here I am, debating on digital financialisation with mature scholars who were way more progressive in content than their young, (at least formally) rebellious students. The latter, in their shining freshmen eyes, always asked me, everywhere, about Bitcoin, cryptocurrencies, and the like. Some would go further, debating Hayek, Mises, and such. Worse than that, when giving talks to unions and left political organisations, I often saw people there do the same.

It was clear to me that something serious was happening so I decided to devote myself to explaining this. Not surprisingly, 2016 is the year, as pointed out by many, of the debut of Jair Bolsonaro as an outsider presidential candidate, during President’s Dilma impeachment, when, announcing his vote in favor of impeachment in the Parliament, he saluted Ms. Rousseff’s former torturer in the dictatorship years. It was not very difficult to connect the dots.

All financial market people in Brazil soon embraced him with open arms, especially the new generation of scholars who work in the tradition of Austrian economics – they were the first! – and the crypto-enthusiasts. Their lunatic rhetoric was rather familiar: everything was the government’s fault; all except hardcore neoliberals were communists; the country was on the verge of full-fledged socialism. Some of them would later be invited to the government by Bolsonaro’s new Economics Minister, Paulo Guedes, a Chicago Boy financier who worked with Pinochet in Chile.

Given this, the crypto-hype in Brazil is almost fully driven by the hardcore right-wingers. Many of them, of course, rely on generous ideological, logistical, and financial support from American conservative think-tanks and libertarian organisations, as is very well documented by now. That said, it is also true that Bitcoin does pose some interesting and sometimes insurmountable challenges to big banks, governments, and international financial institutions. And this paradox needs to be taken seriously.

Brazil, under Bolsonaro, has proved to be particularly receptive to the Mises Institute and various other free market institutions; there seem to be plenty of such communities online. How much are they into crypto? Have they managed to make any truly novel arguments against central banking (and government in general) or do they stick to the conventional talking points? What are their main policy demands when it comes to the regulation of crypto, both in terms of investments and mining operations? Who are their main supporters in the Bolsonaro administration?

I would say there are two layers of crypto-enthusiasts in Brazil. The first comprises young geeks, tech aficionados, social media warriors, engineers, tech people, and so on. This is not unique to Brazil as we find these types everywhere. They tend to be more idealistic and somehow naïve; they are often joined by the mostly white, upper-middle-class males in their thirties – often investors and developers.

The other layer is made by people who are making, in different ways, significant amounts of money off crypto. These people are placed in emerging FinTech and financial institutions, some of them huge ones, propagating crypto-evangelism by selling books and “investment courses” and, most commonly, investing in or selling some type of crypto-product or crypto-scheme. And here, in this second layer, you have a subdivision: those who are openly criminal, building various pyramid schemes; and those who are legitimate, working for brokers, exchanges, app producers, fee collectors of any sort, as part of this growing crypto-ecosystem in Brazil. Some representatives of this legit branch of the business form part of the revolving door that connects Bolsonaro’s Economic Ministry to the big financial institutions in the country.

This second layer mostly preys on a growing mass of people, exposed to years of neoliberal reforms, who are desperate to make some money out of their declining personal savings in a time of crisis. These people, many of them recently unemployed, nurture the dream of becoming suddenly rich by speculating on crypto, often to supplement their declining incomes.

This whole environment doesn’t make much room for truly novel arguments against central banking and governments, as they are not very much interested in that in the first place. They want, above all, to make money. So, they mainly reproduce the well-known talking points. There is not a single, as I recall, distinguished Austrian economist or intellectual who is scholarly recognised in Brazil, even though, with the help of American organisations, some might soon emerge. Their main policy demands are built around something like “leave me alone and let me make my money,” trying whenever possible to be granted some privilege or support – even from the government – for their agenda and their business.

Following the example of El Salvador, some politicians in Brazil want to make Bitcoin legal tender. Using bitcoins to "buy a house, a car, go to McDonald's to buy a hamburger," to quote one federal deputy, Aureo Ribeiro. Is this a fringe debate in the country or is it something worth taking seriously? What lessons could one draw from the El Salvador experience for the Brazilian case? Are there any worthwhile elements that you see there – like the Chivo wallet, for example?

I don’t think it is worth taking seriously, at least at this moment. Some structural factors explain this. The first, and the most important one, is that Brazil has a complex, strong, capitalised, and technologically advanced financial system, still relatively well-regulated, and, above all, structured by some of the biggest banks in Latin America, two of them partially controlled by the State. These banks, especially the fully private ones, politically control the country’s Central Bank and the country’s monetary policy.

This, of course, is a problem, but, when it comes to crypto, it paradoxically offers a form of defense. This oligopolistic financial environment has proved challenging even for big international banks and Big Tech; they have trouble setting up financial operations in the country. So, while El Salvador’s Chivo wallet is certainly an interesting experiment in certain aspects, I don’t see it happening the same way in Brazil. I do think, however, that some kind of a digital wallet might eventually be launched, as a joint effort of private payment companies, big banks, and the central bank. This is the way things tend to happen in the Brazilian financial system.

Moreover, we still have a very well-equipped state bureaucracy, which has shown itself to be against making Bitcoin legal tender. Finally, we also have well-trained and influential economists, both on the left and the right, who offer daily resistance to such proposals; the mainstream media – and, with it, public opinion – have also become aware of how this space is being used to favor illicit practices. So, the main tendency right now is to let the game continue in the way it is and see what happens later. What some representatives of big money in the country – as suggested by Paulo Guedes, the Economic Minister – really wish to do is dollarize the Brazilian economy (which would surely be a tragedy), but even this is met with important resistance.

In short, I would say Brazil is closer to having its own Central Bank Digital Currency than to making Bitcoin legal tender. This, of course, doesn’t contradict the fact that this is a rapidly growing business in Brazil.

After the release of your latest book, you were harshly attacked on social media by various anarcho-capitalist militants. Could you explain how the public debate has evolved since your first interventions? Have you followed discussions and developments inside the online communities that defend crypto technologies from the right? Related to this, are there any online communities in Brazil that defend crypto from the left? It’s something of a growing industry, for reasons unknown, in the Anglo-Saxon world at least…

The relation of the crypto-world, be they technicians or financiers, with right-wing digital communities has contributed to somewhat weakening the organised left engagement with crypto, although there is still some involvement with blockchain initiatives, people experimenting with platform cooperatives and the like. The environment is changing because, for many reasons, the overall political climate is changing in the country. Somehow, the positive and the negative reactions to the book are contingent on that.

When the book was published, I was attacked not only by the anarcho-capitalists and crypto-evangelists but also by “laic people” that put their desperate hope on earning some money with this, people who invest, people who work in this industry, people who depend on this. Since then, many crypto-schemes are getting media coverage and landing people in jail in Brazil and, also, a significant number of these small investors lose their money or at least do not gain what was promised to them. The deepening epidemic, economic, and political crisis is, in part, opening the debate to more critical accounts. That said, Brazil is still a very fertile ground for cryptocurrencies and crypto-businesses and the narrative is still widely dominated by enthusiasts and propagandists who are certainly being successful in their job.

Do you see any value in leftist administrations – let’s say if Lula gets elected again in Brazil later this year – actually adopting the so-called Central Bank Digital Currencies (CBDCs)? Would they be able to pursue any kind of progressive agenda, or would this be very hard given the neoliberal re-orientation of the central bank under Bolsonaro?

Brazil revealed itself in the last decades as a country very open to the digital transformation of its banking and financial systems, as I discuss in my previous book. Brazilian commercial banks are known to have made very effective advances in this area, years ahead of most developed countries. The same has occured in its capital markets, which are regularly placed among some of the most technologically advanced in the world. And this is also a reality for public institutions such as the central bank and the revenue service, which are fully digitally integrated. Brazil recently implemented its own central bank digital payment system called PIX, a pioneering initiative in this area.

In sum, we have very well-trained engineers, plenty of know-how, the necessary resources, and a political and economic environment that welcomes these initiatives so as to control them on its own terms. And here lies the question: control. Because these initiatives are being conducted in a centralised manner, in full alliance with the interests of big private banks, we see a lot of cosmetic change that is there only to maintain the status quo. Some type of CBDC implementation is just a matter of time in Brazil. Alas, it is likely to go in this very same direction, that is, respecting the Brazilian tradition of “conservative modernisation.”

