What Guilfoyle was asking for was $100,000, which she needed to pay off a credit card bill, the Wall Street Journal reported this week. “It won’t show up anywhere if you wire money to American Express.” In the next message she just wrote “Please.”

Eric was Eric Deters, a Trump donor who made his money as co-owner of a pizza chain called Snappy Tomato and had become a right-wing talk radio host (he denies sending her the money). Guilfoyle was the former Fox News host and ex-fiancée of Donald Jr, the president’s eldest son. The pair had broken up in 2024, but Guilfoyle remained close to the family; at the time of the text messages Guilfoyle (who had previously been married to Democratic California governor Gavin Newsom, make of that what you will) was preparing for her confirmation hearing to become the US ambassador to Greece.

Deters, a long-time Trump donor, had already promised to pay Guilfoyle $300,000 in “speaking fees.” If the messages are authentic, and Guilfoyle has disputed their accuracy, they paint a remarkable picture of the cash-for-access culture surrounding the Trump administration. Indeed, this is practically the dictionary definition of corruption: Guilfoyle was allegedly directly offering access for cash. “I will be your Trump ride or die, forever and ever,” Guilfoyle told Deters, by Deters’ account, as she begged for cash.

And Guilfoyle is really just the tip of the fatberg of profiteering that Trump has enabled and even encouraged through his second term; indeed by the standards of Trump’s inner circle, a mere six-figure sum counts as a fairly contemptible return. It is Trump and his family who are truly raking it in — and the numbers and methods they’re using are extraordinary.

***

At the core of the schemes is often the president himself. Take the case of Nvidia. On April 15th, 2025, Trump posted “big and exciting news” on his social media platform, TruthSocial. The technology company had committed “500 BILLION DOLLARS” to build  “A.I. SUPERCOMPUTERS” in the United States, “EXCLUSIVELY”. The White House later added in an official statement that this was the “Trump Effect in action”. Trump had employed a signature mixture of hospitality — he had invited Nvidia’s CEO, Jensen Huang to dine at Mar-a-Lago earlier in the month — and hostility, waving the threat of tariffs if Nvidia continued to make its graphic processing units in Taiwan. And it had apparently worked.

It wouldn’t be the only time he took an intense interest in Nvidia over the course of the year. In August, Trump overruled US Government security restrictions to allow Nvidia to sell its chips in China. There followed more posts, more closed-door meetings, multiple calls and surprise public appearances with Huang, whose business was meanwhile flourishing. By the end of 2025 Nvidia’s stock price had more than doubled, from $94-a-share in April to $188. Today, it is $225.

It is surely pure coincidence, then, that Donald Trump owned up to $58 million of Nvidia shares at the start of 2025 and bought up to $68 million more according to an UnHerd analysis of his financial documents. The purchases were made through investment accounts that the Trump Organization says are independently managed by third-party financial institutions, with neither Trump, his family nor the organisation involved in selecting individual investments. (The disclosure documents present a range rather than exact figures, and the above figures are based on the maximum; if we take the absolute minimum end of the range, according to our analysis, Trump entered the year owning $12.5 million of Nvidia shares and bought just over $17 million more. So the actual number is somewhere between these two.)

Similarly, Trump purchased up to $11 million of Tesla stock in 2025, and promoted the company on many occasions, even calling its cars “beautiful” — quite the endorsement. Indeed, the list of companies Trump has bought stock in, and which Trump has also posted about and/or given government contracts to includes: Intel, the clothing company American Eagle, Palantir, Microsoft, Amazon, Comcast, Meta, Apple, US Steel, and Dell, among dozens of others. Except the President’s representiatives insist there is no conflict of interest here. All the investments are managed without the president’s input or knowledge — and when have they ever lied to us?

Further reading

Trump was never the one

By Sohrab Ahmari

Trump’s disclosure documents reveal that he made more than 21,000 stock trades in 2025 — so separating the signal from the noise is practically impossible. But unlike presidents who have placed their assets in blind trusts or other arrangements to manage potential conflicts of interest — Jimmy Carter, for instance, placed his peanut farm in a blind trust — Trump has retained ownership of his investments while allowing his sons to continue running the family business. As he told the New York Times in January: “I let my kids, you know, do business.” They retain their own business interests and access to their father and members of his administration, while operating in sectors affected by government policy. The question is whether the family’s overlapping financial and political interests create conflicts that existing safeguards are ill-equipped to address.

Then there’s the Trump Organization, which Eric and Don Jr run. This is the part of the president’s tangled business empire that does things like license the Trump name to products, meaning the presidency itself provides a useful extra source of revenue. There are Trump sneakers ($299), Trump watches (ranging from $499 to $100,000), Trump guitars ($1,250 or $10,000 for the optional “autographed” model). There is even a Trump Bible. These licensing deals are hugely profitable. Trump’s “Save America” coffee-table book alone netted the then-candidate $3 million in royalties. Putting his name on all these shoes, perfumes, watches, books and so on has netted Trump more than $10 million.

All of this activity has made many of those within Trump’s inner circle extremely wealthy in the last couple of years. Trump has learned from his first spell in office, when he dropped significantly down the Forbes 400 rich list. The financial disclosure document for the year before Trump became president for the second time ran to 234 pages and showed $622 million in earnings. The equivalent document for his first year in office runs to 927 pages. It shows that the president reported more than $2.2 billion in his first year in office.

In December last year, Forbes published an admiring article about how Don Jr’s fortune had increased sixfold to $300 million in just one year, “the kind of fortune that would make his father proud.” Eric fared even better: he had “supersized” his fortune ten times to $400 million (again, according to Forbes), supplementing his stock trades with investments in cryptocurrencies. “Donald Trump has offered a masterclass in turning political fame into personal fortune,” ran the glowing report.

All of this is “on a scale that has never happened before in American history,” says Claire Finkelstein, a professor of law and philosophy at the University of Pennsylvania. Something quite similar has, however, happened in the Russian Federation in recent years, where Vladimir Putin has used his presidency to accumulate vast personal wealth — and has meanwhile buttressed his political power by ensuring the oligarchs around him are larded with cash too. “Trump has basically hung a for sale sign outside of the Oval Office and said: ‘You can have dealings with me, and I will give you attention if you pay me in some fashion, or allow me to establish a golf course in your country, or otherwise benefit my interests’,” says Finkelstein. “And that means that American diplomacy is basically for sale.”

As if to underscore the growing convergence between the Russian and American modes of government, a ProPublica investigation recently revealed that Don Jr’s wedding, held across two private islands in the Bahamas this May, had been part-funded by a Russian oligarch called Umar Kremlev to the tune of hundreds of thousands of dollars. Kremlev is a close member of Putin’s inner circle with a wide range of business interests. He runs the Russian boxing governing body IBA, and is involved with companies that have a near-monopoly on the Russian gambling industry, including the national lottery. And there he is, peeping out of the wedding photos, directly behind the son of the President of the United States — along with a group of other Russians whose presence reportedly mystified the other guests.

And as we have seen this week with Don Jr’s former fiancée Guilfoyle, behind closed doors the relationship between Trump family members and their friends is often explicit in its bare-faced cash-for-access stance. One term for this is kleptocracy — a mode of government in which the prime motivation of those in power is personal enrichment. Another term is state capture. This is when a narrow interest group takes control, dictates the rules and the way they’re implemented, neuters the institutions that are supposed to hold them to account —  and use all of these diverse mechanisms to award themselves privileges and advantages.

“ In some ways it’s a very familiar pattern,” says Elizabeth David-Barrett, professor of governance and integrity at the University of Sussex. “It’s something that we’ve seen in quite a few countries around the world.” The advance of state capture in the US is more shocking, however: “Because it’s the US, because it is faster than anywhere else, and because it is more blatant and open than anywhere else.”

Trump appears to be placing the enrichment of his family as high on his priority list as making America great again. Asked in January why he is allowing all this conflict of interest, Trump straight-out said: “because I found out that nobody cared.”

***

For those who do care, Don Jr, Trump’s eldest son – Kimberly Guilfoyle’s ex-fiance – is a good place to start. In addition to the work he performs with the Trump Organization, Don Jr is works with a firm called 1789 Capital Management, which was founded by Omeed Malik in 2022 to specialize in “anti-woke” investments. Don Jr joined as a partner two years later.

“ 1789 Capital has made remarkable investments in companies that then suddenly get beautiful contracts,” says Maria McFarland Sanchez-Moreno, the CEO of grassroots government accountability group RepresentUs. She points to August 2025, when 1789 made a big investment in Vulcan, a small North Carolina-based startup that manufactures advanced magnets. Three months later, Vulcan received a $620 million loan from the Pentagon.

According to the Financial Times, other companies owned by 1789 Capital that benefited from large government contracts have included BlinkRX, a pharmaceutical distributor in which 1789 has a stake (Don Jr also sits on its board). BlinkRX benefited directly from Trump’s October “TrumpRX” executive order opening up prescription drug direct-to-consumer sales.

In August 2025, 1789 invested in the online betting platform Polymarket, with Don Jr once again also joining the company as an advisor. It was an odd choice, given that Polymarket had been barred from operating in the US in 2022 by the Commodity Future Trading Commission (CFTC) — and that Don Jr was already operating as an advisor to Kalshi, Polymarket’s main competitor. Just eight days after his appointment was announced, CFTC staff issued a no-action letter that helped clear the way for Polymarket’s return to the US market, via an exchange it had acquired. With the rules on political betting loosened, both Polymarket and Kalshi duly exploded in value. In August 2026, 1789 Capital led a $1 billion funding round for Polymarket which valued the company at $21 billion.

Don Jr holds other personal investments too, though he is not required to release details about them so we have no idea of their total scale. We only see it in glimpses, like when a small drone company called Unusual Machines revealed in a securities disclosure that Don Jr held a $4m stake.

Meanwhile, Don Jr was brought into Unusual Machines as a paid advisor, a couple of weeks after Trump’s election victory in November 2024. Less than a year later, in October 2025, the company announced it had won its biggest contract yet with the Department of Defense. Though the exact amount hasn’t been made public, “ there is a pattern of Don Jr getting very wealthy off regulatory decisions and contracting that is in his father’s control, right?” Sanchez-Moreno says.

Then there’s Eric Trump. Like his older brother, Eric has never had any notable successes independent of his father, preferring to operate either within the Trump Organization or close to the US Government when his father happens to be in charge. In this, however, he has demonstrated astonishing acumen. In April 2026, Eric was telling Fox News that Foundation Industries, for which he is an investor and chief strategic advisor, had just signed $24 million worth of contracts with the Department of Defense to build humanoid war-robots.

Otherwise Eric and Don Jr have a lot of ventures in common. Following Trump’s reelection, Don Jr and Eric were both involved in signing real estate deals on behalf of the Trump Organization. One of these involved licensing a Saudi real-estate company called Dar Al Arkan to build half a dozen Trump-branded hotels, residences, golf courses, and more across the Gulf and other places like the Maldives, netting tens of millions of dollars. (Dar Al Arkan is linked to crown prince Mohammed bin Salman, a close professional associate of Don Jr and Eric’s brother-in-law, Jared Kushner).

In February 2025, it was announced that Eric and Don Jr had bought stakes in a private equity firm called Dominari Capital which they were also advising. Dominari helped set up the cryptocurrency mining company American Bitcoin, which went public in September 2025 at a valuation that made Eric’s stake worth almost half a billion dollars (Don Jr’s stake isn’t known).

Because of the nature of cryptocurrencies, the true amount that the Trump family has made from them will likely never be known. The Center for American Progress tracks Trump’s total crypto earnings to the present day at around $2.4 billion, including $636 million from the Trump memecoin $TRUMP. Melania Trump also made $6 million from the sale of NFTs — “non-fungible tokens,” essentially individualized memes linked to a cryptocurrency unit — in her husband’s first year in office.

The Trump family also has a large stake in World Liberty Financial, Inc, the company behind a “stablecoin” pegged to the US dollar, from which they earn interest, estimated at $59 million. In January 2025, an Emirati company backed by a senior royal and government figure (Sheikh Tahnoon bin Zayed Al Nahyan, the brother of UAE president Mohamed bin Zayed Al Nahyan and the country’s national security chief) signed a deal with Eric Trump to purchase a 49% stake in World Liberty for half a billion dollars. This netted a reported $187 million for Trump family entities. A few weeks later, the Wall Street Journal noted, the Trump administration approved a controversial deal to export AI chips to the UAE. In October 2025 Trump also pardoned Changpeng Zhao, the founder of cryptocurrency exchange Binance, a large partner in World Liberty Financial.

Like stocks, cryptocurrencies are a confidence business. When one of the Trumps boosts it, confidence — and therefore the price – goes up. An investment firm based in Abu Dhabi has bought $2 billion in World Liberty stablecoins. And cryptocurrency companies have rewarded Trump’s support of the industry by donating tens of millions of dollars to Trump’s campaign super-PAC.

***

And what of Trump’s daughter Ivanka, and her husband, Jared Kushner? Finkelstein points to the $400 million Boeing 747 that Qatar gifted Trump in 2025 as an example of the sorts of dividends that his selfless work in the Middle East is reaping. (Albeit the luxury jet would be “a counterintelligence nightmare”.)

Kushner, who served in Trump’s first term as Middle East adviser, founded a private equity firm called Affinity Partners in 2021. Kushner had never worked in private equity before, but so confident was the Saudi crown prince Mohammed bin Salman in Kushner’s talents, he immediately invested $2 billion in the company via Saudi Arabian sovereign wealth fund. Qatar and the UAE soon followed suit with $1.5 billion more. Kushner had stoutly supported MBS’s regime, even after its agents murdered the Washington Post columnist Jamal Khashoggi.

Kushner has been closely involved in Trump’s second administration, too, and while the specifics of his job remain murky he has served in an unofficial diplomatic role in talks with Russia, Israel, and Ukraine, as well as Saudi Arabia — while still controlling Affinity.

It hasn’t always gone well. Backed by Affinity, Kushner and Ivanka, have also been attempting to build a $1.4 billion luxury resort in Albania. But after the Albanian prime minister passed a law changing regulations to allow the gargantuan project to go ahead, local protests began. These spiraled into a national movement, known as the “Flamingo Revolution,” which seems like it might even be on the brink of bringing about the downfall of the Albanian government.

Meanwhile, as Trump’s madcap war with Iran continues to spiral out of control, some of Kushner’s Gulf backers have reportedly started to question whether they are getting a good return on their investment — which shows just how explicitly they saw the deal in terms of cash for access and influence.

***

How did we get here? Throughout his presidency of 1977-81, Jimmy Carter was dogged by questions relating to his family peanut farm in Georgia — an operation worth a fraction of most of the Trump family’s business interests. Carter’s attempts to place the company in a blind trust did little to quell suspicions about a potential conflict of interest; and nor did a special counsel ruling that no irregularities had taken place. In part, the enhanced suspicion was due to Carter’s own promises to raise ethical standards following the Watergate scandal.  

Finkelstein argues that the rot set in with President Ford’s pardoning of President Nixon over the Watergate scandal in 1974, which set a precedent that presidents are beyond accountability. The rule of law was then further eroded after 9/11, when President Bush’s Department of Justice allowed the use of torture in CIA blacksites. But in her view, the real turning point came under President Obama.

Further reading

Is Donald Trump Jr running for president?

By Daniel Kalder

When Obama came into office, he had to make a decision about what to do about the Bush administration’s torture program — and particularly the legal memos that had been used to authorize it. Obama banned the interrogation techniques and released the memos, but also promised that CIA officers who had relied in good faith on the Justice Department’s legal advice would not be prosecuted. For Finkelstein, this was a failure of accountability. “That set the stage for a kind of lack of transitional justice from one administration to the next,” she tells me. “Rather than robustly investigating and prosecuting those who violated the law during the Bush administration, he really decided to give everybody a pass.” In her view, President Biden’s attorney-general, Merrick Garland, similarly “majorly failed” when he didn’t appoint a special prosecutor for two years after the election, which “made it impossible for the Justice Department to meet the timeline required to prosecute Trump.

But Biden further blundered, laying an avoidable trap for any future Democrat or indeed Republican who might hope to hold the Trumps to account. “ Let’s remember that Biden pardoned his own son, Hunter Biden,” she says. “That was a colossal mistake from the standpoint of containing presidential authority and containing corruption, because it set a precedent that will be very difficult for Democrats to object to when it’s used on the other side”.

All of this means that those working to bring values such as honesty, transparency and probity to American democracy are not optimistic. “ In the US, anti-corruption laws are quite weak and have become weaker over time,” says Sanchez-Moreno. ” A lot of things that are corrupt and that other countries would criminalize and treat quite seriously are just allowed to proceed here.” The system of checks and balances that was once the pride of American democracy has not proved much help either. “You have a Supreme Court that ruled that the president has pretty broad immunity, and that has set the stage for an administration that is using its office for the family’s enrichment.”

Things may change, however, if the Democrats take the House back in next month’s midterm elections. The administration is certain to ignore any legal subpoenas — but the private sector companies will not be able to do so without risking prosecution. “So they’re gonna start subpoenaing all these companies,” says Sanchez-Moreno.

The president can issue pardons, but those don’t protect against Securities and Exchange Commission investigations or civil suits. If they start to feel pressure, maybe these companies will also start to reevaluate the value of their investment.

Guilfoyle seems, at least, to be facing consequences. She has been forced to resign her ambassadorship, and there are calls for her to be investigated by members of the House Foreign Affairs Committee. The Trump family has thrown her under the bus, with the President distancing himself from her on Tuesday.

But the Guilfoyle case was just a glimpse of the raw inside workings of how truly shameless the corruption can be. She has resigned in disgrace – but Trump family themselves will continue to make out like bandits, and there’s not much that can be done to stop them.

And yet, after a rally to an all-time peak at the start of October, Bitcoin has fallen hard, shedding some 15% of its value in just the last two weeks. Sharp volatility isn’t unusual in crypto but this pullback has happened at a time when the broader market has either held steady or kept rallying. G7 markets are off by 1 or 2% but emerging markets remain buoyant. Meanwhile, gold — the heavier, klunkier version of the “digital gold” that Bitcoin purports to be — is soaring, rising 7% over the same two-week period, and taking its gain since the new year to an eye-popping 60%.

It could be that Bitcoin’s seemingly relentless upward climb will resume in the coming days and that all this will turn out to be much ado about nothing. But the past fortnight could also be a harbinger of its eventual demise. The Bitcoin oligarchs may find it eventually explodes in their hands.

