In late January, hundreds of demonstrators descended on Ottawa’s city centre. They demanded the government rescind vaccine mandates and abandon vaccine passports—and they wouldn’t go home until they achieved their goal. But as the so-called Freedom Convoy’s participants turned from partying to picking fights with local residents, the protest gained global, polarizing notoriety. A flood of donations soon followed.
The organizers—whose previous experience had been with marginal far-right causes—initially used GoFundMe, but the company shut down their fundraiser in early February. In response, they turned to Christian crowdfunding website GiveSendGo and to cryptocurrency. Bitcoin and other supposedly decentralized forms of money, designed with the idea that they could bypass government control, seemed to be an obvious solution. Organizers pulled in $1.1 million in crypto donations.
Before the convoy, Conservatives in Canada were already gravitating toward crypto and its peculiar ideology. In January, Conservative MP Pierre Poilievre had even caught the attention of Microstrategy founder and Bitcoin billionaire—a “whale” in crypto parlance—Michael Saylor, who shared a nearly 10-minute video of Poilievre speaking in the House of Commons. Meanwhile, Jason Kenney’s United Conservative Party government was trying to attract crypto mining companies to Alberta to set up the energy-intensive computational infrastructure needed to validate new transactions.
For demonstrators in Ottawa, cryptocurrency had affinity with the idea of freedom they were championing, which assumes that removing the constraints of government regulation will have benefits for ordinary working class people. But not unlike other neoliberal-era reforms, the beneficiaries of the crypto industry turn out to be the whales, not the smaller fish.
The relief provided by cryptocurrency turned out to be short-lived. In February, the federal government invoked the Emergencies Act and stemmed the flow of donations—even to organizers’ crypto wallets. But crypto enthusiasts’ embrace of the convoy gave Canadian conservatives permission to be much more explicit about their interest in the industry and the neoliberal politics it’s rooted in.
Crypto’s rapid rise
Bitcoin is the product of Satoshi Nakamoto, a pseudonymous person or group of people who released a white paper in 2008 that imagined it as a decentralized, peer-to-peer payments system. Within a year, the first Bitcoin transactions were being made. While speculation has persisted about Nakamoto’s identity, Bitcoin and the countless other cryptocurrencies that it inspired struggled to enter into mainstream consciousness—at least until people around the world were stuck at home and those with disposable income started putting it into crypto and associated products like non-fungible tokens (NFTs).
Early in the pandemic, crypto values began to soar, causing venture capitalists and other investors to pour billions of dollars into the industry. They hoped that as crypto values went “to the moon,” to use a common phrase among enthusiasts, they would see massive returns. Those early investments were used to build out crypto services and pay for marketing to get more people to invest in coins and other crypto assets.
More recently, celebrities like Matt Damon and LeBron James appeared in high-profile ads for crypto exchanges, enticing viewers to be bold and put their money in crypto. Some of the marketing cash even found its way into the pockets of Canadian celebrities like Toronto Maple Leafs captain John Tavares, who took some heat for his unintentionally deadpan promotion of a crypto giveaway.
Last year, actor Ben McKenzie and journalist Jacob Silverman wrote that, “the Hollywoodization of crypto is a moral disaster. And for celebrities’ fans, who likely have far less money to lose, it’s potentially a financial one, too.”
Despite the hype, the crypto space is rife with scams and fraud that commonly result in users losing significant amounts of money, if not their life’s savings. Critics compare crypto products to pyramid and Ponzi schemes, and many in the industry don’t even bother to push back. The CEO of a major crypto exchange admitted as much last week, effectively describing part of his business as a Ponzi scheme.
But even with all these problems, opportunistic politicians are still jumping on board.
Decentralizing the economy?
Since kicking off his leadership campaign, Poilievre has only doubled down. He recently stopped into a London-based Middle Eastern restaurant that’s been plowing all its profits into Bitcoin to smoke shisha with its owner and buy some shawarma with crypto.
In a video posted to social media, Poilievre stalls as he waits to make the transaction. When it’s finally processed, he declares, “we did it!” to applause from the crowd as though buying lunch is a major feat. Needless to say, he doesn’t mention the fact his Bitcoin payment required over $100 of electricity.
Of late, Poilievre has also begun echoing the language of Bitcoin maximalists—people who wish to see the cryptocurrency replace what they call “fiat” currencies (like the dollar). He’s claimed crypto will decentralize the Canadian economy and give people more financial freedom. In his view, this is necessary because the government and central bank are “ruining the Canadian dollar” through loose monetary policy and quantitative easing which, he claims, encouraged increased spending during the pandemic.
It should come as no surprise that there isn’t much substance to these arguments.
In fact, Poilievre is echoing the crypto industry’s tactic of promising that technology will deliver social benefits without needing to address root causes of existing inequities. There’s plenty of evidence showing crypto is trying to recreate aspects of the existing financial industry, but with fewer regulations. Inflation is indeed rising, but it’s primarily being driven by energy prices and supply chain disruptions, and secondarily by profiteering by corporations—not monetary policy.