I’m convinced that CDBDs surely represent an interesting opportunity for a progressive agenda in various ways. But its technical and practical configurations would have to be designed to meet alternative political content and a different orientation of monetary policy and macro-management. This is the crucial challenge here. It surely is possible, but it will require a gigantic political effort, something that contradicts what has been happing for decades now in the country.

You’ve written, somewhat critically, of both Assange and Snowden as giving cover to the technological utopian part of Bitcoin. I can’t say I fully agree with your characterisation of them in the book but it’s hard to deny that, at least in the case of Assange, there’s a residue of the earlier cypherpunk ideology that informed his early views about Bitcoin. But it’s also hard not to sympathize with his position somewhat: given the US-led blockage on WikiLeaks’ finances, Bitcoin did offer the possibility for the organisation to keep operating. Wouldn’t this justify some of that utopianism? I’m also curious if you have read Edward Snowden’s recent essay about CBDCs? What do you make of the arguments in it?

In my defense, I do say in the book that Bitcoin, among other things, was used and will continue to be used for these purposes. This, surely, is something that must be considered.

However, the political invitation that I offer to the reader in the final chapter is the following: how to maintain the positive and promising aspects of Bitcoin and the blockchain while at the same time freeing us from its dystopian prediction of technocratic apolitical money, of an individualist market-based form of governance? I’m not saying that this is impossible, I’m saying this is very challenging and needs to be approached as such.

Bitcoin and cryptocurrencies already found a set of social needs to be met in the current capitalist world; it has its own social functions, its own use-value, so to speak, although different from those desired by its enthusiasts. In that sense, it is here to stay. Also, the existence of Bitcoin is, per se, promoting lots of changes, mostly in unforeseen directions, and these are really relevant, the emergence of CDBC being, in a certain aspect, one of them.

This leads us to Snowden’s arguments about it. More than wrong and short-sighted, it is at the same time impressively naïve about geopolitics, the complex and contradictory role of States, the autocratic aspects of market forces and big companies, as well as the realm of concrete political struggle, marked by unintended emergent consequences of multiple conflicts in different directions. It sure can take the cryptofascist direction he denounces, but it can also be developed in a different way depending on an alternative balance of forces.

A viewpoint grounded on technological determinism and individualistic liberalism as it is, it is not able to properly process these nuances and complexities. It is the crypto-anarchist Heaven or nothing; this or the digital totalitarian state Hell as its opposite. The admirable fact that they heroically sacrificed their own liberties for the cause of public liberty – and I do see them as such – does not make them correct on this topic. To have libertarian Snowdens and Assanges out there is very good indeed, but it would be even better to have progressive, democratic socialist equivalents of them.

We have recently learned about the secret contacts, running from the 1950s until recently, between the CIA and Crypto AG, a leading Swiss supplier of cryptographic equipment. This granted Americans access to internal communications of many governments, with Brazil continuing to buy Crypto AG equipment for its armed forces until 2019. During Dilma Rouseff’s years in office, there was a lot of talk about technological sovereignty and the need to lessen Brazil’s dependence on the US – a discourse that is not new to Brazil, as it allowed the country, even during the dictatorship era, to make some advances in computing and manufacturing. How much remains of that sovereignty discourse? Or has the “technological sovereignty” of nation states been overtaken by the discourse of the “self-sovereignty” of crypto-armed individuals?

I have to admit that, sadly, this discourse just vanished from prominent spaces of power in Brazil in recent years, even if the mainstream media was not very prone to feature it in the first place. Of course, it still resonates in left spaces and some sectors of the intelligentsia, although not strongly enough, especially considering everything that has happened during these years.

Bolsonaro’s policy of full and subjugated geopolitical alignment with the US is a shame for a country that has a tradition of some diplomatic independence and a very important role to play in international affairs. What is worse, this is a president who built his political capital through chauvinistic nationalism. This surely did provide the grounds, at least to some extent, for the self-sovereignty discourse of crypto-armed individuals, although I don't see this as the most relevant trend in this regard.

After all, Brazil has had a strong and vibrant community around digital privacy, digital rights, and free software. These people are still alive and trying to do their best given the situation. It is striking, however, that, alongside this almost complete surrender of nation-state sovereignty, Brazilians have also passively accepted being deprived of control over their data, their privacy, and their rights. Of course, this is a matter for collective – not individual – action. I hope we will eventually wake up before it is too late.

Edemilson Paraná is an assistant professor in Economic Sociology and Sociology of Work at the Department of Social Sciences/Graduate Program in Sociology at the Federal University of Ceará, Brazil, and assistant professor at the Graduate Program in Comparative Studies on the Americas at the University of Brasília, Brazil. He has published in the areas of Economic Sociology, Political Economy, and Social Theory, and is also the author of the books Digitalized Finance: Financial Capitalism and Informational Revolution (Brill, 2019/Haymarket, 2020) and Money and Social Power: A Study on Bitcoin (Brill, forthcoming).

An essay by Evgeny Morozov

Back in 2012, when I was working on my long essay on Tim O’Reilly and Web 2.0, I came to reflect upon the role of language in structuring how we think about digital technologies, their politics, and their inevitability.

Was the "Web 2.0" buzzword salad that was being weaponized by Tim O’Reilly merely reflecting, however badly and inaccurately, some pre-existing reality? Or was it also bringing a completely new reality into being - for example, by insisting that there were no alternatives to the self-evident but unstoppable chimera of “Web 2.0”?

For all my criticisms at the time, I recognized O'Reilly as a master of linguistic manipulation second to none. My extensive research on O’Reilly revealed that he was intimately familiar with the discipline of general semantics. While today it languishes in obscurity, it was very popular in the 1940s and 1950s. The founder of general semantics, the Polish count Alfred Korzybski, is now chiefly remembered for his pithy saying that “the map is not the territory.” I was doing some archival research on the history of general semantics at the time – one day, it might even get published – so it was fun to apply this more formal intellectual lens on one of Silicon Valley’s thought-leaders.

It didn’t much matter what “Web 2.0” was about as long as O'Reilly remained its chief interpreter, boosting his own publishing and conference ventures along the way.

In the end, the argument of my O’Reilly essay did not pursue the path of what academics might call “performativity,” i.e. the idea that language creates realities rather than merely reflects them. Rather, I saw O’Reilly’s intellectual activities as a form of linguistic and analytical pollution: having read almost everything he’s published or said in public, I came to see him as a deeply opportunistic character. He would often change his definition of Web 2.0 – and the concepts that it was linked to – depending on where the market was going, mostly to suit his own intellectual and business agendas.

In short, I did not see O’Reilly creating a new map, which, in turn, would create or reveal new territories. Nor did I see him creating new territories - so as to sell us new maps. Rather, I saw him as a humble “meme-hustler” who wouldn’t hesitate to alter a perfectly fine existing map to secure a more profitable turn for his business. It didn’t much matter what “Web 2.0” was about as long as he remained its chief interpreter, boosting his own publishing and conference ventures along the way.

It’s important to note that while his Web 2.0 advocacy had some success with the general public, the tech companies that were lumped under the “Web 2.0” label didn't much much care for the yarns that O’Reilly was spinning. Nor was there any “Web 2.0” premium added to their valuation. The viability of that term as a coherent cultural and economic trend was never a serious factor in how they were valued by the investors and the stock markets. In fact, everyone was expecting these firms to fully embrace “Web 3.0” – which, at the time, meant mostly semantic technologies.

***

With Web3, things are different. The link between language and reality is much more immediate and direct. Here, we are no longer talking about linguistic, intellectual, or analytical pollution, even though they are, of course, present. No, we are finally talking about performativity, with new realities being born out of the very language itself. The advocates of Web3 are quite explicit about this: we’ve got this beautiful map on our hands – all that’s missing is the territory it is supposed to refer to. Perhaps, this is the right mindset for the Age of the Metaverse: if there's no reality, we'll create one by talking it into existence.

But what is the right materialistic analysis of this strange turn to idealism, with venture capitalists leading the way? What is the political economy that has produced this stunning but territory-free map? For one, the business model of most Web 3 ventures is self-referential in the extreme, feeding off people’s faith in the inevitable transition from Web 2.0 to Web3.

The Web3 advocates remind me of those annoying vulgar Marxists who, for all the evidence to the contrary, kept insisting that the objective developments within capitalism favor the inevitable transition to socialism

The value of the tokens that underlie many of the flagship Web3 projects is directly tied to the expectation that Web3 is here to stay and that things will become only more liquid and interconnected (or “interchained”): tokens from one DAO universe will be valuable in another one; even more activities and processes will be fractionalized and tokenized; even more institutions will turn into DAOs and more objects, from books to films, will turn into NFTs.