When Bitcoin was created amid the angry fallout from the 2008 bank bailouts, it was designed to take money out of the hands of the bankers and oligarchs who dominated finance and hand it to the people, offering them an alternative system in which to conduct their business. Its political purpose was buried in the very first block of Bitcoin mined, which contained the line:  “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” The digital currency was built upon the novel blockchain technology, which substituted a digital chain for the ledgers used by banks to record transactions, enabling users to thereby circumvent the banks. By fixing its supply at a maximum of 21 million, Bitcoin’s creators ensured that unlike the fiat currency managed by central banks, it could not be devalued: the more money central banks printed to re-capitalize the collapsed financial system, the more valuable Bitcoin would become.

Yet the revolution in finance it was meant to bring about never took place. True, for those rebels who got in early, Bitcoin has certainly paid off handsomely. Worth mere pennies at its creation, it surpassed the $10,000 mark by the end of its first decade and is worth over $100,000 today.

Beyond that, though, not much remains of Bitcoin’s early, idealistic vision. There was admittedly some democratization, as over 50 million people bought Bitcoin — more if one includes people who’ve bought shares in funds that own Bitcoin. Yet it never managed to become an actual currency, being too cumbersome and volatile to be useful as a medium of exchange.

More tellingly, the crypto universe is now dominated by a handful of oligarchs managing large funds and “Bitcoin treasuries” who, by forging close ties with the Trump administration, have used state patronage to boost their asset values, much as the banks did in 2008. Trump and his family have themselves reportedly made $1 billion off their crypto creations. And with investment banks now offering crypto products to their clients, the formal takeover of crypto seems complete. This isn’t the radical, decentralized financial system we were promised.

Rather than treat crypto as an alternative financial system, these “crypto-garchs” have turned it into a speculative asset, whose price they manipulate through Bitcoin treasuries — large funds whose purpose is to take Bitcoin off the market so as to further boost its price.

The biggest of these funds is MicroStrategy (which, though recently re-branded as Strategy, still goes by the stock-ticker label of MSTR). MSTR was originally a software company founded in 1989 by American entrepreneur Michael Saylor. After a history of setbacks and repeated run-ins with regulatory and tax authorities, Saylor finally found his pot of gold in 2020. At that time, as central banks responded to the Covid crash by flooding the market with money, Bitcoin rallied strongly. Saylor used his company’s cash to buy a relatively small stash of Bitcoin. When it rose in value, his plan took flight.

The business model was simple: by buying Bitcoin in large quantities, MSTR helped bid up its price. As the value of its holdings rose, so did the company share price. That meant MSTR could both sell new shares and raise new debt, further boosting its holdings. And on it went for the next four years in a virtuous — to the company and its shareholders — upward spiral. The value of MSTR’s Bitcoin holdings rose from $250 million in 2020 to over $40 billion this year, while MSTR’s share price shot up from $12 to over $400 in the same time span. Other funds soon followed suit, and today the vast majority of Bitcoin are held by just 2% of its owners, with a few dozen of them alone controlling a fifth.

Taking over the market in this way gave the crypto-garchs both economic and political leverage: economic, in that by removing Bitcoin from circulation they reduced the market’s liquidity, which amplified the impact of their further purchases, since they were now bidding for a smaller pool of Bitcoin. And political, in that they now had deep pockets with which to influence politicians in the 2024 election.

More from this author

Is the AI bubble about to burst?

By John Rapley

With the Biden administration taking a skeptical view of crypto, the crypto-garchs turned to Donald Trump. Although originally a crypto-skeptic, calling it a scam as recently as 2021, Trump saw the opportunity in forging ties with an industry that was then out of favor. The industry donated more than $130 million to election campaigns, with an eye on displacing crypto-skeptics and supporting their backers, led by Trump. In return, Trump promised to lift regulation and promote the industry.

After Trump won the election, he came good on his pledges. He appointed big crypto-donors such as Howard Lutnick to his Cabinet, ended investigations into firms such as Gemini, which is owned by the same Winklevoss twins who’d donated $3 million to his political action committee, and withdrew a lawsuit against Coinbase, which together with some of its owners had contributed some $16 million to Trump’s campaign funds. After announcing his plan to create a strategic Bitcoin reserve, Trump hosted several crypto-garchs at the White House, Michael Saylor among them, to discuss its implementation.

All this paid big dividends to MSTR. In the month after Trump’s election victory, the price of Bitcoin rose over 50%, which enabled Saylor to return to the market with a major share flotation. MSTR raised $21 billion in share sales, giving it a powerful armory to juice the Bitcoin price further.

But for all its lucre, there was an obvious flaw in this plan. Given their dominance of the market, that amplification of the impact of their purchases worked both ways. Given the relatively low volume of Bitcoin trades on any given day, even a small sale will sharply raise the supply — MSTR alone owns more Bitcoin than trade daily, so even a small liquidation of its portfolio would cause prices to fall sharply. If the crypto-garchs sold in volume to cover their debts or meet expenses, they’d crash the market. In for a penny, they were now in for a pound.

The crypto-garchs may now be holding a time-bomb. If MSTR is anything to go by, the money may be drying up: of the $21 billion the company raised last year, MSTR blew it all in the following three months. Since then, the company has struggled to raise new share capital.

The company isn’t under any imminent pressure. The debt MSTR raised to buy Bitcoin doesn’t come due for another two years, and having purchased its stash of Bitcoin for an average price of around $74,000, it’s still nearly 50% up. But if Bitcoin doesn’t resume rising, MSTR will struggle to raise more capital. In the meantime, its purchases of Bitcoin are diminishing, and failing — for now, at least — to bolster the price. MSTR is still buying Bitcoin at a weekly rate, but it is paying above market rates and its purchases have grown much smaller. Amid this, smaller Bitcoin treasuries are now starting to go to the wall.

This may explain why the gold market is booming as Bitcoin suffers. It appears that investors believe that if the only thing left of Bitcoin is a digital equivalent to gold — a store of value with limited fungibility — they might as well stick with the original. After all, humans have turned to gold amid social and economic crises for millennia, but have only held Bitcoin for a few years. If they sense a major crash might be coming, atavism may lead them back into the fold of what they know to work.

In the short term, given all the favorable tailwinds, it seems more likely than not that Bitcoin will resume its rise. But the events of the last two weeks may foreshadow Bitcoin’s eventual endgame: the spark that lights a fire under markets. Bitcoin has now spread so deeply into the formal system that a major crash would likely force other liquidations as fund managers looked to cover their losses, possibly starting a chain-reaction through markets. And while oligarchs in 2008 had every reason to expect the government would bail them out, this time might be different. The proportionate size of US debt has doubled in the intervening years, and bailing out the Bitcoiners would likely send bond yields soaring. The crypto-garchs may thus not find the shelter they’d expect in a storm.

If this ends up toppling a few oligarchs, Bitcoin’s original creators may feel their vision came true after all.

The episode reminded me that while toddler art is probably not worth that much money, it was the original impetus for my accidental second career as a writer. When my daughter was in preschool, I used to swap photos of her latest finger-paintings and collages with an art-world friend, accompanied by titles, dates, and solemn thematic commentary in the style of a contemporary gallery. Then I posted a few of these online, and was surprised when the blog went modestly viral. Another friend saw it, encouraged me to write more, and now here we are.  

But what even is “art”? What is it for? How can anyone tell when something is “art”? The whole bit for that toddler-art blog was the fact that sometimes it’s genuinely hard to tell whether a painting was done by a graduate from Central St Martins or by a sticky preschooler in a bib. Nothing, that is, except where it’s displayed, and the price tag. Sometimes not even that: German child artist Laurent Schwarz, now four years old, regularly sells paintings for thousands and recently landed a marketing deal with paint manufacturer Relius. 

We might be forgiven for wondering whether the definition of “art” isn’t as elusive as the one given in 1946 by US Supreme Court Justice Potter Stewart, to define “obscenity”: “I know it when I see it”. But there is surely more to the question than just personal judgment, not least because not even “art” is immune to today’s omnivorous, omnipresent culture war. 

Nowhere is this more painfully obvious than in the public art installed on plinths and in high-traffic areas, where new works routinely attract Right-wing complaints of “wokeness”, or of ideologically monolithic elites imposing weird, mutant iconography de haut en bas. The painter Alexander Adams, one of Britain’s more vocal conscientious objectors to this moral monoculture, writes furiously of an insular internationalist consensus that has sewn up government and philanthropy, and now operates as a closed shop. So what is this closed-shop promoting? 

If we’re to believe the Box venue in Plymouth, it’s art as a kind of therapeutic emollient for the soul. The venue recently published an independent report claiming it has made a £43-million contribution to local communities, including by reducing dementia and depression, and improving visitors’ health and productivity. In this view, an arts venue can be seen as contiguous to, and as a kind of extension of, other municipal “services” such as leisure centers and doctors’ offices. But this suggests nothing grander in aspiration than “art” understood just as a supplement one can take, like cod-liver oil, in order to function more effectively as a fungible work unit: as something barely distinguishable from any other kind of improving leisure activity, such as swimming or studying Spanish.

Suggested reading

Britain’s cliquey art world

By Bruce Clark

Is that all? Some might say the only thing that makes modern “art”, as per the joke of my old blog, is a context which signals to the viewer that they should perceive something as “art”. To take one famous example, a urinal is for men to pee in, until it’s signed and submitted to an art gallery, as by Marcel Duchamp in 1917. At that point it becomes “art”, or maybe a lightning-rod for debate about the nature of art, or indeed more recently a byword for the absurdity of recent efforts to “Westernize” Afghanistan at gunpoint. 

In this rarefied and highly intellectualized context, then, we might claim that it doesn’t matter if the toddler did the painting, or if the banana duct-taped to a gallery wall is the “original” banana or a replacement after another artist ate the first one. What matters is everyone playing along that this really is an “artwork”.

But if it’s all really that abstract, why the concerted efforts now afoot across the developed West to re-moralize art? No major gallery seems immune to curators hell-bent on “reimagining” and “decolonizing” the archives, or public-art consortia commissioning works on leadenly pious progressive themes. Taken together, it all suggests (implicitly at least) an intuition that there’s still more to “art” than just whatever I like or find intellectually stimulating, or else (as in Plymouth) therapeutic leisure for “communities”.

When “art” is so contested, it’s difficult to see why this would be the case. For a clue, though, take a walk round the Sainsbury wing of the National Gallery, which houses medieval and Renaissance paintings. Do that in the right frame of mind, and you can sometimes catch a glimpse of what “art” used to be, before it was “art”. But it’s tricky; for unlike modern “art”, which sometimes only reads as such because of the gallery context, premodern paintings have to be considered outside the gallery context before they become legible. 

Even though, today, the National Gallery hangs these works as though they are “art” in the modern sense, many were originally painted for churches or private chapels. In their original context, these were not “art” in the sense of something nice to look at on the living-room wall. They were for spiritual use: devotional objects that happen to take the form of pictures. 

Artistic works with a spiritual orientation, such as paintings of scenes from the Bible, rest upon a radically different set of assumptions about their own grounding. The older stream of Christian thought within which such works were created believed these should point beyond human experience, toward what classical philosophy called the “transcendentals”: a dimension that now survives only in classical Christian pedagogy, under the heading “the good, the true, and the beautiful”.

It’s difficult to imagine a mainstream contemporary artist today talking in these terms. Why? The Swiss theologian Hans Urs von Balthasar argued that, especially since the Renaissance, the West has by degrees turned away from this transcendental approach to aesthetics, replacing it with a more human-centric approach to the creative arts. In the process, the arts came adrift from the divine. Churches were cleansed of imagery by Puritan iconoclasts; in the wake of this rupture, across the ensuing centuries, “art” flowered in its familiar secular form. 

These are the kinds of works that would, in time, occupy the “gallery” setting: artifacts that hover awkwardly between decoration and their former link to the spiritual world. This association still persists, albeit in degraded trace form, in the instrumentalist view of an art venue as a kind of spiritual cod-liver oil. But beauty gradually came to be understood as “for” only itself, then as something entirely subjective — and finally as irrelevant to the real domain of “art”, which is pure idea. In this outlook, it doesn’t matter if the banana gets eaten and replaced; there is no banana, just the idea of one. Now, though, this economy of abstraction may be approaching a terminal state — and, out the other side, showing early signs of re-moralization. 

The most recent sale of the banana “artwork” was for a whopping $6.2 million, to a Chinese cryptocurrency entrepreneur, who vowed to eat it (again) as his contribution to the “work”. And what makes this so intriguing a development is the parallel between this kind of “art” and the cryptocurrency that paid for it. Cryptocurrency’s purely abstract, un-grounded economy and its mimetic process of assigning value bear a strong resemblance to the one in which this kind of conceptual art acquires value and is traded. 

More from this author

Is the radical Right a crypto scam?

By Mary Harrington

Just as crypto has no material referent, and gains its value via the aggregate of purchasers’ belief in its value, so “art” in the banana or urinal (or toddler painting) sense floats largely free of any stable aesthetic, cultural, or even material referent. These meme-worlds in turn come together in the lively market for “artworks” in the form of non-fungible tokens (NFTs), such as the “milady” and “bored ape” genres. 

But this isn’t the only way the internet is shaking up art’s state of terminal abstraction. As well as threatening mediocre creators with a tide of AI-generated “slop” imagery, those deft enough to use it, and clear enough in their vision to build a following, are finding ways to thrive outside the state-art cartel — whether by connecting like-minded dissidents, as Adams observes, or by enabling sales directly to customers. 

And here, notwithstanding the slop-tide, there’s still demand for real work, by real artists. But the kind of art that enables an artist to build a platform in this environment is very different. The self-taught British painter Ross Baines, for example, paints portraits for MMA fighters, along with themes from pop culture and (and not very progressive) politics. Recent works in this vein include a portrait of the murdered American conservative activist Charlie Kirk, and a work based on a viral photo from the recent Unite The Kingdom rally in London, showing a man atop a stone lion on the South Bank, holding a cross and St George’s flag. There is no way on earth Baines would be able to sell prints of a painting from a Tommy Robinson rally if he relied on mainstream galleries to stock his work. 

The internet, then, is driving “art” out the other side of abstraction in search of engaged buyers. Is a painting of a Tommy Robinson rally “the good, the true, and the beautiful”? Debatable; but it’s a step in the direction of reconnecting painting with a moral vision. And the same trend is even discernible, albeit mostly negatively, in the kind of “woke” public sculpture conservatives love to hate. For unlike the kind of abstract public art that characterized the 20th century, the “woke” kind is progressive precisely in its attempt to “subvert” some variation of the good, the true, and the beautiful. And this still means tacitly acknowledging the transcendentals themselves. 

Meanwhile, outside the progressive arts-industrial complex, creators are less self-conscious about re-moralizing their work. Baines isn’t my cup of tea, but he’s creating heroic iconography for an audience of (I’d guess) largely secular Right-wing men. His work seems to find buyers. Others, such as the podcaster and Greek Orthodox icon-artist Jonathan Pageau, are more frankly spiritual in their subjects — and likewise seem to find buyers. Notably, Pageau has done an end-run round the gallery ecology, selling his work exclusively via a digital portal he himself controls. But importantly, his work is not “art” in the modern gallery sense; it’s closer in intent and function to the paintings now, misleadingly, hung as “art” in the Sainsbury Wing. 

It would be a mistake to read any of this digitally enabled creativity as an “art movement”. It’s the opposite: a movement away from “art”, as such, in the anthropocentric sense we’ve grown accustomed to, toward a reunification of aesthetic and spiritual values. Whether in negative “woke” form or (however clumsy) dissident attempts at positive ones, the transcendentals are coming back. 

If there’s a struggle ahead, it won’t be over what “art” means, or which style of painting is desirable, or whether the banana is real. It’ll be over the fundamentals. What do we mean by “good”, “true”, and “beautiful”? The internet has freed a new generation of creators and visionaries to grapple with that question. We’d better hope they come up with something before the tide of AI imagery drowns us.

We only have Southern’s word for this, but a recent investigation by Pimlico Journal, into Robinson’s links with contemporary crypto ventures, contains some striking parallels. While viewing the livestream from Robinson’s recent Unite the Kingdom rally in London, Pimlico spotted a set of watermarks on the stream that seemed linked to crypto outfits: “Athena Bitcoin”, “UKFOMO”, and “UTKCOIN”. It then transpired that a crypto $UTK “token” has been launched, in conjunction with the rally, and aided by Robinson’s appearance on a number of associated X spaces.

You might say: so what? Political events often have business sponsors. And yet the nature of crypto means that links between cryptocurrencies and influencers are different in kind: the mutual financial interest is more direct, and the opportunity for self-dealing far more brazen. I’m also old enough to remember a time when anything less than a scrupulous public distance between business and politics was called “corruption”. And yet, again, if we pause the partisan finger-pointing for a moment it’s clear that the boundaries between business, tech, and politics haven’t just collapsed on the Right but also, long since, on the Left as well. This has just happened in distinct ways, and in service to competing visions for our high-tech future.

Crypto really is different to regular commerce, though — it really does have a natural affinity with radical politics, and especially the Right. This is, in both cases, because unlike bank-backed (“fiat”) currencies, or more traditional kinds of assets — such as shares or even property — crypto has no material referent at all. Arguably, this is somewhat true of every kind of currency except the old-fashioned kind backed by a “gold standard”, abandoned by Britain in 1931, and the USA in 1970. But it’s particularly true of cryptocurrency, which floats entirely free from any national bank. It resides entirely in computer code, and its “value” depends entirely on what its investors believe it to be worth: a dizzyingly abstract amalgam of desire, meme, and digital code.

Suggested reading

Donald Trump: crypto president

By Frederick Kaufman

These attributes mean cryptocurrencies are both unusually immune to political interference, while also being uniquely volatile and vulnerable to bubbles, gold-rushes, and — sometimes — outright scams. Crypto is popular with libertarians (as well as criminals) for its security, resistance to taxation and other forms of state interference, and its opacity from a conventional accounting perspective. And it is of course eminently possible to make large sums of money entirely legally via this route. But the crypto world can also attract dodgy and sometimes outright fraudulent activity, such as “rugpull” scams, in which fraudsters artificially inflate the value of a cryptocurrency, then abruptly withdraw their initial investment, plus profits, and vanish, leaving other investors out of pocket. The untethered, highly mimetic nature of crypto valuations also means a well-placed influencer who invested in a cryptocurrency and then encourages supporters to do the same might stand to benefit significantly as its value rises.