If anything, quantitative easing has artificially inflated the values of cryptocurrencies. When governments printed money during the pandemic, rich investors plowed low-interest cash into short term speculative investments. Bitcoin, Ethereum, and others rose rapidly with the influx of that money, and have fallen as central banks turned off the taps and began raising interest rates.
But reality hasn’t stopped Poilievre, Canada’s crypto evangelist. He’s gone on crypto podcasts with questionable figures, received investment advice from one of the masterminds of the convoy’s crypto fundraising, and has promised to make Canada the world’s “crypto capital” if he becomes prime minister.
The Conservative leadership hopeful has said he invests in crypto—a risky bet given recent price crashes. While his embrace of a volatile asset as a one-size-fits-all solution to a whole range of problems may seem absurd on the surface, there’s much more to it than it may appear.
Neoliberalism baked in
“As long term institutions, I am totally against dictatorships,” Austrian economist Friedrich Hayek once told a Chilean interviewer. “But a dictatorship may be a necessary system for a transitional period.” Hayek’s work was central to the neoliberal economic model implemented under murderous dictator Augusto Pinochet. When the economist later visited, he was named an honorary chair of Chile’s free-market think tank, the Centro de Estudios Públicos.
In a recent essay, Georgetown University professor Stefan Eich outlines how the vision of money championed by crypto enthusiasts recycles many of the ideas espoused by Hayek in the 1970s. The economist’s response to rising inflation was to advocate for a system of competing private currencies in which the government and central bank no longer had control over money. This tracked with early strains of neoliberal thought taking hold at the time which sought to curtail the role of government in favour of having private companies assume many of its functions.
Hayek’s proposals for private currencies were not implemented, but they didn’t go away. Instead, his vision of unregulated currencies and a gutted state were kept alive as a kind of “secret fantasy” of libertarians, writes Eich.
In 1996, Federal Reserve Chairman Alan Greenspan observed that new technologies could one day make Hayek’s dream a reality. In the aftermath of the 2008 financial crisis, that’s exactly what started to happen. Bitcoin didn’t just reiterate Hayek’s ideas, but extended them given the context of the moment. “Where Hayek had sought to take money away from the state, Bitcoin now aimed to remove it both from the state and from banks,” Eich argues. “This was money for an age in which trust had collapsed.”
Bitcoin was built on long-standing crypto-libertarian ideals that seek to use digital technologies and cryptography to escape the purview of the state. Among the currency’s earliest adopters were figures on the extreme right who used Bitcoin to fund their causes and then benefited immensely when its value soared.
Between its foundational ideological commitments and the groups that initially gravitated toward it, the crypto community has served as a springboard to propel right-wing economic thought and conspiracy theories into the mainstream. It’s no surprise that Bitcoin 2022—the industry’s largest convention and the annual meeting point for its biggest enthusiasts—featured such figures as billionaire Trump ally Peter Thiel and Canada’s alt-right guru Jordan Peterson.
Supernomial snake oil
Even though 90 per cent of Canadians have heard of Bitcoin, a mere five per cent have bought in, according to a recent Bank of Canada study. Bitcoin owners in Canada tend to be “young, educated men with high household income and low financial literacy”—not the people currently excluded by the financial system. Meanwhile, despite the claims of all its benefits, the same study found half of cryptocurrency owners reported being victims of “negative events” like price crashes, scams, and data breaches.
Time and again, technology has been wrapped in the promise of freedom. And time and again, it has delivered surveillance, deregulation, and major profits for tech companies at the expense of the working class. Even its promise of a libertarian freedom from state control—whatever you think of it—fails to be realized in practice. Poilievre’s use of Bitcoin as part of a pitch for extreme right-wing populism shouldn’t fool anyone. It’s part of a political program that will ultimately further serve the wealthy while promising to do the opposite.
We’re watching Poilievre push right-wing economic fantasies that promise easy solutions to complex and highly political problems. As the current frontrunner for the Conservative leadership, he’s also selling a vision of private money where the Bank of Canada will be banned from introducing digital currencies to ensure private companies can develop cryptocurrencies that compete with the Canadian dollar. But as the US treasury secretary recently noted, governments didn’t always control their national currencies, and the system of competing currencies that preceded centralized governance was defined by “immense disorder.”
Placing our faith in the crypto industry won’t solve any of the serious challenges facing Canadians today. Instead, increasing the number of people who engage with speculative financial products that are compared to Ponzi schemes by critics and supporters alike will only increase the risk of a devastating crash.
The left does need a response to rising cost of living, the housing crisis, and the problems with the banking system—but it must entail the decommodification of essential services, major investments in public housing, and a massive expansion of public banking to counter the stranglehold of the Big Five banks. Without such an alternative, people frustrated with rising inequality are left to Poilievre’s Bitcoin fantasies.