This is why all the true Web3 believers have forgotten how to use present and past tenses, let alone modal verbs: every statement that they make about Web3 is not about what it is or what it might be. No, their every statment is  – almost invariably so – about what it will be. The transition is inevitable; better stock up on the right tokens – or the fear of missing out will eat your soul.

The Web3 advocates remind me of those annoying vulgar Marxists who, for all the evidence to the contrary, kept insisting that the objective developments within capitalism favor the inevitable transition to socialism – only then to spend decades elaborating sophisticated templates, with plenty of vivid, utopian detail of what that inevitable arrival of socialism would be like. As a result, we have plenty of fascinating templates, but, somehow, the objective conditions for that transition are no longer there (if they ever were).

The self-referentiality is not to be underestimated. In the end, Web3 is mostly about Web3; there is no “there” there. For all the talk about off-chain events and oracles, there’s no real outside to it: even the very concept of something being “off-chain” presupposes a certain kind of chain-centrism, with the assumption that everything, everywhere will eventually be fractionalized and tokenized and brought onto the chain.

Given these two rather prominent features – self-referentiality and performativity – one would think that the very concept of “Web3” – and the broader historical and political narratives that it enables – would merit far greater critical scrutiny. For example, if one doesn’t accept that “Web 2.0” was ever a valid analytical term, why embrace a deeply political narrative that seeks to fix the problems of a non-existent paradigm by ushering us into a new one?

Ironically, many of the VCs who gave us the reality that O’Reilly served under the label “Web 2.0” are now leading the populist battle to give people the “Web3” they deserve.

Likewise, what kinds of notions of progress and modernization are we inadvertently accepting in normalizing “Web3,” with its immense – yet somehow invisible – historiographic baggage, as a valid analytic concept?

Yet, these are not the kinds of questions raised by the proponents of Web3. Perhaps, they see no value in asking them: as the transition seems inevitable, why bother with all these pesky intellectual debates?

***

Even if one does accept “Web 2.0” as analytically useful, one should then at least acknowledge that its relation to its own predecessor was not adversarial – it was a far cry from how Web3 relates to Web 2.0 today. People like O’Reilly didn’t oppose Web 1.0 – they lamented its premature collapse on the ruins of the dot-com bubble. The whole vibe of Web 2.0 was about *rebuilding* something great while making it even greater and more participatory; it was not about moving away from something awful.

At the time, no VCs were saying that we should move away from Web 1. Ironically, many of the VCs who gave us the very tech and economic reality that O’Reilly tirelessly spun under the label of “Web 2.0” are now leading the populist battle to give people the “Web3” they deserve. It’s all very admirable but shouldn’t they do some public penance for their earlier sins first?

If you ever listened to those inside the a16z universe sing praises to Web3, you would never know that Marc L. Andreessen sits on the board of Facebook (since 2008!) and he has coached its founder and CEO, Mark Zuckerberg. If there are people to blame for how Web 2.0 has turned out, many of the a16z employees are surely high on the list.

Instead of such contrition, the VCs, with a16z in the lead, are busy launching publications, podcasts, and magazines to launder the new talking points about Web3. All of this is meant to convince the public that the overall terms of the debate have already been set and that the only outstanding issue is just how quickly everything is to turn into a DAO or an NFT. By now, their game plan is obvious: VCs aspire to privatize the future, forestalling any alternative conceptions of its institutional and political make-up. It’s not for nothing that the flagship publication of a16z is called – wait for it – Future.

Web3 think-tanks will inevitably follow. There’ll always be plenty of academics, intellectuals, and policy experts who would accept cash for lending their names and reputations to such dubious ventures; in that sense, Web3 would do exactly what Web 2.0 firms have been doing. If you thought that, by channeling insane amounts of money to academics, Alphabet and Facebook have completely poisoned the public debate on privacy or antitrust, wait until the proponents of Web3 weigh in on meritocracy, inequality, and creativity.

The cynics might simply dismiss such efforts as an organized campaign to spin a favorable narrative around Web3. They would be right. Such critique, however, would miss the most important point: there’s no Web3 outside of this narrative; it’s spin all the way down. This is not to deny that there are real projects and protocols being built by real and dedicated developers. But their value – and the reason why there’s money flowing into them – is unintelligible without the broader Web3 narrative that suffuses them with the nearly millenarian spirit of total and radical change. This was not the case with the companies that O’Reilly lumped under “Web 2.0”: some of their business models may have been ridiculous, but they were mostly shielded from his linguistic incontinence and the unpredictable destinations that it would bring him.

If we are serious about reversing the privatization of the future, our main preoccupation should, paradoxically, be with producing a critical account of the past.

How does one criticize a flawed, unrealistic, and extremely partial narrative that is, nonetheless, being rapidly turned into reality? This is not a problem that one can solve by adopting a more pragmatic, solutions-oriented attitude that many of the proponents of Web3 demand from their critics. The goal here cannot just be to find a more progressive use for DAOs or tokens or NFTs. I’m sure they exist – and many more of them can be found in due time. But what is the point of such search expeditions, when, in the end, such efforts are only likely to help in the left-washing of the Web3 brand, giving it the progressive legitimacy it would lack otherwise?

The problem with Web3 is that the self-referentiality of its discourse renders the arguments of its genuine and well-meaning proponents flat and one-dimensional. Most of their paeans are deeply ahistorical; they just accept a very twisted definition of Web 2.0 and move on to make some points about the inevitability of DAOs or NFTs. They lack any engagement with the political economy of global capitalism or even a cursory analysis of the many social movements that are still contesting it. They reason, primarily, by drawing on examples from the worlds of art and computer games, hardly representative of how most people live and work. They are unable to view the state as anything but a rent-seeking and surveillance-obsessed pathology that cannot be reformed or repurposed; one could only tame or abolish it. They cannot even hint at a future where capitalism is not the order of the day, seeing their task as inventing new – perhaps, decentralized  – ways of making it more tolerable. This is why, in the best of cases, the Web3 crowd would only give us the kind of cooperative stakeholder capitalism the Davos Man has promised a while ago, but has, so far, been unable to deliver.

Now, should we trust these people, no matter how well-intentioned they might be, to guide society into the future, given that the future itself is being privatized by the VC industry? I’d say “no.” If we are serious about reversing the privatization of the future, our main preoccupation should, paradoxically, be with producing a critical account of the past. Had we succeeded in deflating the Web 2.0 narrative spun by the likes of O’Reilly, the idea of Web3 might have been hard to operationalize today. This is not an argument against periodization; “always historicize!” remains a powerful call to arms. But this is an argument against accepting spurious periodizations that are spun by the meme-hustlers of this world: they provide no solid foundation for political analysis, let alone political action.

Of all the promises made in the name of Web3, two stand out as particularly radical and democracy-enhancing. First, some expect it to accelerate the process of decentralisation, which is already apace in many institutions, industries, and infrastructures. Second, we are assured that, in liberating artists from the extractivist data clutches of Spotify and their ilk, crypto projects could usher in a cultural revolution, giving rise to the autonomous and self-sufficient “creator economy.”

Both expectations are controversial. For one, the political import of the extant efforts at “decentralisation” remains amorphous and ambiguous, with financialisation – rather than politics – serving as a vehicle for empowerment. As a political program, today’s “decentralisation” agenda appears disconnected from the ongoing debates about geopolitics, the changing nature of democratic representation, the future of public institutions, and so much else.

Likewise, the vision behind the “creator economy” treats artists as full-time brands, ready to leverage the benefits of crypto to prep their own mini-IPOs and issue dividends – by means of tokens – to their shareholder-like fanbase.

Both promises seem to have taken no note of earlier, far more radical efforts to promote decentralisation and democratisation alike. Also absent is any serious engagement with the power of the state and with the role of public institutions in general; at best, they are seen as obstacles in the path of Web3, not as enabling forces that could help achieve the twin goals of decentralisation and cultural empowerment.

There is hardly a better person to recount what happened to those earlier radical visions than Francesca Bria, one of Italy’s – and Europe’s – most original voices on matters of technological sovereignty, digital innovation, and a democratised stack. (A necessary disclosure: Francesca also happens to be my wife.)

Most people know Francesca as the former chief technology officer of Barcelona (in the first administration of Ada Colau) and adviser on digital cities and digital rights for the United Nations, as well as the current (and first) president of the Italian National Innovation Fund and a member of the five-person management board of RAI, Italy’s national broadcasting company. She is also a member of the European Commission’s high-level expert group on the New European Bauhaus, and professor at the UCL Institute for Innovation and Public Purpose in London.