In the X spaces Robinson joined to promote $UTK, reports Pimlico, he claimed to know nothing about this terrain, merely encouraging his supporters to get involved out of a general spirit of supporting Unite the Kingdom. Is this the whole truth? It’s hard to be sure, though Southern did place Robinson in a meeting to discuss a crypto scheme with Andrew Tate back in 2018. But we only have Southern’s word for this; and she also reports that Robinson was so high on cocaine in that meeting he was barely coherent.

So perhaps he doesn’t remember. Conversely though, perhaps former Robinson aide Lucy Brown is telling the truth in her recent memoir, Hate Club. There, Brown recounts Robinson’s habit of diverting political donations to personal uses, such as buying drugs or extravagant gifts for a wife to whom he was routinely unfaithful. Brown describes further how “lying to keep Tommy afloat was just an unwritten rule of his entourage”.

Now, I have no reason to believe $UTK is a “rugpull”. And if we set aside conventional beliefs about keeping business and politics at least somewhat distinct, we might argue that it’s just an unconventional means of political fundraising, with a happy side order of personal profit. Maybe buying $UTK actually will funnel finance to some kind of patriotic activism, or at least to Tommy Robinson.

And we might argue further, in Robinson’s defense, that the $UTK cryptocurrency mashup of business and politics is reasonable on its own terms, as a response to a distinct but just as potent mashup of business and politics among his enemies on the Left — one that weaponizes purportedly neutral institutions including finance against the Right. More broadly, we might point to the way those clusters of culture-war issues we used to call “Left” and “Right” appear today more like two competing visions for the high-tech future.

The version of high-tech utopia that dominated more or less until Trump’s re-election mapped more closely to the Left. Sometimes associated with the WEF’s much-maligned “Great Reset” proposal, this picture emphasizes collective values, centralized state investment in “green technology”, and universalist social liberalism managed via digital surveillance and controls on speech, all with a side order of DEI. Though we can argue the toss about how genuinely “Left-wing” any of this is, taken together it represents a broadly progressive set of instincts that still commands some considerable institutional and corporate power — all tacitly and often explicitly supported by many big businesses.

By contrast, at least until recently, those who objected to this programme’s collectivism, compulsory “degrowth”, speech controls and “diversity” ideology have been more institutionally and politically fragmented, and have often found themselves at the sharp end of censorship and even wholesale exclusion from normal public life — even at the hands of institutions that, within conventional liberalism, were assumed to be neutral, such as banks. For example, in 2023  Nigel Farage was “debanked” by Coutts for his political views — despite being, by any non-partisan measure, a fairly mainstream political figure. Still more egregious was the 2022 Trudeau edict that forced supposedly private, independent banks to freeze the accounts of Canadian truckers protesting against mandatory Covid vaccination.

If the digitization of our infrastructures has re-designated formerly neutral institutions as ideological battlegrounds, this reaches well beyond banks. Right-wingers will, for example, point to the way an infrastructure of message-manipulation, consensus-manufacture and latterly “disinformation” management developed under Obama. In 2020, this architecture was weaponized to pressure social media executives to suppress the “Hunter Biden laptop” story, calling it a Russian plot. Right-wingers claim it cost Trump that election: the laptop was genuine, and contained revelations that could significantly have harmed Biden’s presidential campaign.

Against this, we’ve seen the rise of a Right-wing, individualist tech subculture that understands its values as orthogonal to, and sometimes an insurgent reaction against, the more collectivist vision of our tech future that dominated in the era of “woke capital”. When the libertarian and free-speech absolutist Elon Musk bought Twitter (now X) in 2022, one of the first things he did was release files exposing the extent of the Biden laptop suppression.

More from this author

Nigel Farage has thrown down the gauntlet

By Mary Harrington

In this context, opposing the Left inevitably leads to crypto, even with its occasional dodginess. Facing transparent weaponization of nominally neutral financial infrastructure, any political figure to the right of Farage could be forgiven for concluding that the only way of hedging against being financially “unpersoned” is to exit mainstream institutional infrastructure altogether. In this context, Robinson’s advocacy of $UTK could be read not as a scam so much as an effort to protect his movement against weaponized digital-era institutions. And this kind of dissident tech has tended to emerge from, and be promoted by, tech entrepreneurs in search both of profit and a world more in line with their overall libertarian instincts. This isn’t just Musk: other Silicon Valley leaders who broke for Trump in 2024 indicated that this was at least in part because the Democrats seemed so hostile to their combined political and business interests, across crypto and AI.

So perhaps this fusion of political and commercial instincts is also the context within which we should read the recent investigation by the New York Times into crypto, tech, and Trump. The Times explored possible causal links between a Trump administration deal with the United Arab Emirates’ ruler, Sheikh Tahnoon, on access to advanced computer chips, and the announcement two weeks earlier of $1.5 billion in investment in a cryptocurrency startup owned by a key Trump aide, by one of the same Sheikh Tahnoon’s investment bodies.

Coincidence? Hearsay? The Times chooses its words carefully. But while we might look with dismay at the collapse this evidences between public and private interests, crypto is hardly where it started — or even the Right. The boundaries had long since collapsed, in the years of “woke capital”, evidenced nowhere more outrageously than in the censorship-industrial complex. It just took a different form, and ordered itself to a different utopian vision. Now, though, it’s clear that the Trump administration’s new tech friends have both a financial interest in shaping the tech landscape to suit themselves, and also a different vision and set of priorities.

In both cases, the boundaries are long gone between business, politics, and innovation. But the previous, “Left”-coded, vision for this new hybrid postliberal regime was as a centralized, digitized, globalized, egalitarian green-tech utopia, powered by the free movement of peoples wherever they are needed. For this vision, the totemic built environment was the faceless, frictionless nowhere of the international airport.

By contrast, the insurgent, competing Right-wing, postliberal vision is just as digitized. Never mind the pocket-filling activism of some mid-tier, anti-migration influencer; at scale, its crypto-powered vision is of a decentralized, exceptionalist utopia, powered by nuclear fusion rather than “renewables”, that enables the Great Men of History to transform the world in their image. Its totemic architecture is not the frictionless, faceless Everyman airport, but the exuberant infinite horizon of the spaceport.

There is, though, no compromising between these visions. One will have to win. Would we rather have woke capital, powered by banks, management consultancies, and social media moguls? Or would we rather have techno-feudalism powered by AI visionaries and crypto billionaires? If a third option exists, it doesn’t have super-rich backers with skin in the game. And in the brave new world after liberal “neutrality”, that’s what makes the difference.

This moment in monetary history has become increasingly relevant in light of Donald Trump’s recent romance with cryptocurrency in general and Bitcoin in specific — the value of which has shot up 40% since Trump’s victory, and is now flirting with the $100,000 mark. The once and future President has taken to musing that alongside the United States national grain reserve, oil reserve, and gold reserve, he might consider adding a national Bitcoin reserve, much to the horror of the United States Securities and Exchange Commission’s Chair, Gary Gensler, who has promised to resign before Trump takes the oath of office.

What explains Trump’s conversion to the cause? Crypto lobbyists fuelled the Republican Party’s election effort with more than $135 million in contributions, including $7.5 million in Bitcoin, Ether, Dogecoin, Solana, and a variety of other crypto coins — a record of sorts, as crypto surpassed fossil fuels as the biggest political donor in the election cycle. This may well clarify why Trump’s media company has moved to buy stakes in the Georgia-based crypto exchange Bakkt — more than half of which is owned by the parent company of the New York Stock Exchange. As Goldman Sachs alum and crypto billionaire Mike Novogratz patiently explained to Yahoo Finance, the new administration will have an “overall pro-crypto attitude”.

This might all seem alarmingly futuristic. And yet Bitcoin has much in common with the humble wampum, along with shells, beads, bones, feathers, and all the other various and sundry forms of primitive money. These primordial currencies represent mankind’s earliest attempts to display status, to avert evil, to avoid risk, and of course, the desire to gamble.

As it turns out, all money is fake money. As far back as 1670, real estate investor Nicholas Barbon wrote A Discourse of Trade. Money, he observed, “is an imaginary value made by a law, for the convenience of exchange”. Physical material does not matter — hence the wampum being magically transformed into money by the quixotic New World settlers, who had arrived with dreams of utopia, personal power, and riches.

Yet in America, fiction has never meant not real. Before the Revolution, the colonies of Massachusetts, Maryland, South Carolina, Connecticut, Rhode Island, Pennsylvania and New Jersey defied the mother country by printing their own paper money — guineas and shillings based on nothing but the paper on which they were printed. This created foreign exchange hell whenever a colonist might transport their pieces of coloured paper from one territory to the next, a problem solved in 1789, when Alexander Hamilton figured out how to turn a mountain of foreign debt into the United States dollar. Debt didn’t scare Hamilton, nor does it frighten Donald Trump, whose companies have declared bankruptcy six times, with losses reaching into the billions. Given the devastating losses incurred by his casinos in New Jersey, why should Trump have any qualms about the underlying value of anything, much less Bitcoin?

The myth of any currency requires a creation story, and such is the case for Bitcoin, whose origins are shrouded in mystery. The first Bitcoin appeared on 3 January 2009: a long series of numbers and letters shimmering on a computer screen, a triumph of the libertarian imagination, a story no one yet believed. It was supposedly created by a man named Satoshi Nakamoto, who most likely never existed. No matter. Early Bitcoin aficionados took to calling their currency “Satoshis”. (In June, Trump tried to pull a similar eponymous trick with TrumpCoin, with much less favourable results, as it is presently trading at a tad more than one-hundredth of an American penny.)

In the 15 years that followed Bitcoin’s founding, the idea of a purely speculative store of value caught on, perhaps because blockchain technology fit the cultural moment so well. Here was a digital quintessence of nothingness that perfectly aligned with longstanding academic deconstructions of truth into metatextual black holes — the dour philosophes never realising that post-modern cynicism could possess cash value. The crypto bro, suckled on the teats of such over-arching nihilism, saw opportunity.

More from this author

The mythical masculinity of Donald Trump

By Frederick Kaufman

The revolution has well and truly left the ivory tower. The SEC’s recent approval of options trading for Bitcoin exchange-traded funds supercharged BlackRock’s and Fidelity’s Exchange-traded funds (ETFs), each of which attracted more than $3 billion in their first month of existence. There are presently 11 Bitcoin ETFs, which witnessed daily inflows of $1 billion last week.

The crypto bro’s contempt for the United States dollar is in keeping with MAGA’s denigration of status quo politics and disregard for standard economic wisdom (hashtag tariff war). In this regard, Trump has once again aligned himself with Andrew Jackson, the richest president America had ever known and a famously ill-tempered son-of-a-bitch who despised lineage, pedigree, and protocol. Like Trump, Jackson detested anyone or anything with more power or culture than he, so naturally he despised the East Coast banking elite. The result was his infamous destruction of the Second Bank of the United States out of mere spite against its genteel, priggish, and rather literary banker-in-chief, Nicholas Biddle.

What happened next may serve as a warning for today’s crypto maniacs. Stripped of a national currency, Jacksonian America turned to “wildcat banking” — a term referring to frontier financiers, no longer constrained by regulations or any oversight whatsoever, who set up their own banks in the farthest reaches of the uncivilised West. The assumption was that if their corporate headquarters were 1,000 miles away from anywhere, few people would bother to show up, wait in line for the teller, and cash in their paper currency. In one case, the Jackson County Bank’s holdings consisted of nothing more than a half-full drawer of lead, 10 penny nails, and fragments of broken glass — which, by the way, is more than Bitcoin can boast.

The remainder of 19th-century American financial history would be plagued by boom, bust, panics, and bankruptcy. To the rescue came commodity markets, which back then looked rather different to the kind of markets that BlackRock, Fidelity, the Winklevoss twins and Donald Trump have been backing for crypto. What everyone appears to have forgotten is that American commodity markets were created to stabilise the price of volatile necessities — such as bread — and in their heyday governed the price of everything from apples and plywood to silk and cat pelts. The balancing of the “future” price of imaginary wheat with the day-to-day “spot” price of real wheat turned out to be an extremely efficient way to overcome the chaos of ages past, a problem that had bankrupted farmers in times of plenty and starved citizens in times of scarcity.

Suggested reading

Why we still believe in gold

By John Rapley

These days, no one seems to know the difference between Bitcoin and bread — certainly not the commodity markets. There is no “spot” price for “real” crypto as opposed to “future” crypto because there is no real crypto. Not that that bothers anyone. Every bet placed on Bitcoin requires that the exchanges themselves buy crypto in order to cover the bets, thus creating what is known among the denizens of Wall Street as a “gamma squeeze” — and to everyone else as a self-fulfilling prophecy. The more people bet that Bitcoin will rise, the more Bitcoin rises. It was George Soros, the whipping boy of MAGA (and himself an expert in the baroque workings of commodity markets), who came up with the term “reflexivity” to describe the mirroring relationship of perception and reality in financial markets. In sum: perception trumps reality, pun intended. No wonder Trump recently dubbed Scott Bessent as his new Treasury Secretary — a man who was for many years Chief Investment Officer for George Soros.

The self-declared “crypto president” hearkens a return to long-deflated images of political power — not only to Andrew Jackson and his “pet banks” but to the age of primitive money, of the charismatic tribal lord in his headdress of eagle tails, his many wives draped in beads. Indeed, women have spent a great deal of human history being traded, bought, and sold, for women were man’s first bet on futures and options — a view that eerily aligns with Trump’s atavistic chauvinism.

Crypto is the allegory, the metaphor, the symbol of the Trump presidency. Both Trump and Bitcoin display the triumph of image over substance, emotion over reason, charisma over competence. Perhaps a country founded on dreams deserves such totalising vacuousness. It works great, as long as you can keep manufacturing those clams — and convincing everyone else they have cash value. For Trump, the day of reckoning has never come, and likely never will.

That day at the Music City Center, the once and future president delivered Bitcoiners a kind of political catnip. He promised lighter regulations on crypto companies, breaking with the enforcement regime of Gary Gensler, chair of the Securities and Exchange Commission (SEC). Trump also pledged a Bitcoin Strategic Reserve, holding BTC the same way the government holds oil for national emergencies. And Trump said he’d commute the life sentence of Ross Ulbricht, the founder of Silk Road, a dark web marketplace that helped to popularise Bitcoin. Ulbricht was imprisoned for distributing drugs and money laundering, and many in the crypto community feel he was treated unfairly.

More from this author

Five reasons Bitcoin is invincible

By Ben Schiller

I’ve been working in crypto as a journalist for 10 years and I’ve seen the interaction of the crypto community and US politics close-up. This was the first time I had heard a political candidate, let alone a presidential candidate, say crypto could finally have what it wants and needs: freedom. As Trump now prepares his triumphant return to the White House, it’s clear his strategy paid off. Crypto is an increasingly powerful constituency right across American politics. Now it enjoys a friendly ear in the Oval Office, and it could yet spur wider transformations right across the economy.

Until about 2018, crypto was a political non-issue. Its proponents may have thought it mattered in DC, but the truth is almost no one cared. Few used it; even fewer understood it. As an editor of a crypto magazine called Breaker, I discovered this first-hand. If I ran a story on crypto and politics, only the odd advisor or politician would pay attention.

But, then, the industry began donating to political candidates. Sam Bankman-Fried, who later went to prison for an $8 billion fraud, gave money to one third of Congress, writing cheques to politicians on both sides of the aisle. That balance made sense: in Congress, crypto was still largely bipartisan. Neither side cared enough to take a more assertive position on digital assets.

That’s where Trump saw an opportunity, claiming crypto for himself and his party. He recognised a rich and powerful community looking for mainstream acceptance, a community of innovators ideologically aligned on freedom and a belief in American capitalism. There was a clash between MAGA nationalism and crypto’s borderless ethos. But it didn’t seem to matter: each side was useful to the other.

Trump’s interest in and embrace of crypto helped turn Bitcoin into a wedge issue, with Gensler leading several aggressive enforcement actions at the SEC, often accusing companies of illegally selling securities. Something similar happened at the local level: several Democratic states banned Bitcoin mining, citing environmental concerns. Liberals also led a punitive attack — known as “Operation Chokepoint 2.0″ — on crypto companies’ ability to access banking services. Democrats, in short, were happy to let crypto die in America, with many companies considering relocating overseas as a result.

So when Trump stood before the Bitcoin Conference, claiming the US would become the “crypto capital of the world”, crypto was willing to help, willing to do anything it could to rid itself of the Democratic menace. And so it proved: Pacs and campaign groups helped rally the estimated 50 million American crypto holders to vote for Trump and other pro-crypto candidates in down-ballot races. To get supporters out, they also worked with powerful influencers who pushed the idea that crypto needed to work with Trump to survive. They described it as an existential crisis — and they weren’t completely wrong.

We don’t yet know how many crypto fans voted for Trump on Tuesday. But given that we know that crypto is mostly a young person’s game — largely the preserve of the very online and very talented — the signs are there. Compared with 2020, Trump increased his support among voters under 30 from 36% to 42%. Harris, for her part, saw a 5% drop in young backers compared to Biden four years ago. Could crypto have got out the vote? It certainly spent hundreds of millions of dollars supporting crypto-friendly candidates this election.

And the asset hit an all-time high when it was confirmed it had a friend in the White House. I imagine crypto’s influence on and in politics is now only going to continue to grow. The big question is how crypto will use its newfound power. It will look to expand the range of products it can sell legally, and improve its reputation with the general public — familiarity will help. Now it has the ear of the man in the White House, and Democrats know they can no longer afford to dismiss crypto. And crypto won’t dismiss politics. It will continue spending big: only last week, a leading venture capital firm pledged $23 million, earmarked for the 2026 election.

Suggested reading

The African village mining Bitcoin

By Ian Birrel

But will Trump deliver on his promises? He would have to commute Ulbricht’s sentence and oust Gensler from the SEC, replacing him with someone more crypto-friendly. And beyond these statements of intent, Trump needs to make some concrete moves. The biggest boon would be to pass a “Bitcoin Act” establishing the Strategic Reserve. Republicans, who are likely to control both chambers in Congress, could also pass legislation on stablecoins — the most popular form of crypto — and clear up the question as to which tokens in circulation are covered by long-standing securities law, which purports to protect investors. This last question is crucial, as a large proportion of the SEC’s enforcement actions involved the agency asserting that particular tokens were securities and under its purview.

If he did at least some of this, Trump would continue to be crypto’s guy, even if Democrats started playing nice. Certainly, Bitcoin’s attraction as hard money sits quite neatly with the Right’s suspicion of the Fed as an elite institution serving the elite, particularly at a time of inflation. But increasingly, people on the Left and centre-left are coming to understand that it is a symbol of people wanting more sane public finances and an end to the status quo that serves mostly boomers, Wall Street and Washington insiders. So with Elon Musk, another crypto supporter, at his side, Trump is perfectly placed to transform the position of the technology across American society, cementing its success within the mainstream financial system while elevating it as a political and social power bloc. Nashville was just the start.