Francesca’s path to these important positions of power has been quite fascinating. From an early formative experience as a media and a free knowledge activist in the late 1990s, Francesca got to see the last stages of the European hacker club scene as well as witness the birth of important movements such as Indymedia.

Due to her interests in video activism, digital culture, and free software, she soon crossed paths with Gilberto Gil, Brazil’s visionary minister of culture. During his five-year stint in Lula’s governments, Gil articulated a vibrant vision for democratising both access to and the production of culture through free software and open knowledge. Inspired, in part, by Gil’s accomplishments in Brazil, Francesca eventually joined forces with some public officials in the Information Society Directorate-General of the European Commission to articulate a similar program for Europe.

This eventually led to two important European projects funded by the Commission: D-CENT (short for Decentralised Citizens Engagement Technologies; it ran between 2013 and 2016) and Decode (short for Decentralised Citizen-Owned Data Ecosystem; it ran between 2016 and 2019). It’s hard to underestimate the impact of both projects.

D-CENT was conceived as a platform for facilitating political deliberation and democratising decision-making – Europe’s answer to Facebook. It quickly gained prominence in Spain, where it was used by city administrations, such as Barcelona, and political parties. And the software that powered it eventually came to power the deliberation process of the European Commission itself, being used as the main digital hub for the Conference on the Future of Europe. As early as 2015, D-CENT produced a visionary report about the need to empower local communities with their own democratically-designed and governed complementary currencies, which were to be offered via the blockchain associated with Freecoin.

Decode, in turn, was one of the first publicly funded projects to put the questions of collective data ownership and data sovereignty on the political agenda, with important pilot projects and a set of decentralised and privacy-enhancing technologies tested in the municipalities of Amsterdam and Barcelona. That work now continues, also under Francesca’s leadership, at The New Institute in Hamburg's New Hanse program.

I have had a chance to observe D-CENT and Decode in action, serving as an informal and formal advisor to both (together with Francesca we also curated various associated events and reading lists). What is remarkable about both projects are the paths taken by some of the participants. While Francesca remained faithful to the original vision of fostering democratisation and decentralisation from within the state and the public sector, others trod a different path.

Some of them actually now find themselves on the very frontier of Web3. Harry Halpin, who was involved in D-CENT, went on to found Nym, one of the Web3 privacy start-ups that has recently attracted funding from a16z. Chainspace, a start-up founded by George Danezis and his team at UCL, who were involved in Decode, was acquired by Facebook. More recently, the same team formed Mysten Labs, another start-up to have recently received funding from a16z.

There were plenty of other interesting actors who ended up doing Web3- and crypto-relevant things; Jaya Klara Brekke, who was involved in both D-CENT and Decode, went on to write her PhD on the politics of blockchain protocols (before joining Nym). Denis “Jaromil” Roio has steered Dyne.org through D-CENT and Decode and some subsequent European projects while keeping a close eye on the world of crypto from the very beginning. A lot of other interesting people hung out on the periphery of the project at various times; at the very first D-CENT event in Rome in 2013, one could spot people as diverse as Maurizio Lazzarato, Stefano Rodotà, and even Moxie Marlinspike, who would go on to found Signal a few years later.

Our conversation with Francesca ranges over a number of themes, from the early history of Internet activist communities in Europe, to the lessons to be learned from Latin America, to the political limitations of the current wave of Web3 projects.

~ Evgeny Morozov

You’ve spent two decades trying to make digital infrastructures more “decentralised.” We’ll talk about these experiences shortly but just to get the basics out of the way: given that vast experience, are you persuaded by the “decentralisation” agenda of today’s proponents of Web3/crypto?

Unfortunately, the Web3 agenda seems quite similar to that of Web2. The promises, paradigms, narratives, and business models are not so different as they seem. At the beginning, Web2 promised an open digital economy with the potential to democratise the Internet and digital cultural production, becoming more social and challenging incumbents’ dominant positions. What happened was the opposite, leading to the unprecedented concentration of market and infrastructural power by the Big Tech.

Today, Web3 and decentralised finance, or “DeFi,” promise to nourish a grassroots movement of cyber-hackers that will decentralise ownership of the real economy. Yet, they often end up reinforcing market concentration and fuelling rampant speculation. That world is often ideologically resistant to regulation and poses risks to the wider financial system, with the $2.5tn-worth of crypto assets in circulation ending up in the hands of fewer (and more centralised) players than we think.

The attempt to build decentralised privacy infrastructures at the network and application layer, such as distributed ledgers and crypto protocols that run on Ethereum and other blockchains, does seem interesting and genuine. This attempt to fix the infrastructure, however, doesn’t take into account the broader challenge of reclaiming control and sovereignty over the entire technological stack, including next-generation connectivity (5G and space connectivity), quantum computing, and the critical components in future value chains such as microprocessors and AI chips.

People pushing the Web3 agenda have learned very little from the experiences of all the other movements, from free software to Indymedia to the rise of digital democratic cities.

This purely technical effort at decentralisation also falls short in thinking about the political and social institutions that are needed to take full advantage of this decentralisation. The big questions that I – and you – have been raising over the past decade, with regards to the political economy of data and infrastructures, of technological sovereignty, of the geopolitics of the stacks, all seem to have dropped the agenda completely.

What is being “decentralised” is the ability to extract value and make money, incentivising even further the financialisation of social behaviours. Worse, it seems that people pushing the Web3 agenda have learned very little from the experiences of all the other movements, from free software to Indymedia to the rise of digital democratic cities, that did try to build a more decentralised and democratic digital sphere.

Let’s trace some of that history by focusing on your own career trajectory. Most people think of you as part of the policy establishment. Yet you started out with grassroots work in the worlds of media activism, open knowledge, and free software. Could you tell us about those early experiences and how they – and their limitations – shaped your thinking about technology policy?

In the late 90s, the movement advocating for free knowledge and free software merged with the anti-globalisation social movement, spawning initiatives such as Indymedia, the world's first truly global citizen journalism website. It was also in that early period of open Internet experimentation that some of the technical innovations that we would later call “social media” and “Web 2.0” were born, albeit with a completely different spirit.

As we know now, those early movements didn’t manage to sustain and grow, and it’s important to analyse why. I did sense that something was amiss in how we – and I speak as someone who was part of those pioneering initiatives – thought about politics, information, and power. In that period I became convinced that in order to be sustainable and scale, in order to lead to more systemic innovations, these bottom-up initiatives had to be recognised as critically important attempts at democratic experimentalism. They were important and had to be sustained with public policy interventions, both in terms of regulation and public R&D funding.

It was those efforts to make sense of our failures to take seriously the role of public policy and of the State that led me, around 2005-2006, to start working with the European Commission, with the Regional government of Lazio (my home region), together with governments in Brazil and, later, elsewhere in Latin America that served as inspiration for my work.

Many of those efforts were driven by the desire to learn from the experiences of Project Cybersyn in Chile and imagine what a modern European equivalent of it would be. As we started formulating plans for genuinely European alternatives to Web 2.0 – this was what D-CENT and Decode, the European projects that I led in the 2010s, were about – we were consciously drawing on the Latin American experiences.

Before we get to the Latin American chapters, could you say some more about the most formative experiences in your early career as a “free and open knowledge” activist?

I was strongly influenced by the hackerlabs (and what we would later call “makerspaces”) and their understanding of digital knowledge and software as a common good. These were community spaces that during the late 90’s were located inside community social centres or squats, even though sometimes they also functioned independently like Internet cafes. They offered free access to Internet connectivity and some basic infrastructures, technological assistance and basic digital skills classes to those who needed it, from ordinary citizens to artists and from activists to immigrants.

There was always a way to make these new technologies serve the social needs of the communities. These open labs were staffed by hackers and software engineers who had knowledge of these emerging technologies; they spoke the language of technological autonomy, popularised privacy and encryption tools, and provided the much-needed technical support during important gatherings (such as those of the so-called anti-globalisation movement).

Thus, in the late 1990s / early 2000s, I felt like I had joined a movement that was able to politicize technology. It saw technology as an infrastructure, as a knowledge tool that could empower communities, with a vision of a more inclusive and innovative future. We did want people to produce their own content and information – the motto of Indymedia was “don’t hate the media; become the media'' – and the hackerlabs provided the assistance and the infrastructures that made such autonomy in the field of content production possible.