Critics, not unreasonably, said crypto had failed to offer compelling use-cases, beyond speculation. They said it was a cesspit of money laundering and terrorism (its involvement in the latter tends to be vastly overstated). They said it was dangerous for the environment. They said it could never become part of the financial system, because key financial players on Wall Street would never accept it. Some even dared to bid a valedictory “Sayonara”, as they have hundreds of times before now.

Yet today, Bitcoin is trading at around $70,000, above its previous all-time-high of about $69,000. The world’s premier cryptocurrency now has a market cap greater than silver, and many expect it to reach parity with gold within a few months. Meanwhile, the rest of the crypto market, which slumped along lifelessly for much of 2023, isn’t far behind.

So, what’s going on here? What sparked Bitcoin’s resurrection? The truth is there are five principal reasons behind its revival, the first of which may seem rather obvious…

1. You can’t kill Bitcoin

It’s awfully difficult to eradicate something like Bitcoin. Its network is peer-to-peer and decentralised, with roughly 18,000 public nodes working to validate and maintain the network daily, and they work independently. There isn’t a central point of failure or vulnerability for someone or something to stop. It’s a self-perpetuating system. And, more importantly, Bitcoin has tremendous latent support in the world: there are more than 100 million Bitcoin holders globally and, characteristically, they do not respond to political pressure. Since its emergence 13 years ago, Bitcoin has purred along efficiently, steadily growing, even in the face of massive competition and numerous hacks (particularly to exchanges and individual wallets).

This resilience isn’t directly connected to price; Bitcoin can be resistant without the price going up. But the price is based on this sense of permanence. It’s a function of everyone knowing with certainty that the Bitcoin code can’t be changed and that the issuance of new Bitcoin isn’t a political matter. Unlike fiat currencies, which are subject to central bank issuing more or less of a currency depending on the economic circumstances, the issuance of Bitcoin is predictable. That’s a unique selling point in a world where everything, even money, is increasingly politicised.

2. The arrival of ETFs

Though the Bitcoin industry takes pride in its outsider status, it has long sought mainstream support, whether from regulators or blue-blood institutions. This January, after 10 years of trying, it hit the mother lode, winning SEC approval for Bitcoin exchange-traded funds, or ETFs. These vehicles, which helped to popularise gold in the 2000s, allow everyday investors to buy into Bitcoin as if they were purchasing a conventional stock. There’s no need to own the underlying asset or to store it oneself.

This convenience is propelling a whole new generation of customers to buy into digital markets via trusted names such as BlackRock and Fidelity. Recently, daily inflows to 10 approved ETFs averaged more than $1 billion, and analysts expect more than $200 billion in trade for Bitcoin in the next couple of years. If so, crypto will have a strong underpinning, helping it to weather regulatory storms and inevitable crises. And the Bitcoin ETFs are just the start. Many expect regulators to approve Ethereum ETFs in a few months and that, eventually, wealth managers will allocate up to 5% global savings to digital assets. Bitcoin is the gateway drug: once people hold Bitcoin in an ETF, the thinking goes, they’ll move on to more exotic digital asset investments later.

3. Regulation works

People in crypto tend to hate regulators and regulation, believing that people and institutions should be able to transact freely. They complain about regulatory interference in general and particularly about the type of intervention we’ve seen over the past year from the SEC. The lack of new legislation governing crypto in the US has led to a series of arbitrary enforcement actions by that agency, leading to a deep sense of mistrust across the Bitcoin ecosystem.

However, regulation can also be a useful tool for industries seeking acceptance. The trial and prosecution of Sam Bankman-Fried last November created a sense of clearing-house, of past failures being put to bed. Finally, many Bitcoiners believe, we can all move on. Meanwhile, the EU passed its comprehensive MiCA legislation regarding crypto, creating greater regulatory certainty within the bloc and showing other jurisdictions the way forward.

4. Elite approval

If you want a cast-iron indication of the new mood around Bitcoin, look no further than Donald J. Trump. Back in 2021, Trump said that Bitcoin was “a scam” that undermines the dollar’s place as the world’s reserve currency. But now he says, if he’s re-elected, he wouldn’t seek to ban it. “I have seen there has been a lot of use of that,” Trump said recently. “I’m not sure that I’d want to take it away at this point.”

Nor is Trump the only high-profile convert. BlackRock CEO Larry Fink has also U-turned, recently backing an Ethereum ETF to go with his company’s Bitcoin ETF. Even, the Financial Times and the New York Times, liberal institutions that have routinely amplified the routine criticisms of Bitcoin, are noticeably more accommodating these days, running approving articles to go along with all the jeremiads. (That said, central bankers, who have the most to lose from Bitcoin becoming serious money, are still lockstep against Bitcoin, even in the face of ETF mania.)

More from this author

How SBF killed crypto

By Ben Schiller

5. The world is going to end

The less palatable reason for Bitcoin’s rise is that it’s a hedge against very bad things happening. Bitcoin is “disaster insurance” in a world where traditional monetary mechanisms break down. People buy it because they don’t trust central banks. That’s why more than half the adults of Turkey, to take one example, own Bitcoin: because they think it will hold its value better than the Lira.

In this way, Bitcoin is the strangest of exotic assets: its price is both an indication of financial health in capital markets, but also an indicator of deep unease with the current social settlement. On the one hand, the mainstream approval of Bitcoin arguably makes us safer because capital markets are broader-based and people are diversifying into new categories. On the other, its resurgence shows that many people are concerned that the conventional financial system — and, by extension, the broad social system it is based on — is going to fail. They want to “exit” and find something that isn’t controlled by a few dozen middle-aged white men in suits. They want decentralisation away from narrow elites controlling our lives, whether it’s Wall Street, the Federal Reserve or Big Tech.

Having said that, the demise of today’s financial system, long foretold following the 2008-9 financial crisis, hasn’t happened yet. For now, we have the curious situation of mainstream financial institutions marketing the hell out of an asset that was once created to outrun and destroy them. The question is whether this uneasy situation continues indefinitely. Will the mainstreaming of crypto mean it’s sanitised of political and social meaning; that it becomes just another financial asset? Or will Bitcoin’s success lead where hardcore Bitcoiners have always wanted to go? For now, we don’t know whether the promises of global financial revolution made by some of Bitcoin’s more Jacobinical founders will materialise. But, even as it takes another tumble, with some of the new investor funds from early this year going into reverse, we can be sure of one thing: reports of its death were greatly exaggerated.

For electricity has arrived in Bondo. Three turbines were installed in a micro-hydro scheme exploiting the fertile region’s rainfall. And the impact has been life-changing for the 1,800 homes so far connected to a mini-grid. Children can study after dark, so now have a better chance of passing the exams for secondary school rather than having to leave aged 11. Drugs and food can be stored in fridges, so villagers do not have to make the 12-mile trek to the hospital and can produce batches of food or drinks to sell at market. Cooking the evening meal is three times quicker — and far less destructive to the environment — without the need to collect firewood.

One group of women giggled when I asked if they had televisions and watched football in their homes. “Before, our husbands would say they were going off to watch football when they were really walking out with other women. Now they can no long claim they are going off for football,” Bertha told me. The senior chief told me they had never dreamed of having energy supplied to the villages, with a dozen maize mills, many small enterprises, schools, shops and churches also connected to the grid. “When you move around Bondo you see happy people — and that’s because of electricity.”

Yet the big surprise in Bondo is not simply the supply of energy to such an isolated community, in a country where only one in eight citizens has access to grid electricity and on a continent where almost half the 1.2 billion population still lack this life-changing supply. The real eye-opener is the stack of 32 computers inside the concrete pump shed. This innovative mini-grid — located more than two hours from Malawi’s second city of Blantyre along bumpy roads and tracks that can become impassable in a torrential downpour — is mining Bitcoin to fund its operation.

It is a smart idea. The computers used to create valuable new Bitcoin tokens and validate transactions consume around the same amount of energy as a medium-sized country such as Sweden would generate. Hence the stinging critique of how this cryptocurrency wastes the planet’s precious resources. This initiative flips that narrative by using Bitcoin mining to fund energy in parts of Africa that are too poor or remote to merit connection to grids, but which do have plentiful supplies of potential power sources. Mining soaks up the excess energy of these renewable plants. And this delivers not just electricity but a powerful jolt to to drive development in the local economy.

More from this author

Why would anyone envy the NHS?

By Ian Birrell

The concept comes from a Kenyan firm, Gridless, set up in 2022, whose backers include Twitter founder Jack Dorsey. There are four other sites in Kenya and Zambia and plans for scores more across the continent. Its aim is to demonstrate how Africa could play a central role in countering the conventional belief that Bitcoin, now 15 years old, is used simply for risky speculation and dodgy transactions. Instead, it backs those who claim it will lead to more inclusive financial systems as it usurps the control of dysfunctional governments and manipulative central banks.

It will also release the community from reliance on foreign handouts to survive. The Bondo power plants were built by Mount Mulanje Conservation Trust, a local group trying to protect the mountain region’s unique bio-diversity, and were initially supported by finance from aid and development agencies — but now Bitcoin covers the running costs. This offers a commercial incentive that does not rely on altruism or subsidies to deliver power to remote regions, while exploiting energy waste at times of low use such as overnight.

Malawi, one of the world’s poorest nations, provides a powerful case study in the failures of aid. As former development minister Rory Stewart said in a lecture at Yale, Britain gave £4.5billion over half a century to this southern African country corroded by corruption and bad governance, yet it ended up “if anything, poorer than it was when we started”.

“Bitcoin can prevent Bondo becoming the sort of white elephant that you see across Africa, built by aid groups and then abandoned,” said Erik Hersman, chief executive of Gridless. He admits that he is “not a big fan” of the sector. “They come in with low-cost loans and grants to finance all these schemes that they say will pay their way in 30 years but the sums never add up. This is a new way to finance development.”

Malawi also demonstrates another reason why there is rising interest in Bitcoin in Africa: people are seeking a safer home for their cash than local currencies. Prices rose sharply after its currency was devalued two months ago by 44% against the US dollar — the second decrease in value of the kwacha in 18 months. Many African countries on the continent have suffered also from catastrophic inflation, while official currency conversion rates can be significantly lower than street rates.

Suggested reading

Inside Liberland: Europe's Bitcoin micronation

By Matt Broomfield

One Kenyan entrepreneur told me she turned to the cryptocurrency after seeing her savings constantly eroded even in a country with lower than average inflation for the continent. “I was trying to save to buy a house but kept finding my sums declining. I wanted more stability so tried Bitcoin, and then found it had other uses,” said Marcel Lorraine, founder of Bitcoin DADA. Her clients include a trader of alternative health products in a Nairobi street market, who found it much cheaper to use than changing currencies after being introduced to it by a Nigerian customer and is now hoping it will provide a stable platform for building her business to obtain a shop.

While Warren Buffet dismissed Bitcoin as “probably rat poison squared” and the economist Paul Krugman has compared it to a Ponzi scam fuelled by libertarian fantasies and “technobabble”, devotees see it as a liberating force due to the decentralised design created by its mysterious and pseudonymous creator, Satoshi Nakamoto. BlackRock, the world’s biggest asset manager, has even applied to launch a Bitcoin exchange-traded fund that may open up the market to the US wealth management industry.

Certainly Bitcoin, for all its fluctuations, can seem comparatively reliable if you live in Africa — or indeed many other parts of the planet, from Argentina to Lebanon. “This is what I have seen everywhere,” said Peter McCormack, who travels the world for a Bitcoin podcast. “Here is an alternative to gold and property for a middle class that has some money and patience, but is seeing expenses and costs rise while savings decline in value. And a strong middle class helps build a strong economy by driving consumer spending, reducing reliance on the state and driving innovation and entrepreneurship.”

Bitcoin has also become a helpful tool for activists and journalists in dictatorships, since it makes it far harder to track funds. In Togo, a West African state run by one despotic family since 1967, it is used to channel cash to opposition and civil society leaders despite the freezing of bank accounts. Bitcoin has been instrumental in delivering donations to Alexei Navalny’s Anti-Corruption Foundation in Russia and the pro-democracy movements in Belarus and Myanmar.

Suggested reading

Workers have lost faith in money

By John Rapley

Alex Gladstein, chief strategy officer for the Human Rights Foundation and author of a book arguing that Bitcoin offers freedom from archaic monetary systems and political strife, believes the cryptocurrency is especially exciting for Africans, since they suffer “all kinds of financial repression”. He points out there are 45 currencies on the continent — with 15 still controlled by France — with high transaction fees on conversion deals that are largely processed by Western firms with heavily-fluctuating rates. “Bitcoin provides an escape and an alternative for Africans while its use is less limited than some people think,” he says. “Entrepreneurs there have figured out how people without the internet can use Bitcoin, which is frankly remarkable.”

This agility is typical of the technological innovation exploding across Africa, driven by a young, rapidly growing and increasingly well-educated population. “The beautiful thing about Bitcoin is that it is a bottom-up technology and its adoption has been genuine at all levels,” said one key figure at the second African Bitcoin Conference in Ghana at the end of last year.

Only time will tell if Satoshi’s invention will turn out to be a bubble with bad consequences or, as optimists believe, a driver of profound change in the world. The fraud conviction of Sam Bankman-Fried, who ran one of the world’s biggest cryptocurrency exchanges, and admission of money-laundering by the boss of another major exchange has hurt the reputation of cryptocurrencies for many in the West. But Bitcoin certainly seems to offer something positive in societies scarred by autocracy, colonialism, military coups and woeful governance — as seen with those computers in a concrete shed in rural Malawi turning water into streams of cash to fund electricity.

The idea of setting up an “independent” nation has always been attractive to libertarians, even though a half-century of attempts to establish tax-free idylls have produced no tangible results beyond angering locals and wasting the pocket change of billionaires like Peter Thiel. Partly in response to this, the more artistic tradition of “micronations” has been overtaken by a particular trend of Bitcoin-fuelled ultra-libertarianism, which implies less a release from state repression than a form of anarcho-capitalism. This vision has more in common with Dubai’s brand of free-market authoritarianism — a vision of ultra-rich luxury and labour exploitation — than any true utopian ideal.

Vit Jedlička, a ruddy-cheeked, stout-chested libertarian ideologue and self-styled President of Liberland, is as emphatic as he is energetic. “We are not a micronation, but a nation of 700,000 people, with embassies in 80 nations, and relations with countries like Haiti, Somaliland, and Malawi. We’re serious about getting Liberland set up as a country.” Never one to undersell his project, Jedlička clearly has tremendous fun barrelling around the world promoting Liberland. Nominally based out of this scrap of marshland the size of Gibraltar, but largely operating online, it’s a Web-3 nation: businesses unfettered from regulation, a skeleton state providing only basic protections, and “citizens” issued with voting credits based on the amount of voluntary tax paid.

Never mind that none of those would-be citizens actually live in Liberland — instead there is a handful of activists moored downstream on a houseboat, under the close supervision of the Croatian police. Never mind that its diplomacy is rather more limited than Jedlička suggests, with the citizens of Malawi recently ridiculing their government for getting involved with a nation that is never likely to exist. The President is always ready with a litany of soon-to-be realised projects and promises, hinting at deals and meetings with billionaires and politicians. The crash in the crypto market is a blip; a Liberland houseboat has been torched, but there will be an insurance payout. Every potential threat is recast as proof his project will succeed.

We first meet in a half-finished holiday camp Jedlička has purchased on the Serbian side of the river. And there is a clear tension between this “eco-village” (a “diaspora” site where Liberland’s first “settlers” will train in survival and negotiation skills) and his Serbian supporters’ frustration at the lack of a clear business plan. But, even if its “ambassadors” are paid lobbyists or random Bitcoin enthusiasts, Liberland does have more political reach than other libertarian micronations. This is partly a product of Jedlička’s gregarious personality, which has kept the project alive since it began in 2015. Due to an arcane, post-Yugoslavian boundary dispute, neither Serbia nor Croatia prefer to lay claim to the 7km²  of territory, leaving it — Jedlička says — “terra nullia” for the taking. (The Croatian authorities disagree, tolerating the Liberlanders’ presence on their territory, but denying them access to the contested patch of land.)

More from this author

Is Serbia a pro-Putin outpost?

By Matt Broomfield

But this reach is also thanks to the political moment into which Jedlička announced his project. The conservative Czech politician found a natural home in the heady world of Web-3 technologies, securing capital backing (through cryptocurrency investments) and the means to place Liberland’s constitution on the blockchain in perpetuity. He generated a growing, global interest in his ultra-libertarian vision — resulting in collaborations with big-name architects, the Polkadot cryptocurrency development fund, and a host of global Bitcoin fans, including the Liberian (not Liberlandian) Consul General to Dubai, currently living on a barge just outside the UAE in imitation of Liberland’s ideals.

For Jedlička, these international supporters “understand the economic potential of a truly free zone in the European Union… they like the vision, and want to watch”. He presents it as “combining aspects of the most successful states to date”, bringing together Singapore-style meritocracy, the town-hall democracy of early America, and the low-tax environment of European microstates such as Monaco or Liechtenstein.

In practice, such a system would face immediate issues. As we ride rickety bikes along the course of the Danube, Jedlička says he prefers the “right to set up a lemonade stand in the street over the right to cycle down it naked”, suggesting that the freedom to practice business should trump personal liberties. Yet this approach opens the door to all manner of abuses, since those individuals or businesses able to spend the most money will also be able to determine law and policy, by securing the most voting credits. Already, in Serbia’s Liberland-linked tourist village, a promised wage of €600 a month has proved insufficient to retain the skilled workers needed to complete the camp, leaving it half-finished. The “non-aggression principle” proposed to prevent direct physical harm between Liberland citizens offers no protection of basic rights. There is no health or social care, workplace protections or minimum wage. To the Liberland activists, “welfare state” is a dirty word.

Other liberties would also come under threat. The project has been troubled from the outset by the question of whether free movement of peoples would be allowed, with Liberlanders congregated in the Serbian eco-village mocking the emailed residency applications of confused Middle Easterners who mistake the country for a real polity. While Jedlička generally presents an optimistic, modernising political model, Serbian supporters who drove up from Belgrade to visit their President describe themselves as proud “conspiracy theorists”. And this isn’t libertarian trolling: they cite the Protocols of the Elders of Zion and Ku Klux Klan associate Albert Pike in arguing that the world faces an imminent race war orchestrated by the same Jewish New World Order they allege was behind the Holocaust. Given no-one actually lives in Liberland, Jedlička is free to place his trust in a notional citizens’ veto to prevent abuses of rights. But it remains unclear how a clash between libertarian ideals of free movement and the survivalist, white-nationalist inclinations of many its followers would be avoided.

Jedlička is able to evade these issues through a mixture of blind confidence and the fact that his project exists only on paper — or on blockchain. A fully-fledged Liberland would resemble real-world microstates, in that it would rely on either the continued “mining” of cryptocurrencies or on accommodating international capital as a tax haven. Quoting a sympathetic, Belgrade-based think tank, Jedlička suggests a tax haven on the Danube would bring a GDP boost to neighbouring states.

But other libertarian projects have failed following local opposition: the 1972 “Republic of Minerva”, an attempt to establish a microstate on reclaimed land in the ocean near Tonga, came a cropper when locals decided not to allow rich Westerners to enjoy a tax-free oasis at the expense of their fishing rights. More recently, a “seasteading” project which aimed to establish a floating utopia near Tahiti, initially backed by libertarian billionaire Peter Thiel, met a similar fate, collapsing following angry protests from locals opposing a “megalomaniacal” project with no clear benefit to the local economy.

Recent attempts to establish crypto-friendly communities of expats in Puerto Rico and Central America have also foundered. Notoriously, El Salvador has witnessed a protracted effort by its president, Nayib Bukele, to force locals into using Bitcoin, while attracting the Western crypto elites to free-market resorts intended to serve as Bitcoin playgrounds. The attempted pivot to virtual currency has been met with indifference and protest. Following the recent crypto crash, the nation came close to defaulting on its sovereign debt. Bukele’s Bitcoin roll-out has also gone “hand in hand” with the introduction of a “police state” characterised by widespread arrests, detentions and torture, including the arbitrary arrest of those opposed to the government’s bitcoin policy. Liberland’s nominal finance minister Navid Saberin, a Luxembourger businessman, admits he personally visited El Salvador and found “no-one had anything good to say” about the Bitcoin pivot. Yet he also remains wholly optimistic that Bitcoin will bounce back, restoring his fortunes and justifying Bukele’s efforts.

Jedlička worries that finance journalists dismiss Liberland’s political programme as too utopian. In reality, the opposite is true. If realised, his “vision” would result in a dystopian combination: reliance on foreign capital which creates little benefit for local communities, undergirded by authoritarian excesses in defence of those elite financial interests. The Liberland proposal is not a challenge to the current economic order. It is its fullest expression, stripped of all protections, checks and balances.

Suggested reading

Workers have lost faith in money

By John Rapley

But this vision has its appeal. In the surrounding states, crony capitalism beholden to EU investment has brought few benefits to ordinary people. Liberland’s President is a genuine and infectious believer in personal sovereignty, and it’s little wonder frustrated young people are attracted by his dynamic, untrammelled version of capitalism, as they are by the get-rich-quick crypto promise. And though Jedlička is keen to distance himself from more playful, performance-based micronations, the political model has also been used to register protest against authoritarianism and homogenisation. Protest projects such as Germany’s Free Republic of Wendland or New Zealand’s Independent State of Aramoana stood up against the profit-driven destruction of local communities and environments, with the latter successfully resisting the state-backed imposition of an aluminium smelter. In nearby Slovenia, the Neue Slowenische Kunst (NSK) used provocative appropriations of state insignia to critique state authoritarianism.

Though dismissed by Jedlička, this spirit of protest is inherent to both the micronation concept and the libertarian movement. There is room for a more productive critique of an admittedly exploitative global financial system rigged to benefit certain states, which also recognises the limitations of crypto and the role that tax havens and free-market ideology play within that system. For now, though, we have only Jedlička’s vision of Dubai-on-the-Danube, and its handful of loyal followers.

We knew little about Bitcoin’s creators, other than that they were angry at how the 2008 crash had been managed and wanted to create an alternative form of money to liberate people from banks. Set up using blockchain technology — a decentralised, digital record on a peer-to-peer network — Bitcoin transactions could take place without the need for a central clearing authority. Yet despite all the excited chatter that evening about the new businesses that could take payments or process transaction in cryptocurrencies, few of them went far. That’s because Bitcoin, with its volatile pricing and high transaction costs, wasn’t really behaving like money. But I also suspected that didn’t matter. Because built into its design was a limit to how many Bitcoins could be produced, a feature that would enable it to exploit a design flaw in central bankers’ monetary policy — and ultimately reveal the façade of so much “wealth-creation” in the past decade.

At the time of the 2008 crash, a strict theology governed economic policy-making in Western countries. It held that monetary policy, determined by an independent central bank, should dominate economic management and should support the private banking system to the best of its ability. For obvious reasons, the crash spurred demand for change to this model across the political spectrum. But the economic policy establishment scarcely noticed. Instead, it faithfully applied its doctrine. The banks were bailed out and, to ensure asset prices quickly bounced back, central banks flushed the financial system with cheap money, and not just with its traditional method of cutting interest rates.

Starting at the US Federal Reserve and then following on in 2009 at its British and European counterparts, central bankers adopted a bold new policy that had been pioneered in Japan: essentially handing money to banks by buying their bonds at near-zero interest, something they called quantitative easing. The theory, derived from studies of the Great Depression, was that by pouring money into the corporate sector, the central bank could get businesses to invest and thereby create new jobs. But economies had changed a great deal over the intervening century, and rather than kickstart a recovery, the money flowed into existing assets, producing big bull runs in stocks, bonds and real estate. Still, central banks were happy, saying the resulting wealth effect — asset-owners feeling richer — spurred consumption, and supported economic growth.

Suggested reading

Will America win from de-dollarisation?

By Thomas Fazi

But that’s not necessarily how ordinary folk saw matters. Real wages remained stagnant, even as house prices and rents on homes or new business premises were all rising by the month. And not coincidentally, these were the years of populist rage against elites and “experts”. But while some took to the streets, a secondary revolt took place: infiltration of the financial system. Enter Bitcoin, which offered a means to hack the regime of quantitative easing. Since its supply was fixed, any portion of the wave of money that central banks pumped into markets which was used to buy Bitcoin would drive up its price, inflating a bubble.

That’s just what happened. By 2021, that $100-a-pop trade I’d touted back in 2013 had soared past $60,000. And on its vertiginous journey, as others saw the easy money to be made off gaming monetary policy, spin-offs multiplied, from non-fungible tokens to meme stocks on trading boards. Such innovations took on a sharp political edge on Reddit boards such as r/wallstreetbets, where traders organised short squeezes that caused losses at big funds, and then celebrated those victories. “We have a once in a lifetime opportunity to punish the sort of people who caused so much pain and stress a decade ago,” wrote one user in 2021, “and we’re taking that opportunity.” But though such victories were usually fleeting, and the new inventions not only ethereal but often utterly ultimately meaningless, they succeeded in making their point. What amounted to currency debasement by monetary authorities had meant that what was worthless could become priceless.

The fact that cryptocurrency was more or less imaginary, that it had no physical reality, that it was nothing more than a sort of elaborate confidence act, was beside the point. That’s true of all money. Although we rational moderns claim to believe only in “facts”, and thus impart the language of cold empiricism to any talk of money — hard cash, real money, solid gold — in reality few things are less concrete. We think of money as cash, but cash is insignificant in the money supply (when was the last time you used it?). We think the government prints it, when we actually create it ourselves from thin air via bank-borrowing. The government can’t even be sure how much money exists.

Suggested reading

America's empire is bankrupt

By John Michael Greer

Nevertheless, we’re willing to transact business with millions of people we’ll never meet, using a medium of exchange we don’t understand, simply because we trust in its fungibility and solidity. Those figures in our banking apps may be nothing more than code on a server, but we trust them to still be there tomorrow, to have essentially the same value today as they did then, and to be available as a universally accepted means of payment. The whole system is backed by an elaborate financial and legal architecture, mediated by a central bank, and is ultimately grounded in our faith. And that faith has enabled us to do miraculous things, from developing new technologies to lifting billions from poverty.

But faith is also fragile and easily broken. When we lose it, when people begin to doubt the solidity of money, inflation results. So when central banks waved off surging asset-prices as not real inflation, many took it as a betrayal, for it was plain to see that asset-price inflation benefited some more than others. It looked suspiciously like central banks were increasing the value of money used by owners while debasing the money used by workers. The modern priesthood revealed itself to be manipulating our faith to serve the ruling class, and the temple erupted in rebellion.

Mainstream economics claimed it “saved the world” in 2008. But they provided the material conditions for the crisis of political faith across the West since that fateful year, first in the way the economic models used at the banks helped cause the crash, and then through a recovery which generated wealth for owners and immiserated workers. And amid all the self-congratulation, central banks and economists took no heed of the multiplying signs of distress that their crisis produced: the explosion of street protests, the declining support for democracy, the epidemics of mental illness and “deaths of despair” in America. All such dysfunction was dismissed as outside the bounds of macroeconomic theory. So the vandals infiltrated the system and made the “experts” notice where it hurt, in the asset-markets.

Suggested reading

Capitalist radicals will shatter the world

By Quinn Slobodian

After a decade of sucking up the cost of asset-price increases, workers recently started to claim back some of their losses with stronger wage gains, changes in labour markets having improved their bargaining power. But rather than cut the record profit-margins attained during the pandemic to absorb the cost, firms have simply passed the bill to consumers, leading to the consumer price inflation we now see. No longer able to pretend inflation isn’t a problem, central banks have had to tighten monetary policy aggressively. When that tightening began, when it appeared the era of cheap money had finally ended, Bitcoin crashed.

But when the ructions began spreading through the US banking system again recently, central banks eased up on the money brakes. Bitcoin rallied once more. And so it will continue. Investors are betting the days of cheap money will soon be back and have begun buying again and driving down interest rates. Central banks are insisting the pause is only temporary, and they are determined to stamp out inflation. So they now face a painful dilemma. They can prosecute their war on inflation and clamp down on the money supply, standing by while investors and fund managers wail over their losses. Or they revert to their old ways: heed the call of asset markets, keep prices rising, and allow inflation to linger, which would amount to a dereliction of their duty to the economy as a whole.

To know which way the wind is blowing, watch Bitcoin, the imagined currency that has become real, and is our most useful measure of faith in global finance. If central banks revive the neoliberal theology of 2008 — rescue the owners, forget workers — they will continue to lose their congregation as the apostates flock back to cryptocurrencies. But while a renewed bitcoin surge would indicate a deepening of the crisis of faith, there are signs that economists, and even some central banks, are noticing. New voices have begun pushing back on the dogma that generous social spending or rising wages cause inflation, and some central banks are even starting to admit that maybe, just maybe, it’s excess profits that are the inflation bugbear.

Bitcoin may still crash. But if along the way it shamed the priesthood into serving the people, it will have been no mean feat.

The absence was especially surprising to Furio Tedeschi, the artist who designed the bull. He had submitted his design to Tradestation with “huge, mechanical balls” — only for the firm to neuter it. “Prosperity and wealth shouldn’t have any gender,” a company official explained. It might seem odd that a symbol of the overwhelmingly masculine crypto community — it is estimated that 94% of crypto accounts are owned by men — has been castrated in the name of diversity. But for a product built on faith, appearances matter.

That the price of various cryptocurrencies, including Bitcoin, began a spectacular decline only weeks after the bull was neutered is the kind of irony that crypto-types would otherwise revel in. But as the realities of the “crypto winter” set in, there wasn’t much joy to be had in a community known for its in-joke culture. The collapse of a number of prominent crypto firms, such as FTX, last November saw crypto crashing to lows that hadn’t been seen for years. The price of Bitcoin dropped to $16,000, only a year after it reached a record high of $69,000, seeming to herald the end of a Bitcoin boom.

These rapid fluctuations in crypto prices were keenly felt in the neutered bull’s new home. While Miami might not yet attract as many crypto transactions in dollar volume as San Francisco and New York City — though it is fast gaining on them — it is one of crypto’s undisputed cultural centres, and has the fastest-growing number of tech jobs in the country. Describing the city as one that moves from “from hustle to hustle”, Miami mayor Francis Suarez has repeatedly praised crypto, once saying that it offers a “tsunami of opportunity”. Natural disasters aren’t usually a metaphor leaders reach for when promoting their cities. But in Miami’s high-risk, high-reward culture, where boom and bust cycles are part of doing business, his phrase feels appropriate.

More from this author

How manifesting was corrupted

By Elle Hardy

Suarez has opted to surf the tsunami, using traditional methods to promote crypto business, including a favourable ecosystem of tax breaks and friendly legislation, combined with an attractive lifestyle for workers. These perks have created considerable momentum for firms to move there: investment in Miami-based crypto start-ups jumped from $6 million in 2020 to $745 million just one year later. There has also been a steady stream of Bitcoin parties and conventions, encouraging potential investors to associate crypto with a lavish lifestyle. Indeed, some have had a little too much fun with crypto: last month, the US Securities and Exchange Commission froze $100 million in assets of Miami-based crypto company BKCoin and one of its co-founders, Kevin Kang. Describing it as a Ponzi scheme, in which investor funds were mixed with Kang’s, the SEC alleges that $371,000 alone was spent on sporting tickets, holidays and an apartment in New York City.

There are plenty of reputable crypto enthusiasts who argue that the currency is a hedge against inflation, and a bulwark against corrupt governments. The blockchain ledgers on which it is stored are said to be incorruptible, and the complex mathematical equations required to unlock the coins constrain supply. But these digital assets also undoubtedly attract those looking to launder fiat currency from dubious sources. One report last year found that $8.6 billion was laundered through cryptocurrency in 2021, up by 30% from the previous year. It’s the currency of choice from Mexican drug cartels, who pump about $25 million through it annually, to Russian mafia figures, one of whom was extradited from Greece to the United States last year, charged with a $4 billion laundering scheme.

Miami has, inevitably, seen a number of high profile crypto-related arrests. In January, Anatoly Legkodymov — a Russian national who legally resides in China, operated the crypto exchange Bitzlato out of Hong Kong, and did his work in Miami — was arrested by Florida authorities for running a $700 million “haven” for funds “intended for use in criminal activity”. Months earlier, a respected 76-year-old University of Miami professor of global crime networks was jailed for money laundering. He had been working with Alex Saab, a Colombian national and “super facilitator” for sanctioned countries looking to do business in global markets, who used Venezuelan cryptocurrency Petro Gold for many of the transactions.

Suggested reading

Who cares about race in Miami?

By Alex Perez

How Miami has come to attract these sorts of international figures is largely a matter of geography and demographics. The city’s culture is inextricably tied to its location in the centre of the Americas. It is closer to many Caribbean nations than to Washington DC, and acts as a transport hub for those travelling between North and South America. It also has one of the highest immigrant populations in the country, whose experiences have probably influenced the city’s general attitude to authority. Cuban émigrés have been arriving steadily since the United States first began overthrowing their governments in the Thirties, and the ascension of Castro in 1959 meant that many new Floridians had a decidedly anti-government bent. In the Seventies and Eighties, while the rest of the world was struggling through oil shock recessions, a flood of cocaine money saw Miami transformed from a tourist outpost into a major metropolis, and a place where prosperity often has shady roots. In the past decade, Miami has become an attractive alternative to London for highly upwardly mobile Russian and Chinese citizens looking for somewhere to make a reliable investment.

But some turn to crypto out of necessity. Of US cities with over 100,000 people, Miami has the largest “unbanked” population; around one in five residents doesn’t have a bank account. This is more likely due to the enormous number of undocumented workers in the city, who live from cash payment to cash payment, than to money-laundering kingpins. And when many traditional money exchanges closed their doors during the pandemic, migrant workers turned to crypto to send back home.

This is where two very different perceptions of crypto intersect: while some Miamians sell it to achieve the good life, others use it to keep themselves and their overseas families alive. And even if some of the world’s shadiest elements are attracted to crypto, so are some of its most influential: giant Silicon Valley VC firm Andreessen Horowitz continues to plump for it; in its recently-released 2023 report, it called for “crypto computers, not crypto casinos”.

Next month, Miami hosts Bitcoin 2023, the annual convention that last year introduced the neutered crypto bull to the world. It has been suggested that the currency, in the intervening 12 months, could become entirely worthless — one website has tracked 473 instances of prominent people falsely declaring it dead. But those who aren’t following Bitcoin’s daily fluctuations may not have noticed that it has quietly risen almost two-thirds since last Christmas. Its association with shady money and macho risk-taking is a symptom of economic malaise rather than a sign that crypto itself is the rot. Crypto is not going anywhere.

Bitcoin Beach, with its old shacks and gleaming new hotels, is home to an eclectic mix from El Salvador, the United States and beyond. Its residents include investors and fishermen, YouTubers and surfers, former beauty queens and former mercenaries. It is more than just a beach club; it is a symbolic landmark of an 18-month-old experiment to promote the cryptocurrency in El Salvador, whose economy is otherwise driven by farming, sweatshops and migrant remittances.

Salvador’s Bitcoin project is championed by globe-trotting entrepreneurs, known as “Bitcoiners”, but is also a key policy of President Nayib Bukele, a 41-year-old former marketing executive who has revolutionised politics for San Salvador’s six million inhabitants. Bukele is most famous for his crackdown on gangs, having suspended civil liberties and incarcerated 1% of the population. But while he has taken an authoritarian approach on crime, in Bitcoin he has embraced a flagship of many libertarians — the controversial blockchain system for digital payment transactions created by the pseudonymous Satoshi Nakamoto.

Bitcoin crept onto the world stage in 2008 and gradually rose in value, attracting hundreds of billions of dollars by the late 2010s. Amid various downturns and scandals (most recently the collapse of the FTX exchange), many dismiss the currency, but it still attracts investment and hardened Bitcoiners insist it will eventually replace physical cash. In September 2021, El Salvador became the first country to declare Bitcoin a legal currency, alongside its use of the US dollar. All Salvadorans received the equivalent of $30 if they signed up to the state-approved “Chivo Wallet”, while Bukele spent $100 million from Salvador’s state coffers on the crypto, shortly before it crashed, immediately diminishing this investment to $66 million. Despite this, Bukele announced “volcano bonds” to raise money for a tax-free Bitcoin City near the Conchagua volcano on the Gulf of Fonseca. At the 2021 Latin American Bitcoin and Blockchain Conference in El Salvador, Bukele was introduced with a giant screen displaying an avatar of him in his trademark hipster beard as a flying saucer beamed him down to earth.