We were exploring and owning the new territory of digital and network culture. The hackerlabs aimed to appropriate and, in some sense, socialise the critical knowledge behind technology. Inevitably, such efforts sparked a lot of conversations about things like intellectual property: who owned this technology, how one could share it, on what terms, how we could sustain the creators, and so on. The issue of licensing came to the fore, as, to truly serve the agenda of autonomy, the software had to be studied, reproduced, copied, and shared. It’s in this period that the Creative Commons licensing model was born and popularised by Lawrence Lessig.

You were involved in much more than just technical debates about licensing at the time, right? You were also producing content of your own…

Yes, at that point, I was also involved in the production of creative content, such as digital videos and independent documentaries. We were coding videos manually, working on the first open-source video archive. It was eventually launched with an open-source video code called new global vision, which was hosted by ECN (short for European Counter Network), an important independent service provider in Italy. We did that way before the BBC came up with their own iPlayer. This was also before YouTube and other Web 2.0 publishing tools.

This radical technology and hacktivist network was active in Italy with projects like ECN, Autistici/Inventati, and Indymedia; in Spain with projects like sinDominio; and in Germany with projects like the Chaos Computer Club – which were very connected to social movements. So all of us who were engaged in content production were also engaged with social and political activism, on issues like migration or social justice, feminism or the environment. Later, this all morphed into the anti-globalisation movement.

During this period I traveled a lot around Europe and also in Latin America. For example, I was in Argentina in 2002 as the country was in a deep political and financial crisis. That’s where I met Naomi Klein, who was working on her own film at the time. I was working on a film named Argentina Arde, about Argentina’s unemployed workers, or piqueteros, in the context of the Argentine financial crisis and the antiglobalisation movement. The film was eventually distributed by the now defunct Italian newspaper Carta.

Between 1998 and 2002, you lived in Amsterdam and it seems to have had a big influence on your subsequent trajectory. Why was it so important?

Amsterdam was a reference point for the free knowledge movement for two reasons. First of all, in the late 90s Amsterdam was a very vibrant place, both culturally and politically. A liberal, open city, it was also a home to many NGOs and foundations, including those of the more progressive variety, fighting for social justice and against climate change. There were a lot of activist organisations that were critical of the IMF and the World Bank – I’m thinking, for example, of the Transnational Institute and ASEED Europe. Many of these NGOs also had public money to spend. This attracted a crowd of very young and bright activists, people who were just out of university and who wanted to make a difference but not in a conventional desk job.

The other reason is that in the 1990s Amsterdam had some public policies that were favouring the transition to the digital society. They had good multimedia academies, pirate radios that were legal, well-funded local TV cable channels. They had public spaces like De Balie that were promoting the emergent digital culture with festivals and conferences such as The Next Five Minutes, which popularised concepts such as “tactical media.” Hackerlabs were everywhere – often, right next to the coffee shops – and they were staffed by very good technical people. You could go there and learn everything about computers, about how to use them, how to navigate the Internet.

And, of course, the Internet itself was everywhere. As a result of clever public policies, it was also cheap or entirely free. They also had independent Internet providers like XS4ALL that did have this progressive view of communication. There was very little of this kind in Italy – at least in a world beyond the hackerlabs that were still perceived as “underground” culture.

When I got to Amsterdam in 1998, there was a lot of buzz about the pioneering project of the Digital City; this was an important first effort to have a public debate about how to provide new rights and services for citizens in the digital city. These debates would eventually continue in the new institutions like Waag Society, which was something of a European public equivalent to the private and commercial world of the MIT Media Lab, but also to mailing lists like Nettime.

You joined Indymedia early on. What drew you in and what were your initial impressions?

In 1999, during the anti-WTO protests in Seattle, the technical community started to create platforms and tools through which the social movements could express themselves and create their own media. Later, this would be called “citizen journalism” and “user-generated content” – and it would be almost completely subsumed into the rhetoric of Web 2.0.

From the outset, Indymedia was a platform that had editorial teams distributed all around the world, each of them with their organisational structure rooted in different national states and individual autonomy. They shared some principles and rules, including how to control and moderate the content posted by the users that was misogynist, racist, or discriminatory. It started with text. But soon one could also publish photos, videos, and audio. Imagine what it meant to publish and distribute video on an open platform in 1999!

So Indymedia became like a meta platform that connected all the independent media and all the independent journalists and content production communities together with the technical community, the hackers, and the social movements. This went really big in the early 2000s, because then, after Seattle, the anti-globalisation protests started to spread all around the world.

Many of the members of Indymedia’s technical community who created the open publishing protocol were from North America. They went back to the US and ended up working for companies that would eventually become big Web 2.0 names.

There is an interesting and mostly unknown connection that ties Indymedia to Web 2.0…

Yes! Many of the members of Indymedia’s technical community who created the open publishing protocol were from North America. They went back to the US and ended up working for companies that would eventually become big Web 2.0 names. The story of the podcasting firm Odeo – where Twitter was born – is emblematic, for, along with Jack Dorsey, it also employed Blaine Cook and Evan Henshaw-Path, who not only participated in Indymedia but were also key to the development and further adaptation of TextMob, a text messaging software used at many protests, which would go on to inspire Twitter.

Soon, by 2005 or so, some of us realised that in order to produce high-quality content communities like Indymedia, we needed much stronger, sustainable structures. Indymedia, for example, was completely volunteer-based; the majority of people didn’t have a salary. Donations, while helpful, didn’t allow us to develop bigger plans. We started to debate these issues internally.

There were, predictably, opposing camps on these issues. Some linked it to the question of financing public goods, understanding that the pioneering infrastructures that powered Indymedia could also be funded by governments as innovation for the public interest; this whole debate could be connected to the broader struggle of access to information and digital rights. Others obviously opposed any state involvement, and later turned to the private sector for funding.

Who were these opponents?

For the most part, the North Americans preferred the private solutions, and would then move to Silicon Valley and work with Web 2.0 firms, thinking that, via social media, they were democratising the ability of people and communities to have a say and publish their own content – outside of most regulations that existed at the time. Some of them were libertarian; some were anarchists. They never looked at the state and the public sector as a solution, viewing it, mostly, as a censor or an enemy to fight.

I think they found more freedom, more resources, and definitely more money in the venture capital scene in Silicon Valley. So they founded all these companies, which, over time, became very different from what they were at the outset; the founders left after a few years, and the companies were then acquired by bigger players.

So, you were clearly in the other camp – the one that did see governments as potential enabling actors rather than enemies to fight. Interestingly, it’s by studying the Brazilian experience that you also found some interesting policy suggestions for Europe. Could you explain how exactly that encounter with Brazil happened?

I always thought that we needed to influence public policies and create pioneering policy instruments that could support emerging digital infrastructures as well as make the tools of content production cheaper and more accessible. Brazil provided an inspiration for this, since Lula’s ascent  to power was welcome news to many of us in Europe. I went to one of the first World Social Forums in Porto Alegre; I do remember seeing many intellectuals who were influential for the movement, such as Noam Chomsky, but also Richard Stallman, Larry Lessig, and Vandava Shiva there.

The themes of free access to knowledge and connectivity, and the reform of the global intellectual property regime, were finally given the attention they deserved. There were also a lot of discussions about things like participatory democracy and open budgeting – and that did seem very exciting to us in Europe.

So, under Lula, Brazil was a big progressive player – also in all sorts of international and global debates and institutions. Around those years, the World Summit on Information Society was getting into gear and I remember attending its first big gathering in Geneva in 2003. I was there as part of the We Seize! activist campaign (“We Seize” is a play on WSIS) to demand more accountability, transparency, and democracy during the Summit negotiations. Two years later, there was a follow-up summit in Tunis and it was extremely important for my subsequent work, both in Brazil and in Europe.

How so?

I was in Tunis as an independent journalist covering the summit (I was freelancing for the Italian newspaper Liberazione). One of the most exciting people present there was the Brazilian minister of culture, Gilberto Gil. Gil, of course, is known as one of the country’s most famous musicians, very much involved with the Tropicália movement, a collaborator of Caetano Veloso and much else. Gil, who served as minister of culture for five years, did take some rather radical steps to promote the agendas of free knowledge and free software.

First of all, he – like the rest of the Lula administration – was not afraid to pursue an adversarial policy towards big technology companies, and insisted on reshaping government policy, including on procurement and around free and open source software. Free-software advocates and prominent professors like Sérgio Amadeu were now working for the government.