For all the fanfare, it’s hard to figure out the mechanics of Bukele’s scheme, such as how Bitcoin City will pay for garbage collection with no tax. It is also unclear what the incentives are, with critics claiming it is really designed to attract money launderers. Like the currency itself, the experiment seems to mean different things to different people, have varying applications (some useful, some shams) and is as much about the image as the product. In short, Bitcoin El Salvador is as cryptic as the virtual money itself.

More from this author

Inside El Salvador's brutal gang crackdown

By Ioan Grillo

Likewise, it’s hard to classify exactly what Bitcoin Beach is. It is not an official district (and is not on Google Maps) but is part of an area called El Zonte. The Californian surfer, businessman and evangelical Christian Michael Peterson is credited with devising the concept in 2019, helping inspire Bukele to launch the currency nationally. Peterson had been visiting El Zonte for over a decade and conducted charity work through a non-profit called Missionsake. The Bitcoin Beach website describes itself as a Salvadoran initiative that Missionsake supports, and the beach as “a sustainable Bitcoin Economic ecosystem… where the majority of people do not have access to bank accounts”. However, while almost all businesses in the area accept the crypto, it’s unclear how many of their transactions use it; one vendor tells me it’s only a tiny amount and he uses those sales for savings.

The project headquarters can be found at Hope House, a white building emblazoned with an orange Bitcoin logo. There, I meet Jorge Valenzuela, a 33-year-old “coordinator” from Zonte. Valenzuela says Bitcoin Beach is registered as an educational and social project which has taught local youths to get a foot in the financial system. But he concedes there are other goals, too. “We can do transactions in Bitcoin and it works. But beyond this there is tourism, economy, new jobs, opportunities, many journalists coming here to see what is going on,” he says. “We have changed the country now. The country of pupusas. The country of waves. The country of Bitcoin. The country of good people. Now nobody is remembering a bad country.”

As successful Bitcoiners have shown, crypto can be promoted not just as a currency or investment but as a lifestyle choice, involving living by the beach, working remotely, and rejecting government interference. Down the road in a gated community, I meet some of those attracted to this newfound libertarian side of Salvador. Nicki and James are a pair of Bitcoiners who moved from New Zealand in early 2022. James was an early adopter of Bitcoin from an entrepreneurial family; Nicki worked in finance. They met during the pandemic as New Zealand’s lockdown restrictions were getting increasingly harsh, especially for the unvaccinated. “They made a two-tier society. You couldn’t go to a café. You couldn’t get your hair cut. You couldn’t do all those things,” Nicki says.

Suggested reading

There's nothing woke about crypto

By Mary Harrington

Then, in November 2021, El Salvador became one of the first countries in the world to remove all Covid travel restrictions. Nicki and James sold up, said goodbye to their families and began a new life by the Pacific, as well as a new YouTube show. Like the few hundred foreign Bitcoiners in the country, they do a mixture of remote work and social media in addition to investing in crypto. As well as saving Bitcoin, they also spend it at the local stores, using apps that can facilitate rapid transactions. “It’s really important for us to utilise it in both ways,” says Nicki. “Eventually, it would be really great to see the fiat system go.” James sees their decision as political: “We literally moved our monetary choices and our time spent to another currency system in another country,” he says. “That’s a really strong vote in our mind.”

The most famous Bitcoiners in the area are Max Keiser and his wife Stacy Herbert, formerly co-hosts of a financial news show on Russia Today. They are considered advisers to Bukele on Bitcoin, a badge that Keiser proudly announces on his Twitter handle to his half a million followers. Their podcast “Orange Pill” applauds Bukele, and discusses Bitcoin in terms laced with near-religious zealotry. “There is always a counterforce for everything in the universe, and Bitcoin is the counterforce to all this: that money-printing; those warmongers; those plunderers,” Herbert said in a recent episode. “Bitcoin cannot be stopped.”

One area where Bitcoin could certainly take off is with remittances, the money migrants send home from their work abroad, mostly in the US. In 2021, migrants wired $7.5 billion to El Salvador, representing more than a quarter of its entire GDP. They often send it in small amounts to their families, and pay high fees using transfer services such as Western Union. Bitcoin, with its blockchain technology, could massively reduce these.

More from this author

Mexico’s cartel corruption on trial

By Ioan Grillo

In the more deprived areas of the capital San Salvador, however, residents seem less enthusiastic. Flogging bananas on a stall in the Margaritas slum, Yamileth Gonzalez, 40, says she received her initial $30 with the Chivo Wallet but hasn’t used it since. “It’s fiddly. A hassle. I prefer cash,” she says, although she is a firm Bukele supporter. Meanwhile, less than 2% of remittances used crypto. The migrants sweating in fields and restaurants seem to lack the patience and trust to turn their earnings into Bitcoin. This isn’t too surprising: many cryptocurrency ATMs in the country appear to be broken. Standing on a street corner in San Salvador, I watch a line of people try to use one, only to walk away empty-handed.

Yet a few streets away, there are signs of El Salvador’s Bitcoin revolution taking shape. Outside Chivo Pets, a government pet hospital that charges in Bitcoin, a trail of dog owners bursts out of the waiting room and onto the street. Here, customers who pay in Bitcoin are charged massively reduced fees — just a few dollars for hundreds of dollars worth of treatment. One queuing dog-owner, Veronica Serrano, tells me she is not a supporter of Bukele but thinks that launching Bitcoin was a popular policy, despite people not using it much. “People like the idea of Bitcoin because it seems modern and futuristic. It seems like we are going forward,” she says.

This strikes me as a key motivation for Bukele, a marketing executive who is very tuned in to the image of his policies. In terms of its PR value, for Bukele, the country’s broken crypto ATMs are a sideshow. As long as places like Bitcoin Beach and Chivo Pets continue to succeed and dominate the headlines, there will always be a victory for him to sell.

One might think that, amid a global cost-of-living crisis, these bodies would have other, more pressing concerns. But central bankers are never ones to miss an opportunity — and in fractious times like these, uncertainty is the most profitable opportunity in the business.

To understand the sudden rush towards digital currencies, let’s begin with the notion of “digital money”: as flashy as this may sound, it’s nothing new. In fact, fiat currencies are already digital and have been for a long time: in the UK, for example, 95% of all the money in circulation is electronic (the ones and zeroes that make up the money in our bank accounts), and 85% of transactions are made electronically. Online-only banks are also becoming increasingly common. CBDCs are therefore clearly not about making money digital — it already is.

Where a CBDC would change things, however, is that the digital money would be created directly by the central bank, as opposed to commercial banks. Indeed, when people hear the words “money creation” or “money printing” they tend to think of central banks and quantitative easing, but most of the digital money held in our bank accounts is actually created by commercial banks. We tend to assume that banks collect deposits from savers and lend them to borrowers. But that is not how today’s system works. In reality, when a bank makes a new loan, it simply taps some numbers into a computer and “creates” brand new money, which it then deposits into the borrower’s account. The bank’s pre-existing deposits are not even touched; the money is effectively created out of thin air. Instead of deposits leading to loans, it actually works the opposite way: it’s the loans that lead to newly created deposits. In other words, the banks lend money that they don’t own, at a rate of interest.

This creates a number of problems. First and foremost, privately created digital money is always accompanied by debt (since the new money is created in the form of loans). Moreover, it means that to a large degree, private banks — not central banks — control the supply of money in the economy. This gives them the power to create a potentially infinite supply of money, especially through the process of securitisation, fuelling massive credit bubbles (which inevitably go bust). It also hands them control over where this money goes, which is usually to those who are already well-off and can therefore provide the necessary collateral.

There are several reasons, then, why the current system of privatised money creation is problematic, and needs to be radically reformed. But central bank digital currencies will not solve the problem, unless they were associated with a move towards a full-reserve banking system, whereby commercial banks could only lend deposits created by the central bank, thus giving the latter full control of the money supply. This, however, is not currently under discussion. As the Bank of England has made clear: “The digital pound would not fundamentally alter the traditional channels of money creation”.

So what is the point of central bank digital currencies? One of the arguments made by governments and central banks is that they would provide a safe, state-backed digital alternative to private cryptocurrencies, which are highly speculative, extremely volatile and outside the regulatory control of governments. Regardless of what one thinks of cryptos (personally I’m no fan), this explanation makes little sense. People invest in Bitcoin and similar blockchain-based cryptocurrencies precisely because they are decentralised systems beyond the control of governments, and because they hope their value will rise over time. It’s hard to see why those same people would opt for a highly centralised system like CBDCs, which have failed to build on any of the core insights that led to the creation of cryptocurrencies. Most CBDC implementations, for example, will likely not use any sort of distributed ledger technology such as blockchain.

Suggested reading

The crypto revolution is failing

By Greg Barker

Other arguments offered in favour of CBDCs — that they will help promote financial inclusion, improve transactions speeds and economic efficiency, bolster confidence in the currency, and even help fight climate change — either make little sense or are little more than empty slogans. Why would the 1.2 million people in the UK who don’t have a bank account be inclined to open a “digital wallet”? Why would the latter be less energy-intensive than ordinary bank accounts? And if governments want to lower transaction fees and bank charges, why don’t they simply legislate to that end?

Ultimately, it’s unclear exactly what problems CBDCs are supposed to solve or even what their benefits would be. The potential risks of digital currencies, on the other hand, are all too clear. One issue is that of privacy. CBDCs would allow central banks to monitor, record and analyse all transactions in real time, accumulating sensitive payment and user data at an unprecedented scale. As a report published by the IMF notes, “accumulating so much sensitive data in one place increases security risk by making the payoff for would-be intruders much greater, amplifying the scope and scale of many of the security and privacy threats that already exist in today’s financial system”. Such threats could come from cybercriminals or foreign states — but they could also come from government authorities themselves.

CBDCs, after all, would give governments sweeping powers of surveillance and control, allowing them to instantly punish citizens and consumers for behaviours deemed undesirable, by fining them or even locking them out of their accounts at the flick of a switch — in much the same way as China already uses its “social credit” system to prevent people from buying plane and train tickets for so-called “behaviour crimes”.  

This is especially true if we consider that the widespread use of CBDCs could accelerate the transition towards a “cashless society”, a pet project of the World Economic Forum, in which all transactions are monitored and recorded (even though the Bank of England and the Treasury deny that the digital pound would replace cash). Another related issue is that of social manipulation, insofar as CBDCs are “programmable”, meaning that the money can be restricted in the way in which it is used; when, where, by whom — and even whether it can be used at all. This would confer governments a huge degree of control over the spending and consumption habits of citizens — for example to enforce ostensibly “green”, “climate-friendly” and “healthy” choices, or to blacklist certain companies, products and even countries (forget that Russian caviar!).

More from this author

The paradox of Degrowth Communism

By Thomas Fazi

Now, it’s important to note such tools could potentially be used for positive ends. Theoretically, they could be subject to democratic accountability and control, and could be used to track criminal syndicates and illicit activities such as money laundering, and to reduce corporate tax evasion, rather than to go after ordinary citizens. But the past few years have made it pretty clear that Western states are heavily swayed by the ruling factions of the capitalist class that make up the biopolitical lobby, the intelligence and security establishments, and globalist organisations such as the WEF — factions that have no qualms about using the repressive powers of the state to cement their rule, and discipline the masses.

In this context, it is perfectly normal for people to be concerned about handing over even more power to governments. The latter, let’s not forget, have already resorted to the kind of techno-authoritarian tactics that critics fear digital currencies will be associated with. Last February, for instance, Canada’s “progressive” government froze several bank accounts connected to truckers protesting the vaccine mandates in the country in order “to pressure protesters to leave the city’s streets”. Similarly, throughout the pandemic, Covid passports were used in several countries to deny millions of people access to a whole range of public spaces and services on the basis of their unvaccinated status.

It’s easy to see why many link the plans for CBDCs to the push towards the normalisation of biometrics-based digital IDs, which aim to make the enjoyment of basic human rights, such as the right to freedom of movement, conditional upon the positive scanning of digital passes. It’s tempting, of course, to dismiss such concerns as the product of over-imaginative minds that have watched one episode too many of Black Mirror — if only such policies hadn’t been implemented already.

Yet this story of her image, like the blood-test technology that won her fame and fortune, was fake. One former colleague later revealed how a “frumpy” Holmes had adopted the look to mimic the signature style of Steve Jobs, even tracking down the exact Issey Miyake turtleneck favoured by the Apple founder. Her pose as a cool, black-clad genius worked for a while, fooling some of the best-known financiers and public figures in the United States. Then it had to be ditched in favour of dull suits to appear in court for fraud. And soon will switch to dowdy prison scrubs after her conviction and 11-year sentence.

Silicon Valley superstars love to embrace a simple style. Rich enough to buy anything in the world and puffed up with self-importance, they use clothing to send out the message that they are too important to waste their precious intellect and time on deciding what to wear every day. “I really want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve this community,” said Facebook’s Mark Zuckerberg when quizzed about his uniform of grey T-shirts and blue jeans. (This is, lest we forget, the man who set up a website to rank attractive women at university that exploded into one of the planet’s most pernicious companies.)

Sam Bankman-Fried also tapped into this approach: he presented himself as a financial prodigy who disdained societal mores while set on saving the world. He went for the scruffy skateboarder look, a man-child with an unkempt bubble of hair who even wore his T-shirt, shorts and sneakers when sitting on stage next to a former US president and a former British prime minister.

It is no surprise that Bill Clinton and Tony Blair fell for such a phoney. Yet they weren’t the only ones suckered by this high priest of cryptocurrency, who preached of earning billions through his unique financial acumen, promised to pour the money into philanthropy, and then crashed to earth with his fortune evaporating. “SBF” championed a modish millennial approach to philanthropy, that claims to harness data, in tandem with supreme brainpower, moral leadership and relentless logic to improve the cost-efficiency of charity and tackle state failures. But his downfall has exposed the hollowness at the heart of this cult that has become as much part of Silicon Valley’s uniformity as their T-shirts and turtlenecks.

The astonishing rise and fall of the disgraced crypto king began over a meal with William MacAskill, a prominent young Oxford University philosopher. This Scottish professor, guru of the effective altruism movement, persuaded the vegan SBF, then a student, to forget about devoting his life to animal welfare and instead focus on making as much money as possible for donation to good causes. So SBF duly set out to become mega-rich, ostensibly on the basis that this would let him do as much good as possible in the world, and he seduced admirers and investors alike with his sense of mission while pouring money into MacAskill’s own projects.

More from this author

Inside Britain's psychiatric nightmare

By Ian Birrell

Effective altruism draws its inspiration from Peter Singer, the Australian philosopher. He contends that the moral obligation to save children from hunger in a famine is no different from that of saving a child you saw drowning before you. Unfortunately, so radical and inhumane is his stance that he ends up as an eugenicist: the lives of those with disabilities are of less value, he argues, and so killing babies born with disabilities is ethically permissible. Singer is relentlessly utilitarian.

Yet his arguments lie at the root of this movement so beloved by Silicon Valley billionaires since it justifies their accumulation of great wealth on grounds that it can end up doing great good. Now, though, leading devotee Dustin Moskovitz, another of the Facebook founders, has acknowledged that effective altruism either encouraged or excused SBF’s unethical — and almost certainly criminal — behaviour. Even MacAskill, whose organisations received big donations from his shamed protege’s operations, admits he was wrong to dismiss fears that his philosophy might be “misused” to cause harm. Their church of benevolence became cover for a giant crypto-scam.

This cult of ultra-rationalism implies that it is morally better to get rich than to slave away in a badly-paid job that might be socially useful. Essentially, it tells people to work in the City rather than a care home, demeaning those who believe in public service or actually helping other human beings rather than piling up mountains of cash in tax-efficient havens to give away to their pet causes. Critics such as Timothy Noah have noted how it ignores issues such as economic inequality since its “most distinctive characteristic” was the “deftness with which it tiptoes past targets likely to offend billionaires”.

It is, of course, impossible to apply data and accountability to the future. In reality, it seems that SBF used this pretence of doing good to provide cover for a giant pyramid scheme, pretending ends justified means while he hung out with his clique overseeing a crypto con at a $40m mansion in the tax haven of the Bahamas. “You were really good at talking about ethics for someone who kind of saw it all as a game with winners and losers,” said a Vox reporter last week after his empire had fallen. “Ya, hehe… I feel bad for those who get fucked by it,” he responded, admitting “the ethics stuff” was mostly a front and talking of a “dumb game we woke westerners play where we say all the right shiboleths [sic] so everyone likes us”.

SBF was also the second-biggest donor to Joe Biden and the Democrats last year, handing over $37 million. Yet his veneer as a do-gooder slipped when the President’s party flirted with a wealth tax for the super-rich — who often end up paying proportionately far less to the state than fellow citizens due to armies of highly-paid accountants shifting their assets around the globe. He told the New York Times that “this could cause hugely negative collateral damage, significantly reducing the amount of innovation and taxable base in the first place”.  Elon Musk, who might have been hit for £50 billion, chimed in with a warning that this might hamper his long-termist plan “to use the money to get humanity to Mars and preserve the light of consciousness”.

Suggested reading

William MacAskill's ineffective altruism

By Arif Ahmed

The downfall of SBF should send a stark warning to be wary of self-appointed prophets who think their wealth has given them special gifts to solve the problems of humanity. These tycoons are often little better than the robber-barons of old who used charity to atone for their rapaciousness in business — but only after becoming immensely wealthy. Note how Jeff Bezos has joined the ranks of those billionaires such as Zuckerberg and SBF pledging to give away much of their fortunes. It is a welcome trend but it reeks of hypocrisy, given that it would be so much better if the ultra-rich simply played by the same rules as the rest of us, ensuring at least that their firms pay a fair share of tax. Even that secular saint Bill Gates is not immune to such criticism when Microsoft became a case study in tax avoidance for the Senate during his reign.

Ultimately, these prophets of elitist altruism proclaim a specious and self-serving creed: they create giant fortunes by running firms exploiting their digital revolution to dodge tax and evade national borders, then bask in the glow of adulation for their philanthropy having subverted democracies, slashed government revenues and thus weakened state services. Finally, they claim to be the best people to solve some of the most pressing societal issues — although only the ones they decide to tackle on their own terms, rather than more unfashionable ones such as filling roads, funding soldiers or fashioning support for the vulnerable.

Canada’s finance minister Chrystia Freeland provided a glimpse into such attitudes a decade ago before she abandoned journalism for politics, writing a superb book called Plutocrats that exposed how a smug elite dictate public discourse and demand a system tilted even more in their favour. One billionaire Republican donor she interviewed even argued for the abolition of most taxes, praising how the super-rich “self-taxed” themselves by supporting charities of their choice rather than funding government. He demanded the state should pay tech tycoons for their contributions to society. “It’s that top 1% that probably contributes more to making the world a better place than the 99%,” he concluded, outrageously.

Many people yearn for superheroes, visionaries and wunderkinds to offer hope of salvation on a complex, messy planet. But altruism built on avarice is simply a comfort blanket for billionaires. Behind the stylised images, the sci-fi sheen of technology, the bold claims to have remodelled philanthropy, the arrogant insistence some people are so important they should be spared taxes, lies the same hubristic mentality that tarnished the aid industry. It is based on the cynical idea that a small, superior and wealthy elite knows best — and that they should not be thwarted in their drive to earn billions since they are indisputably the good guys. As two new age messiahs stumble and fall, we ought to be more sceptical over billionaire geeks posing as god-like saviours and show a bit more faith in our communal ability to resolve serious problems.

It’s estimated that about 20% of the population of Europe died in the Thirty Years’ War, the culmination of some 150 years of religious conflict triggered by the Protestant Reformation. And the Reformation was, in turn, powered by a radical new means of disseminating information: the printing press.

History doesn’t repeat itself, but, as Mark Twain said, it does rhyme. It’s not original to suggest that the internet is as transformative as the printing press: less library in your pocket and more, as David Bowie put it in 1999, an “alien life form”. But less often asked is: if revolutionising how we view, store, exchange and cross-reference our knowledge set off violent religious convulsions 500 years ago, that rewrote the political map of Europe, how long before the internet does the same thing?

The usual response to this suggestion tends to be wild gesturing at the now-common “wokeness is a religion” take, accompanied by “well, look, it’s happening”.

But this has it backwards. “Wokeness” isn’t an upstart faith. It’s a secularised, mutant form of the Protestantism that began with Luther. It’s the creed of our current elite establishment, with near-hegemonic power, and it’s subject to many of the same critiques as the then-hegemonic Catholic Church was in Luther’s time, down to the selling of indulgences. In this story, “wokeness” isn’t the schism; it’s the established church.

For schismatics, look to the emerging coalition of dissenters from woke hegemony. And if this coalition increasingly replaces ‘the Right’ in Covid-era politics, its most action-oriented and potentially disruptive faction is also perhaps the least well-understood: the crypto bros.

Often fiercely anti-woke, this loosely Right-aligned subculture blends tech futurism with a desire to preserve elements of the past, and sometimes unsettlingly strong views on facets of human nature they see as immutable and hence not amenable to progressive social engineering.

The mainstream Right mostly doesn’t really know what to make of this faction, and largely ignores them. Meanwhile, they’re busy building. And what they’re building has the potential to transform not just the internet but our most fundamental political structures — as dramatically as the Reformation and its aftermath.

Thinking of the Reformation as a religious schism driven partly by new information technology isn’t to trivialise it. The shift in mindset it drove was so radical it pushed some to opt out altogether, from a regime they found intolerable. And one form this took was the Puritans leaving Europe for America.

The political scientist Albert Hirschman argues that for this historical reason opting-out, or “exit”, has “an extraordinarily privileged position in the American tradition”.

More from this author

The American Right's civil war

By Mary Harrington

Hirschman’s influential book Exit, Voice and Loyalty looks at what happens when things start to go wrong in an organisation or polity. As he sees it, citizens can choose to remain loyal, to exercise their voice (ie protest) or to “exit”. And as Hirschman points out, America’s origin story has contributed to an especially robust American political tradition of people voting with their feet when they don’t like how things are going.

Those talking about “exit” today in America aren’t the modern-day Puritans but their opponents. Many prominent figures associated with the subculture I’ll call the Exit Right are determinedly anonymous. Of those who write or speak under their own name, one key thinker is the neo-reactionary writer Curtis Yarvin. Yarvin’s “patchwork theory” offers a model for what exit might look like: he argues that nation-states should be replaced by proliferating, competing, autocratic city-states, each with its own CEO. In effect, this would then institute a market for governance, in which citizens could exit for a different polity, if an existing one didn’t suit.

But perhaps its most well-known powerhouse is Peter Thiel. Thiel is influenced by libertarian individualism and aversion to big government. But he doesn’t just dislike the current woke kind: he seems averse to all large-scale political systems. In a 2009 essay published at the libertarian Cato Institute, Thiel took aim at “totalitarian” and “fundamentalist” politics alike, and also the “unthinking demos” that powers “so-called ‘social democracy’”.

Thiel’s NatCon address took aim at institutional wokeness — but also the fundamental structures of Web 2.0 that power this creed. He denounced the way “the wisdom of crowds” has shaded into “the madness of crowds”. He railed against the “epistemic closure” around approved “scientific” consensus and fiat currency, warning against “a globalist future in which individuals will not exist”. He hinted at his preferred solution to this predicament, when he went on to say his biggest regret was not buying enough crypto while it was cheap. And he called for Satoshi Nakamoto, the pseudonymous inventor of the Bitcoin protocol, to be lauded with a ticker-tape parade.

More from this author

The death of Britain's dignity

By Mary Harrington

Many looked baffled. But for the tech bros, talking about political models and talking about tech models is the same conversation, because the one enables the other. And when even a sitting president is vulnerable to deplatforming if they fall foul of consensus on proper behaviour, perhaps they have a point.

It’s not just about freedom of speech or association. Because as the Exit Right sees it, the problems inherent in big, centralised tech infrastructures are also there in big, centralised (and increasingly Big Tech-enabled) financial infrastructures and the fiat currencies they use. The Exit Right argues that the only way to protect any measure of freedom for dissenters is to abandon fiat currency altogether, in favour of crypto.

Meanwhile, the stories keep coming about tech converging with government: Google passing search histories to the government, for example, or Amazon hosting UK spy agencies’ data. With every story, the drumbeat grows louder from the Exit Right, to escape the convergence of government and Big Tech for salvation in the decentralising power of the blockchain.

The tech bros suggest the mainstream Right merely carps about “wokeness” from the sidelines, while assenting to every framework that gives this brittle bad-faith “faith” its real-world power: notably finance and the over-centralised internet.

Their proposed solution is leaning into new tech, to escape an increasingly totalitarian present tech. The theorist James Poulos argues in the forthcoming Human, Forever that the only way out of this bind is to embrace decentralised tech, and create “parallel institutions and secure, robust networks of mature and culturally healthy people online and off”.

This means building. Thiel is a prolific funder of projects in the Exit Right ecosystem; Yarvin hasn’t just contributed dissenting theory, but also dissenting tech. He was a founding developer of Urbit, which aims to replace the centralised Big Tech model with a peer-to-peer network of web services in which identities and data are always owned by the user, and not by Big Tech. (Urbit was part-funded by Thiel.)

Another example is New Founding, which aims to connect dissident (conservative) American individuals and businesses with “new media, technology, and commerce that serves and supports the American people”. Poulos also practises what he preaches: his book will launch initially as an NFT on Canonic, a blockchain-based self-publishing platform that sells books denominated in Bitcoin and also recently published Zero HP Lovecraft.

More from this author

The crypto revolution is failing

By Greg Barker

If the internet does drive serious, world-shattering schisms, my money’s not on wokeness as their source. It’s on these decentralising visionaries. Because for all that many of them see their task as freeing the world of Big Tech’s now rapidly-consolidating woke priesthood, their own tech vision will in turn inevitably develop its own priest class — or rather, priest classes (plural).

Right now, the Exit Right is a heavily male-dominated, almost exclusively nerd-only subculture full of exceptionally clever techies: a group that, to a man wildly underestimates the ability or willingness of normal people to get their heads around tech innovations. But in order to go mainstream, the tech that powers the Exit Right’s vision will need explaining for non-nerds. And that means roping in writers. In other words: arts graduates, people with the right mindset to simplify, prettify, explain and popularise.

But as well as bringing an ability to explain, when you get arts graduates involved, they’re guaranteed to bring their moral viewpoints with them. Arguably a key reason why tech is currently so creepily uniform in moral outlook, is because it’s heavily centralised. And its explainers and popularisers — its priest class — are recruited mostly from a small set of elite American universities with a fairly homogenous worldview.

Peter Thiel and the Exit Right argue that the only way to give teeth to the emerging “anti-woke” consensus is to decentralise finance, tech and even governance. But popularising this won’t create one new priest class. Instead, every exiting faction will need its own. If they succeed, the upshot won’t be liberation from tech-adjacent priesthoods but competition between moral outlooks.

And a measure of their success will be that this happens not in an otherwise neutral, unified “marketplace of ideas”. It’ll happen in a world where each competing worldview potentially has its own infrastructures, currencies and perhaps even city-states. Let’s hope they can all get along. Because zero-sum disagreement between moral worldviews with their own infrastructures has a name: just like the last time our information technology changed this radically. Think culture war, but without the prefix.

There may come a time when even those of us who dislike our current stifling woke hegemony look back on it with nostalgia, as the last-ditch effort of a fading age to save us from the oncoming storm.

When Bitcoin, the first ever cryptocurrency, was launched in 2008, it was hoped its “Blockchain” technology — which records transactions and cannot be hacked — would spark a digital revolution. If a transaction could be carried out securely without the need for an established bank, it would, we were promised, mark the end of corporate capitalism — and the dawn of a new era of decentralisation.

Just over a decade later, however, Blockchain has become the centre of the financial elite’s new-age banking system. Indeed, behind the scenes, they’re going all in on crypto.

Using its very own cryptocurrency, the world’s largest bank JPMorgan has completed its first “interbank crypto trade” with fellow Wall Street titan Goldman Sachs. They carried out the transaction of JPMCoin, JPMorgan’s version of a digital dollar, using its new blockchain system. And with more than a dozen institutions now signed up to it, exchanging more than $1 billion daily, a digital financial revolution is in the making.

Ordinary citizens, however, won’t be part of it. When it was first conceived, crypto’s leading advocates insisted that we had entered a new era of financial autonomy: all you needed to defeat crony capitalism was a Bitcoin wallet and an internet connection.

Suggested reading

The West can learn from China

By Marshall Auerback

But in reality, the crypto rebellion has failed to liberate us, or achieve anything else its founder Satoshi Nakamoto envisioned. Rather than producing a more open, more liberating, more financially free society, the crypto movement has empowered not just another cabal of corrupt financiers, but a hidden cartel of criminals, Wall Street rejects, and what U.S Senator Liz Warren has described as “shadowy super-coders”.

Its prominent members continue to run rampant around the globe, circumventing laws, regulations and ethics to accumulate multi-billion dollar fortunes. Not a single country appears to want to host crypto-billionaire “CZ” and his company Binance, the biggest cryptocurrency exchange platform in the world. Meanwhile, Brock Pierce, the billionaire co-creator of cryptocurrency Tether, is currently using his wealth to engage in “crypto colonialism” in Puerto Rico, where dozens of “entrepreneurs” hope to build a new city that only uses virtual money.

Sensing this rising elite is getting a free pass, the world’s financial power structures have responded with a regulatory hailstorm. And as it has intensified, the more “controversial” outlets have tried to meet regulators’ demands.

Binance has tried to appear more credible by “looking at the potential IPO route” and appealing to regulators, while BlockFi, a cryptocurrency lender that matches all the Securities and Exchange Commission’s criteria for a Ponzi scheme, has had to obey securities laws to continue operating in the US, with five states  —  New Jersey, Alabama, Texas, Vermont and Kentucky  —  striking the fintech company with either cease and desists (requests to stop alleged illegal activity) or show-cause notices (proof that they are not a scam).

As for the bosses of ill-famed Tether, they recently appeared on CNBC, trying to convince everyone that their currency has a one-to-one backing — for each Tether in circulation, they claim to have $1 in their reserves backing it up (though still won’t perform an audit of their reserves).

Since the US Government has come down hard on any entity not playing ball, some of the crypto elite have started to question whether true decentralisation is a delusion. Indeed, they are starting to realise that it is a lot easier to build a fortune  —  and keep it  —  when they participate in the “official” system and follow the rules.

Suggested reading

Bankers are running the country

By Peter Franklin

It’s the same realisation Peter Thiel had in 1999. Back then, his original vision for PayPal was to create a truly anonymous money-transfer system, free from state influence and control. “It will be nearly impossible for corrupt governments to steal wealth from their people through their old means,” he declared, before quickly backtracking and rising through the ranks of Silicon Valley.

Fast forward to today, and the crypto elite have mimicked Thiel’s change of direction. Rather than simply throwing in the towel and admitting the game is up, they have abandoned their cyber-libertarian roots and merged with their enemy: the financial behemoths of Wall Street, the Federal Reserve and Silicon Valley.

It’s easy to see why this would seem appealing; a number of crypto elites are already reaping the rewards of cosying up to the establishment. Jeremy Allaire’s Circle — the company behind the huge, unaudited cryptocurrency USDC — has partnered with Silicon Valley payment giants, Mastercard and Visa. Meanwhile, Brian Armstrong, the CEO of cryptocurrency exchange Coinbase, revealed in a tweet in May that he’d held meetings in D.C with high-ranking state officials, including Congresswoman Nancy Pelosi and Federal Reserve Chair Jay Powell.

All of which raises a peculiar question: Why is the Federal Reserve’s head honcho, Bitcoin’s supposed arch-enemy, collaborating in undisclosed meetings with the CEO of crypto’s main cashier? In Bitcoin Gospel, that’s heresy.

The answer lies in what I suspect are the crypto elite’s real intentions: namely, that they were never really in it for the freedoms Bitcoin could offer, but more for the untold riches it promised. Now they’ve succeeded, it’s all about wealth preservation, and in the age of bailout capitalism, becoming “too big to fail” is the ultimate protection. That is why getting in the good books of Wall Street and the Federal Reserve seems to be the top priority for crypto billionaires. If a crisis emerges, and they threaten to bring down the existing power structure’s financial order, guess what? They’re first in line for a taxpayer-funded bailout.

Right now, it seems inconceivable that the financial elites would bail out the crypto market. But as the bubble gets bigger and becomes tied to Wall Street through its investments, the likelihood increases.

Suggested reading

Is community crypto the future of money?

By David Z. Morris

Take Tether, for example. On top of its $63 billion market cap, half of its reserves are now backed by real-world debt securities issued by Wall Street companies. Given it is a modern wildcat bank, one that issues its own currency, and has failed to provide any proof its assets exist, it is unlikely we will ever know how much debt Tether owns. But if it’s revealed that Tether’s value is, in fact, a swindle, Wall Street could eventually face losses amounting to more than a slight haircut.

In which case, don’t be surprised when the Federal Reserve comes to its rescue. It’s easy to forget that Wall Street can’t be distinguished from the Federal Reserve; the financial elites know that if something goes wrong, Jerome Powell, chair of the Federal Reserve, will be there to step in and bail them out at whatever cost.

And if the next crypto crash does threaten to bring down their system, if wildcat banks like Tether become too big to fail, our current financial power structures will do everything they can to ensure that the status quo is maintained. Two classes of elites will become one, with the “less desirable” parts of the crypto world  —  and likely the taxpayer’s purse  —  becoming collateral damage.

What happens next is anyone’s guess. But with the likes of Goldman Sachs combining forces with such unsavoury characters in the crypto elite, it is not impossible to imagine them wreaking havoc around the globe: charging clients obscene crypto fees and betting against their own Bitcoin products to make even more money. The rest of us, meanwhile, will watch on from afar, knowing that we’re powerless to stop or escape yet another era of financial repression.

In the case of Britain’s bankers, I suspect not. After all, if the past year has taught us anything, it’s that they can provide something that the politicians will always want: money. 

There was a time when the function of a central bank was to regulate the wider banking system, set interest rates and keep inflation under control. Though an important role, it was a limited one.

But then, in 2008, the global banking system almost collapsed. The shock was such that slashing interest rates wasn’t enough to revive the economy. And so the central banks embarked upon a course of quantitative easing (QE) — i.e. creating money electronically and using it to buy up government debt and other financial assets.

This was meant to be a temporary measure. As soon as things went back to normal, the plan was to reverse the process of QE. The central banks would sell off the assets they’d purchased and electronically destroy the money they’d created. Job done; the balance restored.

But things didn’t go back to normal. By 2012, vast amounts of money had been created — £375 billion in the UK alone — but there was little sign of inflation and not much growth either. And so QE was never “unwound”. Politicians realised this was an endless fountain. In the wake of Brexit, the Bank of England conjured up enough funny money to buy a further £70 billion of government bonds.

Now with Covid, the QE binge has become an orgy. All the central banks are at it. In the UK, we’ve plucked another £450 billion from the magic money tree. To put it another way, our national debt now stands at over two trillion pounds, but getting on for half of that is owed to the Bank of England.

More from this author

Who will pay for this Covid catastrophe?

By Peter Franklin

It’s getting hard to deny that the central banks are printing money to finance government spending. The central bankers won’t admit to that, of course. They’ll say that QE is just the equivalent of an interest rate cut and intended to stop inflation from turning into deflation.

However, that alibi is wearing thin. Firstly, there’s not much risk of falling prices right now — quite the opposite in fact. And, secondly, one can’t help but notice that the more QE there is, the more the Government borrows.

But why worry? Isn’t owing money to the Bank of England better than borrowing it from the Chinese? And given the fragile state of the economy, isn’t borrowing preferable to tax hikes or spending cuts?

There is the risk of inflation, of course — a real concern right now. Then there’s the risk that the money markets might run out of patience — and start charging higher interest rates on government debt. When a government owes £2.2 trillion, like ours does, then every 1% increase in the interest it pays on that sum costs an extra £22 billion a year — or roughly half the defence budget. 

But there’s a more disturbing possibility: that economic gravity doesn’t reassert itself — and that the QE orgy continues.

Suggested reading

What if it's not the economy, Vince?

By James Kirkup

Ultimately, this would be terrible for democracy. When governments rely on their own citizens for money, they become beholden to them. The principle of “no taxation without representation” puts nations on a path to universal suffrage and keeps them there.

However, governments that get their cash from elsewhere — oil revenues for instance — can afford to ignore their people. As the absolute monarchies of the Middle East prove, “no representation without taxation” is also a potent political force. 

So what happens if central bankers replace taxpayers as the key source of government finance? We saw what happened in Greece, which ceased to be sovereign state as soon as it became dependent on the European Central Bank. The Greek people voted for a government of the populist Left, but extreme austerity was imposed anyway — and continues to this day. Similarly, Italy is controlled by the EU establishment — the Prime Minister is Mario Draghi: a former President of the European Central Bank.

In Britain, we can be thankful that Brexit has removed that possibility. But what’s the point of giving the Eurocrats the slip, if we replace them with a homegrown caste of over-mighty central bankers?