Second – and this was very important to me – Gil launched a program called Pontos de Cultura, which was a government effort to promote bottom-up access to and production of information and knowledge, including from the favelas and parts of Brazil that were previously excluded from the sphere of culture. This did have some similarities to what we were doing with hackerlabs back in Europe but, in Brazil, this was not limited to hackers and activists.

Rather, this was part of a big government push, with Gil and the ministry driving much of this effort to democratise access to culture produced by means of digital technologies. There were also parallel efforts to boost digital inclusion and digital literacy and those were all quite radical and ambitious programs, including large public investment in digital infrastructures and connectivity for open public broadband, and digitalisation of public administration services using free and open source software to promote technological autonomy aligned with their national development goals.

As I understood what was happening in Brazil, I immediately started thinking of how to apply these experiences in Europe. First, the focus was regional; by then, I was working in the administration of the Lazio region and I was instrumental in establishing a collaboration program between Lazio and Brazil within the European digital society framework, so there was some effort to translate Pontos de Cultura experiences locally in Italy. I wrote a paper about this analysing the effort made.

How did these efforts go beyond Italy?

This has to do with the other important person I met in Tunis – an Italian official at the European Commission called Francesco Nachira (he would retire from the commission in the early 2010s). In 2002, Francesco published an important paper on “digital business ecosystems,” which made the case that Europe, instead of building giant national or pan-European champions, should rather be investing in creating knowledge and technological infrastructures that could allow smaller companies not only to build cutting-edge products but also to build on each other’s discoveries and innovations.

Nachira would build a whole research program around this insight, culminating in an important 2007 book. By then, he had this very appealing theoretical but also practical vision based on a biological metaphor of the ecosystem, which saw business and technological spheres – what today we might call “infrastructures” – interact in such a way as to produce mutually beneficial results. So the idea was that by promoting free software and open source technologies but also all sorts of open knowledge infrastructures – we would later talk about them as the “semantic web” – Europe could still preserve its technological and industrial autonomy even without having big technology giants.

Perhaps, it would have even been a better path, as, with smaller players, one could achieve better and more democratic governance as well as have an economy that was not just about competition and profit but also collaboration and cooperation. There was also plenty of research that showed that SMEs were not always acting to maximise profit and pursued other goals. Nachira believed in cooperatives and smaller enterprises; one could say that there was much appreciation for decentralising economic activity, following the Italian tradition of territorial industrial districts, with learning economies and their specialisation tailored to local needs.

It’s hard to believe this today but many of Nachira’s papers and presentations from that period – published under the auspices of the European Commission – cited Project Cybersyn in Allende’s Chile as inspiration and as something that, by drawing on advanced but decentralised ICTs, should be recreated in Europe. (Project Cybersyn was somewhat better known in Italy due to the appearance of an important 1980 book about it.)

There was a lot of very interesting theoretical research that informed Nachira’s approach: he drew on general systems theory, cybernetics, constructivism, and various theories of cognition to make his points, citing Stafford Beer, Fernando Flores and Terry Winograd, Varela and Maturana, Bateson and Piaget. He explicitly rejected the game theoretical approaches that were popular at the time (ironically, it’s precisely game theory that is so much in fashion with the Web3 crowd these days).

Pontos de Cultura seemed exactly the kind of government-driven effort to build a digital ecosystem of free knowledge and technology that could then have major societal and economic effects.

How did Brazil fit into all of this?

Nachira knew of what Gilberto Gil was doing in Brazil and he wanted to meet him and see if some kind of bridge could be built between Europe and Brazil. Pontos de Cultura seemed exactly the kind of government-driven effort to build a digital ecosystem of free knowledge and technology that could then have major societal and economic effects… a sort of public policy for digital sovereignty, we would say today.

It fit very well with Nachira’s program and we wanted to test whether something like Pontos de Cultura could be launched in Europe as part of the Digital Ecosystem agenda. I soon started working closely with Nachira, becoming one of his liaisons to European Regions and to Latin America. I, then, also did a brief stint as an expert in the European Commission – working on smart cities, ecosystems and living labs while I was working on my PhD at Imperial College in London.

Nachira’s efforts, while initially lauded by the Commission, soon ran into some opposition and he took early retirement (also due to health reasons). The spirit of those programs, however, lived on and soon – in 2012, I think – the European Commission launched CAPS (short for Collective Awareness Platforms for Sustainability and Social Innovation). By that time, I was finishing my doctoral studies at the Imperial College in London and was also collaborating with UK’s innovation agency, Nesta, and its incoming director, Geoff Mulgan, was very enthusiastic about having me apply for CAPS funding on Nesta’s behalf. This is how my first big European project, D-CENT, was born.

Just one more point on Nachira here: around 2014, after he retired, we did go to Ecuador, working with people like Andres Arauz there, also in hopes of getting Latin America to pursue the kinds of policies that we found so difficult to implement in Europe. There was quite a positive reception to what we had to say but Latin America, too, soon entered a crisis, so many of these ideas remain to be realised.

Could you explain the logic behind CAPS and also how did D-CENT, your first European project, fit into it?

The idea behind CAPS was to promote all kinds of new and emerging technologies that were empowering people and communities – e.g. decentralised protocols, distributed networks, technologies for democratic participation. At that time, the European Commission was funding technology for the sake of technology. Fabrizio Sestini, the intellectual architect of CAPS, understood that the social purpose had to come first. And he wanted to create a program driven by what communities could do with technologies to serve their needs, with a very strong environmental focus as well (once again, we are back to the kind of impulse that drove our work in the hackerlabs back in the late 1990s and later in the Pontos de Cultura model).

So I decided to apply for CAPS, with a project focused on reducing the dependence of social movements, NGOs, municipalities and most other political institutions on the platforms of Web 2.0. By that time, it was impossible for any of these entities to engage in activism or enable deliberation among their members outside of the platforms such as Facebook or YouTube. We basically had no autonomous platform where this could be done, so everyone took to these big platforms. So, D-CENT, in a way, was conceived as a way to address this problem.

We wanted political parties to find new ways to interact with their members, while enabling social movements and organisations to effectively use digital technologies to empower collective action.

Was there some other bigger philosophy underneath?

On a very general level, what we tried to do with D-CENT was to develop platforms for large-scale democratic participation, with a focus on democratising the party form – actually to strengthen the party form – and on making sure that democracy could be fitted to the 21st century, giving more power to citizens without, however, believing that parties as such were over. We wanted political parties to find new ways to interact with their members, while enabling social movements and organisations to effectively use digital technologies to empower collective action.

What came out of it, as we already said, is a set of large experiments that resulted in a democracy platform that is now used to deliberate on a pan-European scale instead of, say, a private alternative Facebook. Our platform was funded by European taxpayers and later picked up by the city of Barcelona and many other cities, and we are proud of it. It's open source, it's privacy-preserving, and it's accountable. We can't manipulate the data, we can’t sell the data, we cannot manipulate the opinion of the citizens. It shows that the technology that's built and constructed in a bottom-up way, by communities of citizens, can become a pan-European platform. Such small regional projects can scale and be robust. This is yet another proof that Nachira’s original vision of the digital ecosystem was correct, and that you can develop technologies that are democratically owned and controlled.

Like all European projects, D-CENT was a joint effort of many different organisations, right?

We had some interesting partners from the very start. Harry Halpin was already working with Nachira who, by then, discovered his academic work on distributed cognition. Harry was working with Tim Berners-Lee at the time, on standardisation. There were other people – e.g. Blaine Cook (of the Odeo-Twitter fame) who was working on decentralised identity management as well as Evan Henshaw-Path (also of that Odeo-Twitter contingent), who, by then, was a CEO of a lean UX startup.

So while there was a very strong technical component to our consortium, we also knew that what we were trying to solve was not just a technical problem. Thus, we wanted to have real movements and institutions as part of the project. We had the Pirate Party in Iceland, as they became an important force in the country and conducted the first experiment with direct democracy at scale; the mayor of Reykjavik at the time, Jón Gnarr, was very much involved with what we were doing. The same thing happened in Finland, where we worked with Forum Virium, the ICT organisation of the city of Helsinki; our point person there would later become the technology officer of the city of Helsinki.

With our backgrounds in Indymedia and other social movements, we wanted to reclaim this space from Facebook. We wanted to give these social movements a stable, reliable, scalable digital infrastructure that would also protect their privacy.