Take the Bank of England’s “net zero mandate”. The Old Lady of Threadneedle Street already interferes in the market by using QE money to buy up corporate bonds from the private sector. Purchases total £20 billion so far. This amounts to a major subsidy for the qualifying businesses — who are able to borrow more and at a lower cost. Deliberately skewing this to favoured companies would mean using QE to pick winners — a bizarre position in which to place a central bank.

More from this author

Do you know where money really comes from?

By Peter Franklin

I’m all in favour of green government policy. But these are decisions that should be made democratically in Parliament, not by unelected central bankers picking winners. 

Meanwhile, the central bankers could become more powerful yet if the Chancellor goes ahead with a scheme to introduce what he calls “Britcoin” — a digital currency overseen by the Bank of England. This could have all sorts of benefits — from reducing transaction costs to ensuring that our national currency isn’t displaced by a cryptocurrency or Facebook’s Diem system.

But there are dangers to Britcoin too. For instance, a digital currency administered by the Bank of England could be used to monitor our purchases and transfers, thus ending the privacy that comes with using cash. In theory, the Bank could also apply its climate mandate to our transactions — for instance, imposing a penalty on purchases deemed to be unsustainable. 

And then there’s the risk that a central bank digital currency (CBDC) would destabilise the banking system. 

At the time of the last financial crisis, governments moved fast to prevent bank runs. With a few exceptions, they succeeded. That said, their job was made easier by the fact that most of us don’t want to empty our accounts and store our savings as banknotes under the mattress. However, if we could withdraw our money in the form of digital cash and keep it in a safe with the Bank of England, that would present fewer obstacles. Conceivably, the entire private banking system could collapse within minutes if enough people went online to transfer their bank balances into their Britcoin accounts. 

Suggested reading

Covid-19 has exposed our financial fragility

By Jonathan Tepper

I’m presuming these possibilities will be anticipated, and preventative measures put in place before an official digital currency is launched, but there’s no doubt that any such move would further expand the role of the Bank of England. 

How can we stop this? Ideally, our elected representatives would be dealing with this stuff on our behalf. But I doubt that most of them are capable. The next time you meet a politician, ask him or her to explain quantitative easing to you. Or ask them where the money that banks lend to their customers comes from. If they say “from savers”, then they haven’t got a clue. 

If we can’t rely on our politicians to provide effective oversight, what can we do? One solution would be to end our addiction to QE — though I’m not convinced we’re willing to endure the austerity that would entail. Another would be to end the independence of central banks. But this would mean putting politicians in full charge of the QE printing press — and do we really want to risk that?

Unless there’s an inflation crisis that brings the whole pack of cards crashing down, the most likely scenario is that the central banks continue to grow in power — until we stop thinking of them as banks at all, and instead as parallel governments. 

If you didn’t know, you probably wouldn’t guess that the £ is a stylised letter ‘L’. At first glance that doesn’t make much sense, but it’s derived from the Latin libra pondo, which means ‘a pound by weight’. Strictly speaking, the first of those two words refers to the unit of measurement and the second to the act of weighing something (it’s the root of the verb ‘to ponder’). However, it was pondo, not libra, that was adopted by speakers of Germanic languages as the unit, eventually becoming ‘pound’ in English.

Suggested reading

The three myths about free markets

By Jesse Norman

Languages derived from Latin stuck with variations of ‘libra’, hence the French word Livre and the Italian Lira. Even in medieval and early modern England, it was natural for educated people (who knew Latin and French) to use an ‘L’ as a Pound sign. The libra connection also explains why the abbreviation for ‘pound’, as in a unit of weight, is ‘lb’.

*

There’s now a 21st-century twist to this tale. Last week came the news that Facebook is launching an electronic currency – called ‘Libra’.

Like the Pound (£), the Dollar ($), the Euro (€) and the Yen (¥), the Libra will have its own symbol – an obscure character called the triple tilde, which looks like this: ≋

Unless you’re a mathematician studying the geometrical concept of congruence, it’s unlikely that you’ve ever seen a ‘≋’ before. However, if the Facebook project succeeds it might not be long before you see it everywhere. Though it may flop or stay stuck in some niche application, there’s a chance that Libra could become a global currency – and, perhaps, the universal means of exchange.

But why would anyone want to convert their £ or $ into ≋?

Libra is a blockchain-based cryptocurrency, and if ‘crypto’ is your thing there are various options to choose from. A few of these have become pretty significant – most (in)famously, Bitcoin. However, they also have limitations as a mass medium of exchange – including obscurity (not enough people have even heard of them, let alone accept them as payment), complexity (just too difficult to use), insecurity (vulnerability to hacking and other criminal activity) and volatility (wild swings in value compared to conventional currencies).

Suggested reading

Is community crypto the future of money?

By David Z Morris

Can Libra overcome the limitations? Well, for a start, it has Facebook behind it – plus Facebook’s partners in this venture, which include Uber, Vodafone, PayPal and Visa. If anyone can create and promote a digital currency that is widely used, user-friendly and secure, it’s this lot. But what about the volatility problem? What’s to stop privately controlled, electronically-issued scrip from crashing in value?

An extremely useful TechCrunch briefing by Josh Constine explains how Libra would anchor itself:

“The idea is that you’ll cash in some money and keep a balance of Libra that you can spend at accepting merchants and online services…

“Each time someone cashes in a dollar or their respective local currency, that money goes into the Libra Reserve and an equivalent value of Libra is minted and doled out to that person. If someone cashes out from the Libra Association, the Libra they give back are destroyed/burned and they receive the equivalent value in their local currency back. That means there’s always 100% of the value of the Libra in circulation, collateralized with real-world assets in the Libra Reserve.”

Assuming that all works, the next question is: why use it as opposed to all the other online payment systems out there? The big promise with Libra is that transaction fees will be much lower than for, say, credit cards. This would cut costs for vendors – and reduce the friction of online commerce. Constine points out that Facebook already has a relationship with 7 million advertisers and 90 million small businesses. The other participants in the venture can contribute millions more relationships. If transaction costs (in hassle as well as money) really are significantly lower than established systems, then that’s a potentially enormous number of vendors who’d not only accept but encourage payments in Libra.

Suggested reading

How robots could set the developing world free

By Peter Franklin

Then there’s the billions of people in the world who have limited or no access to financial services. The involvement of nonprofit organisations dedicated to financial inclusion (such as Women’s World Banking and Kiva) points to a global and humanitarian level of ambition. An especially interesting market is made up of the world’s 100 million+ migrant workers – who in 2018 sent $689 billion back home (including $529 billion to low and middle income countries). Transaction costs on these remittances are notoriously high and reducing them substantially would make a huge difference to the recipient countries. It would also spread Libra’s reach across the planet.

So, yes, Libra has the potential to become a global currency used by rich and poor alike. A pre-emptive backlash is already underway. The currency has acquired some unfortunate nicknames such as ‘Facebook crypto’ and ‘ZuckCoin’ – attesting to fears that the Silicon Valley behemoth and its CEO, Mark Zuckerberg, are already too powerful. Do we really want to give it – and him – control of the world’s money supply, too?

But, hang on, Libra hasn’t even been launched yet. Even if it realises its wildest ambitions, it seems unlikely that the custodians of the world’s official currencies – in particular, the government of the United States of America – would tolerate a genuine challenge to its monetary power.

Another source of partial reassurance is Libra’s ownership and governance structure. Josh Constine explains that “Facebook won’t fully control” the system:

“…but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations.”

Suggested reading

The dark side of China's Social Credit System

By Peter Franklin

Furthermore, efforts are being made to address concerns over privacy and control of user data:

“Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting. Your real identity won’t be tied to your publicly visible transactions.”

Even better, the underlying software is open source. So, conspiracy theories aside, this really doesn’t look like an attempt to establish top-control over the global economy.

*

So, nothing to worry about, then. In fact, something to look forward to – a super-efficient payments system minus the rip-off merchants. But before we see Zuckerberg as a Christ-like figure, over-turning the money-changers’ tables, here are three little things that might just cause concern:

Firstly, Facebook doesn’t need exclusive control over Libra to become enormously more powerful. Consider the World Wide Web, which established a user-friendly and seamless means of exchanging information. The Web is governed on a model that is even more ‘open’ than Libra, yet that didn’t stop the tech giants (including Facebook) from establishing a dominant position.

Libra, if it succeeds, would establish a user-friendly and seamless means of financial exchange. The world apart that is Chinese internet provides a model of what happens when the distinction between the tech and finance industries is erased. For instance, the Chinese mobile payments market is fifty times bigger than in America and WeChat (the closest equivalent to Facebook) has a commanding position as the “app for everything.” Libra could create similar conditions in the west and Facebook would be ideally positioned to take advantage.

Suggested reading

How China ditched the banks

By Peter Franklin

Secondly, the fact that Libra itself is designed to keep information about individual payments secure, anonymous and decentralised is not necessarily good news. One way of getting the notoriously undertaxed tech sector to pay its fair share is to use levies to target it’s revenues at source – e.g. as generated by advertising clicks or online sales. That could prove more effective than trying to apply corporation tax to the industry’s well-massaged and footloose profits. All the time that the tech giants know exactly where each dribble of revenue comes from, the law can be used to verify the taxes that ought to be paid on it.

That however could be rendered impossible by a completely anonymised and opaque transactional system. Expect tech-savvy governments to pay very close attention to how the technology evolves – privacy must not become the enemy of transparency.

Thirdly, what if those controlling Libra decided to behave really, really badly – i.e. like the monetary authority of a sovereign state? The early indications are that the system is intended to operate within very strict limits. As described above, Libra will only be issued in exchange for an equivalent amount in a hard currency like US Dollars. This is to create confidence in Libra as a reliable store of value, without which it is unlikely to achieve widespread acceptance.

But imagine a future in which Libra or some rival system is well on the way to becoming a de facto global currency. The closer it gets to achieving the status of a universal means of exchange, the more it will become its own guarantee of value – valuable not because it is exchangeable for other, more conventional currencies, but because enough people need and want Libra. At that point, its controllers will be tempted (or may even be pressured) to turn on the metaphorical printing presses and issue Libra backed up by nothing except public faith in the system.

Suggested reading

Do you know where money really comes from?

By Peter Franklin

One method might be to set up a Libra bank that creates currency out of thin air, lends it out and then destroys the money when it is repaid (but pockets the interest paid by the borrower). That might seem completely bizarre, but this is how conventional fiat currencies and conventional banks already work – in the modern world, that’s where money comes from.

*

To be clear, there’s zero evidence that this is the Libra masterplan. The objective is to create a cheap, easy and reliable way of buying and selling, giving and receiving, just about anywhere in the world – a bridge between countries and their currencies, not a rival source of monetary power. The irony is that the more Libra succeeds in its stated objectives, the more it will be seen as a potential threat to the established order.

Locals could buy $10 worth of “Deli Dollars” for $8 in US currency, with the currency redeemable at a future date. In essence, they gave Tortoriello a tiny personal loan and collected a bit of interest. The program was a success, easily raising the $5,000 Tortoriello needed. Even the banker who turned down Tortoriello’s formal loan request bought some Deli Dollars: he couldn’t justify an institutional investment in the deli as a business, but he couldn’t pass up a personal investment in Frank.

Tortoriello’s successful experiment was the first of several conducted in the area, known as the Berkshires, through the 1990s. They in turn inspired a local paper currency known as Berkshares, founded in 2006 with the intent of supporting local businesses – shoppers get an effective 5% discount when they use Berkshares at local businesses that accept them. Today, according to Schumacher Center co-founder Susan Witt, between $125,000 and $175,000 worth of Berkshares are in circulation at any given time.

The launch of Berkshares added momentum to a global movement for local currencies, which now exist from Bristol in England to Spain’s northern Basque region. The main goal of Berkshares is to support local businesses, but advocates say local currencies have many potential benefits, above all increasing community resilience and self-determination. Money, after all, is a kind of communication technology: the most important signal of what actors in a modern economy want. But the structure and administration of a currency can skew those signals, and national currencies can be seriously out of sync with what a particular community needs or values. Local currencies can take back a portion of that power, and use it to encourage environmental responsibility and community spirit, or just mobilise untapped resources.

If you’ve paid even marginal attention to cryptocurrency in recent years, your antenna might be twitching. Frank Tortoriello’s Deli Dollars and local currencies like Berkshares were precursors of ICOs, or initial coin offerings: private, digital currencies issued to help fund the development of tech businesses using distributed blockchain database technology.

Further reading

Is Bitcoin really 'rat poison squared'?

By David Z Morris

ICOs first made headlines in 2017, and over the last 18 months have raised more than $15 billion dollars. That’s a far cry from $5,000 to move a deli – and not surprisingly, the ICO boom has attracted more than its share of bad actors, with many of the issuances proving to be outright scams.

Still, ICOs highlight how blockchain technology could help make local currencies more mainstream. Issuing a local paper currency is labour and infrastructure intensive: Berkshares are administered by a community non-profit in partnership with 16 local banks, who handle the exchange of dollars for Berkshares. By contrast, the basic software for cryptocurrencies like Bitcoin is open-source and relatively easy to copy, while a plethora of digital wallets and exchanges exist to facilitate the distribution and spending of cryptocurrency. Re-branding a Bitcoin-based system as a local currency is primarily a graphic design and marketing problem – no physical infrastructure is needed.

No surprise, then, that some of the very companies founded in the blockchain boom are joining the ranks of local-currency advocates. At the Oslo Freedom Forum in May of this year, Galia Benartzi, co-founder of the blockchain trading platform Bancor, told the story of the Lev Market, an experimental program in Israel. Bancor issued “Levs” – “hearts” in Hebrew – to 20,000 mothers, who used the currency to pay one another for services like babysitting, school pickups, and baking.

Bancor’s experiment seems to have borne out one of the strongest arguments for local currencies – that they can unlock unused resources. According to Benartzi, in less than a year, network participants exchanged over $24 million worth of goods and services using the Lev currency. “Not a shekel, not a dollar ever changed hands,” Benartzi said. “And what we asked ourselves was, why weren’t they doing this to begin with? All the mothers were there before, all the goods and services were there before.”

According to Benartzi, the Lev market catered largely to women in low-income and marginalised communities – women who didn’t have much ‘official’ currency to spare. Such monetary privation has a double cruelty. Poor communities, more or less by definition, can’t build financial wealth or reap any benefit from long-term investments. But nearly as bad, and much less attended to, is their limited ability to benefit from money’s day-to-day role as an economic coordinator. If we consider money a communications technology that generates signals about collective needs and desires, poorer communities are being deprived of both wealth, and the information they need to generate it.

This is one of the key arguments made by Bernard Lietaer and Jacqui Dunne in their book Rethinking Money. Adding new currency to communities with too little of it can help connect unused resources to unmet needs, generating real benefits that can improve quality of life. Similar logic lies behind government stimulus spending during recessions – but local currencies, Lietaer argues, have the added benefit of providing some insulation from national fiscal and monetary crises.

Further reading

How digital dissidents are defying the despots

By Ian Birrell

Of course, at least some of the activity measured by Bancor’s Lev Market experiment was taking place before the introduction of the new currency: parents, especially in poor communities, have never needed money to coordinate shared child care, for example. And this suggests a possible drawback to community currencies. As Leitaier and Dunne themselves point out, considerable research has shown that non-monetary exchanges are crucial to cementing social bonds: when I babysit your children as a favour, we are bound together by an outstanding social obligation.

The network of social ‘debt’ built up by this sharing is weakened by adding money to the equation. When I babysit your children and you pay me for it in currency, we have no debt, and no resulting social bond. Injecting currency at the community level, then, could increase efficiency, but come at a serious cost in the erosion of social capital. That’s worrying, because social capital is itself a major factor in the resilience of communities – sociologists like Robert Putnam argue that in money-centric societies like America, it has been eroding for decades.

Creating local currency on a blockchain could also create a novel sort of risk: by nature, cryptocurrency can be sent anywhere on the globe, bought and sold freely, and, almost inevitably, financialised and speculated upon. In fact, increasing the convertibility of local currencies is part of Bancor’s stated mission, and its current major product is a trading platform.

For some locales, this could actually be a benefit. Well-run currencies from economically dynamic regions could hold on to their value elsewhere – you’d probably be welcome to spend your Brooklyn Bucks in San Francisco, and vice versa. This could be a boon to local businesses, who would have privileged access to liquid capital, much as the international acceptance  of the US dollar gives American companies an advantage in world markets.

But many local cryptocurrencies, exposed to the wild complexity of the global financial market, could become chum for its circling sharks. As digitisation continues making financial markets more granular, the ability to ‘short’ any cryptocurrency – bet that its value will decline – could become widespread. This would allow speculators to bet against the currency of a city or region, and put downward pressure on its exchange value. Such tactics have had devastating effects when used against national currencies – George Soros’ historic shorting of the British pound, for instance, or the attack on the Thai bhat that kicked off the Asian financial crisis.

Those cases were made possible by mismanagement at the national level, and resulted in massive transfers of wealth from entire national populations to hedge funds and other speculators. Many local currencies rely on fixed exchange rates, or ‘pegs,’ to national currencies – the same sort of pegs that made the baht and pound vulnerable. Local administrators are at least as likely to make mistakes as the Bank of England, and would have fewer resources to defend against hostile speculators.

More from this author

The cracks appearing in the digital economy's foundations

By David Z Morris

A world of local cryptocurrencies, then, could feature regular short attacks on the Portsmouth Pound, the Philadelphia Peso, and the Ypsilanti Yen. But these would have more limited impacts than large-scale shorts on national currencies, both because the impacts would be localised and because community currencies almost always coexist with national currencies. In fact, one of Lietaer’s most frequently made poinst is that using multiple currencies protects against fragility in any one of them.

Digitising local money would undeniably have complex and unpredictable implications. In fact, there may be a core tension to the idea itself: if digitisation inevitably connects a currency seamlessly with global finance, is that currency truly local anymore? Of course a certain level of trading friction may in fact be part of the insulating benefits Lietaer believes local currencies create, a technological moat against assaults by the global financial mob.

But digital currency, at its heart, is largely about eliminating friction – the friction of printing paper money, the friction of central bank authority, and the friction of geography itself. There may be ways to insulate a local digital currency, but this is largely uncharted territory: it’s not clear whether a local currency could prevent a global cryptocurrency exchange from listing it for trade, or perhaps use GPS systems to prevent it from being sent or used outside a particular region.

For their part, Susan Witt and the administrators of Berkshares say there are no plans to go digital anytime soon. They prefer to keep up good relations with trustworthy local banks – and make sure their local currency stays local.