At the time, all the talk was about Indignados in Spain. I knew some people around Manuel Castells’ research group at the UOC Internet Interdisciplinary Institute (IN3) in Barcelona, especially Javier Toret Medina, who was also active in Indymedia in the 2000s. They were doing some cutting-edge work on theorising these new tech-enabled social movements. There was some shared reluctance to accept the standard US narrative that Facebook and Twitter were the tools that revolutionaries used and that we should just accept that, following the Arab Spring, all the mobilisation would happen there.

So, with our backgrounds in Indymedia and other social movements, we wanted to reclaim this space. We wanted to give these social movements a stable, reliable, scalable digital infrastructure that would also protect their privacy. But we also wanted to understand what they need in the political process and empower them with the means to debate, organise, make decisions, and eventually govern. The “governing” part proved very important later on, as many of us participating in the project – including me – were called to take on various government positions, mostly in cities.

We also had another partner in Spain, Medialab-Prado, which at the time was building a tool that was starting to be used by Podemos, and ended up as the main participatory platform of the city of Madrid. It would eventually form the backbone of Decidim, the tool for deliberation and governance that would eventually be used not only in cities like Barcelona and Helsinki, but also at the pan-European level, endorsed by the European Commission, the Parliament, and the council of the Conference on the Future of Europe.

So D-CENT had this important dimension of creating an alternative platform for mobilisation, deliberation, and governance. But there was also an important dimension looking at social digital currencies. How did that come about?

This part – on economic empowerment, money, complementary currencies, and the potential of crypto-currencies – was inspired and influenced by Denis “Jaromil” Roio, whom I got to know in the hacker scene in Italy in the late 1990s, when we were both very young. Jaromil came from an interesting background, one part of him was rooted in the world of arts and culture, the other one in the world of free software. He was also active in Amsterdam, working in MonteVideo, an important cultural institution in the city. He was busy developing dyne:bolic and other creative projects based on Debian and Ubuntu. Inevitably, he became an early expert on Bitcoin, so we watched that space very closely from the very beginning. (Note from Evgeny: I remember running into Max Kaiser, one of the loudest Bitcoin maximalists today, at a D-CENT event in London in December 2013!)

Ok, so Jaromil was following this early on. But what was the rationale of even looking at these currencies and digital money?

On the one hand, D-CENT wanted to promote decentralisation in the sphere of political participation, i.e. we wanted citizens to be consulted when it came to decision-making – much like they were consulted when it came to participatory budgeting in Porto Alegre. On the other hand, we wanted to solve the question of the concentration of economic power and somehow link it to Nachira’s ideas about digital ecosystems. So we wanted to promote economic empowerment and decentralisation as well.

Ok, so imagine if you do a big collective participatory budgeting project. But how do you fund this? And how could you fund many of these initiatives given that this was also the time of austerity and the Greek experience was very much part of our everyday conversations at the time? So we started looked at various complementary currency movements – the Brixton Pound in the UK, the WIR bank in Switzerland, and many other examples in Europe and elsewhere. We soon started working with Bernard Lietaer, who knew this space very well and had a lot of interesting theories about the ecology of money. He was the one to author the pioneering D-CENT report on social digital currencies in 2015.

So, already in 2013, we started asking what was going to happen to all these alternative and complementary currency movements given the arrival of Bitcoin and other crypto-currencies. Marco Sachy, who was involved with the project, was doing some interesting work on Freecoin at the time (it became his dissertation eventually). So we came up with Freecoin Toolchain and had some basic pilots in various partnering countries.

Let’s talk briefly about the sequel to D-CENT, which was called Decode.

There were several big assumptions driving it. First of all, it became clear that the city became the site for democratic experimentalism. In 2015, as progressive mayors got elected in many European cities, we saw this new wave of interest in “democratic municipalism.” Suddenly, people wanted to contest this notion of a heavily financialised, for-profit city – including, when it came to technologies, the image of this very slick “smart” city, where everything was offered “as a service” by some technology vendor.

So I wrote a short paper on how to move from the smart city to the democratic city and I actually got a call from Ada Colau inviting me to implement that vision in Barcelona, as its chief technology officer. So Decode, in a way, was an effort to think through what would be involved in that transition, with citizens enjoying more rights and control over digital public infrastructures, sensors, data, and so on.

It was important to show that there were many options for what one could do with one’s data; how much of it to share, how much of it to keep private, and on what terms.

We clearly also wanted to show that there were other paradigms to think about data; for us, it was obvious that it was something collective and public and that citizens should be given an option to decide what to do with that data – including, of course, giving them the ability to share that data with the public sector so that more and better public services could be built with it. We thus started talking of “data altruism” and “data sovereignty,” which are now central concepts in the new Data Governance Act of the European Commission.

So it was important to show that there were many options for what one could do with one’s data; how much of it to share, how much of it to keep private, and on what terms. We did run some interesting pilots but even I have to acknowledge that Apple may have gotten ahead of us when they pushed this update that now requires users to explicitly decide whether they want to be tracked and how. We thought of something like this but, of course, in the context of how citizen data, once shared, could help enhance value elsewhere in the public administration.

So for us, the task was not figuring out how to give an option to store your data in a safe of some kind, so that you can later monetise it – the underlying motivation of many in the self-sovereignty identity space today – but how to create public services and infrastructures that would actually make data-sharing lead to more value being produced in the public sector as the data itself gets socialised: we called it a new social pact on data. It is a very hard task to solve, as it requires transforming the public sector as such, not just building the right standards and protocols for regulating who has access to data and how.

What was the broader political message you were intending to send with Decode? Did you succeed?

Decode posed the question of the infrastructural power of Big Tech, of their dominance of the whole stack. So we were trying to make a case for industrial policy; that we Europeans needed to take back control over critical digital infrastructures and technologies that underpin basic services and institutions of  the 21st century, from healthcare, to education, to transportation, to even logistics and delivery. But, most importantly, we wanted to problematise the layer of data, because we understood the many fundamental questions between data, money, reputation, and identity.

We focused on the data layer because that seemed like an obvious way to attack the dominant business models of surveillance capitalism. We didn’t do it because we thought that controlling the data layer would exhaust the question of the infrastructural power of Big Tech.

There were, of course, failures. While we managed to scale projects like Decidim, we didn’t manage to achieve a common pan-European initiative on technological sovereignty, linking political, economic, and geopolitical dimensions in a coherent way. There’s still no coherent vision of a digital industrial policy that could liberate even half of the stack that Europe needs, not to mention its entirety. In our defense, we also had very little money; 5 million Euro – this was Decode’s budget, spread across many partners in the project – is not so much given the ambitions.

We were also too early in many respects. What we were theorising with Freecoin and alternative digital social currencies arrived a few years too early; today it’s completely inside the crypto bubble, minus the political and social concerns that we had. As a result, the elaborate institutional framework that we crafted is missing from most of these crypto projects.

So if we look at the big picture and study the choices that Europe faces right now, what are they?

Well, there’s always the option of leveraging industrial policy and investing in European technological sovereignty to rebuild the stack – much like the Chinese have done, but in line with our democratic principles and values. We would need new companies to do that because the old incumbents, including the telcos, are probably not up to the task. How do we create the companies we need? Perhaps, the venture capital market, which in Europe does attract a lot of state money, could be used for that.

This also explains why I found myself leading Italy’s Innovation Fund, a venture capital fund backed by Italy’s national promotional institution, Cassa Depositi e Prestiti (CDP), the equivalent of France’s Banque publique d'investissement (BPI) and Germany’s KfW. How do we ensure that VC investment in Europe doesn’t follow the American path and that instead of focusing on management fees and whatnot, we focus on creating value for the public while achieving Europe’s much-needed technological sovereignty? And how do we do it in such a way that European start-ups are not then bought up by Facebook or by Saudi Arabia's sovereign wealth fund?

What I find so suspicious about DAOs and tokenisation and Web3 is the idea that they want to tie every institution to the logic of the stock exchange: if things work well, the value goes up – and this creates some kind of a disciplining mechanism.

How could we deliver on the promises of decentralisation, decarbonisation, the Solidarity Economy, the new welfare state through the companies that will be created and funded? Likewise, when we think about enabling political participation – to help people fight climate change or even solve their own local problems – how do we do it in a way that goes beyond the logic of the market and doesn’t require turning everyone into an economic agent responding to financial incentives of some kind? How do we do that without financialising politics?

This sounds like you are not a big fan of hijacking financialisation to serve social and political needs, as many proponents of crypto and Web3 have been arguing…

I’m not. What I find so suspicious about DAOs and tokenisation and Web3 is the idea that they want to tie every institution to the logic of the stock exchange: if things work well, the value goes up – and this creates some kind of a disciplining mechanism. Do we really want to “optimise” our healthcare or education this way? Even when it comes to companies, we still have public companies that have a public mission, and even if they have been privatised this doesn’t somehow eliminate that mission.

Tokenisation, for me, is the latest manifestation of what we could call the super-financialisation of everything, enabled by the digitisation of physical processes and objects. Now one can attach IP rights to everything; make smart contracts out of everything; enable transactions in everything. We fought that logic early on, with Decode, when people started making arguments about data being an asset class, something that accrues to individuals, to be bought and sold. We always argued that one could also have a much more social and public take on data, and specify collective access and ownership rights; data doesn’t have to be treated as something proprietary, but as something that can create public value and redistribute wealth and rewards.

Can blockchains and crypto be of some help here? Maybe, but one would need to change the entire technological system, then. One would need to say that, instead of using blockchains to create smart contracts that enforce property rights, we want blockchains that enforce the “right to informational self-determination” or “the right to knowledge”? Or even the right to inspect the algorithms in order to assess their impact… for example, this is very relevant today when it comes to collective bargaining and platform workers’ rights in the gig economy. This would require transforming quite a lot of jurisprudence and reining in our notion of the public good and then also somehow fitting it onto the blockchain.

I am thinking of debates about digital IDs in the Global South – e.g. India – where biometric technologies are seen both as mechanisms of control but also as ways of claiming welfare benefits that many citizens couldn’t claim before. So the effects are quite ambiguous and depend on the politics of the situation.

This is exactly the problem. There is a big fight for the democratisation of the state, for the new notion of the democratic public. We either win or lose that fight. That has been my frequent response to advocates of things like “platform cooperativism.” Ultimately, these cooperatives cannot and do not live in a void. You do need the state to enact new regulatory frameworks, new ownership patterns and structures inside an economy; the state is the only tool that we have, it’s the one and only institution that we have to regulate and to create laws that would prevent big companies from usurping their dominant position and abusing their market power. So, in the end, if you want to democratise the economy, you will need the state. We need to reclaim that power, not hide away from that responsibility by invoking the power of crypto or the market or financialisation.

As someone who has worked in this space over twenty years, what do you think of the vision for emancipation that is now on offer by those advocating Web3?

Well, first of all, I don’t see how Web3 – focused as it is on the creator economy and tokenisation – would allow us to deal with questions regarding infrastructural power and the industrial policy of the future… things like broadband, 5G, data centres, cloud computing, AI, quantum computing, microchips, the next generation of batteries. It’s not just the advertising business models of Web 2.0 that should concern us. What does Web3 offer us here? Not much. The Web3 discourse accepts today’s status quo as a fact and moves on to discuss all these other aspects.

Most of the stuff about DeFi seems to me just a temporary phenomenon – the result of central banks’ inaction and delay in grasping the threats that come from leaving this industry unregulated. In this sense, China seems to be seeing through all the Web3 rhetoric and asking the right strategic questions, both in terms of controlling the whole stack, from batteries to AI, to establishing control over the FinTech sector in a way that would reduce risks to the country’s overall financial system. Europe, of course, doesn’t operate in the same political climate, so acting so resolutely about Web3 might not be an option (also for geopolitical reasons). It’s hard to imagine Chinese policymakers spending any time discussing Dogecoin.

What is one thing that the current advocates of decentralisation – at least as this idea surfaces in the crypto/Web3 space – get wrong, in your view?

What I learnt from Francesco Nachira and his interest in constructivism and theories of language and cognition is that decentralisation can never be just about decentralising infrastructures. One always needs to have a requisite strategy for decentralising institutions as well.

So that’s why we always aimed at the decentralisation of economic and political power as the necessary condition of possibility that was needed to deliver on the true emancipatory potential of decentralising digital infrastructures. When I look at the promises made by the proponents of DAOs and NFTs, they seem to believe that technology itself would somehow do the job: once we code a DAO correctly, it will ensure a new institutional form and that form would have revolutionary effects, etc. This seems to me short-sighted and also very inward-looking.

It’s not, of course, only about decentralising power. It’s also about creating new institutions to keep old power – which, by now, has taken on new forms – in check. Where are these new institutions when it comes to crypto and Web3? Everyone seems to believe that big tech platforms and Wall Street and Hollywood will just stand idle as they are being disrupted by “crypto.” Does this really sound plausible to anyone?

I’m reminded of the experiences we had in Italy in the early 2000s, when some of us – including many people in the hackerlabs – joined forces with the so-called chainworkers – those working for the likes of WalMart – who enjoyed few of the traditional workers’ rights. We did insist on giving them basic income, on building new kinds of trade unions to defend them, and so much more – but these calls were met with silence and often direct hostility from the traditional unions, who just couldn’t see that exploitation and precarity were taking on new forms, previously unknown to them. But imagine how much time we would have gained if these institutions were, indeed, formed at the time? This would have turned the struggle against Uber and Deliveroo in a completely different direction, at least in Europe…

I have one last question. For you, it’s been an interesting professional trajectory to jump from Indymedia – the world’s first online independent media website – to being on the governing board of RAI, one of Europe’s most respected public broadcasting networks. What kind of transformations can we expect from your presence there?

In a sense, I think about my mission there through the prism of my earlier experiences with Pontos de Cultura and digital ecosystems, and more generally in the context of the mission to reclaim Europe’s digital sovereignty. How can we retain and reform a public media that provides high-quality content but also informs the general public and serves a public mission? Non-commercial broadcasting networks do run the risk of disappearance and decline, because of the challenges posed on many fronts, from advertising to content production. Now they suddenly have to compete with Facebook and Google and Youtube and Netflix and Amazon…

Curating and contextualising things well is an expensive and ambitious proposition; that’s why no innovation in the crypto space is likely to replace libraries or museums – not even NFTs.

My own view on this is that the public media might actually need to learn a thing or two from Indymedia. We do need to think about using public media to aggregate high-quality content and curate it; they would need to leverage open APIs and find a way to attract content produced by all sorts of players that are currently outside of its ecosystem, be it newsletters or festivals or newspapers, podcasts or some completely new format. Public broadcast media can bring massive visibility to such sources and they can also contextualise them much better, given the huge archives that they have. Perhaps, we’ll see that there’s a way to do curation and recommendation wisely – using data and ethical algorithms in the public interest. This is where public media may actually do a much better, more responsible job than whatever one might expect from Netflix’s algorithms…

But do we even need any of this given that Web3 and crypto would soon usher in the “creator economy” of independent content producers and curators?

I am convinced that we do. Curating and contextualising things well is an expensive and ambitious proposition; that’s why no innovation in the crypto space is likely to replace libraries or museums – not even NFTs. Culture and media, done well, are expensive undertakings, and if we expect them to keep playing an important role in our democratic system, we have to be prepared to pay for them as public goods – and not as something funded solely through advertising or data collection or whatever else the latest model might be.

Francesca Bria is the President of the Italian National Innovation Fund and a Board Member of the Italian public media company RAI. She is Honorary Professor in the Institute for Innovation and Public Purpose at UCL in London and she is part of the High-level Roundtable for the New European Bauhaus set up by the EC President Ursula von der Leyen.

She is the former Chief Digital Technology and Innovation Officer for the City of Barcelona in Spain. In this role, she was leading the smart city agenda and was one of the founders of the Cities Coalition for Digital Rights, a UN-backed platform to promote sustainable digitisation and urban digital transformation. She has served as Senior Adviser to the United Nations (UN-Habitat) on digital cities and digital rights. Having led two major European projects (D-CENT and Decode), she is also a member of the European Commission high level expert group on Economic and Societal Impact of Research and Innovation (ESIR), and a Senior Adviser on the EC program STARTS. She also founded and is the director of The New Institute’s New Hanse program.

Francesca has a PhD in Innovation and Entrepreneurship from Imperial College, London and MSc on Digital Economy from University of London, Birkbeck. She has been awarded Commander of the Order of Merit of the Italian Republic. In 2020, she was named Culture Person of the Year by the German newspaper Frankfurter Allgemeine Zeitung (FAZ). She has been listed on the list of Top 50 Women in Tech by Forbes Magazine as well as on the list of the World's 20 Most Influential People in Digital Government by Apolitical.

Twitter: @francesca_bria

Website: https://www.francescabria.com