OF BITCOINS AND BLOCKCHAINS:
THE SOCIAL CONSTRUCTION OF CRYPTO-CURRENCIES
A thesis submitted to The University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities
2017
Thomas Redshaw
SCHOOL OF SOCIAL SCIENCES/SOCIOLOGY
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Contents
Declaration and Copyright ...... 4
Abstract ...... 6
Acknowledgements ...... 7
List of Figures ...... 8
1. Introduction ...... 9
1.1 Networks and Crises ...... 9 1.2 Overview of Chapters ...... 15 2. The Strange Entangled Loop of Society and Technology ...... 21
2.1 The Social Construction of Technology: Interpreting the social in design and development .... 22 2.2 Critical Constructivism: Interpreting politics in design and development ...... 33 2.3 Actor-Network Theory: Reconceptualising ‘the social’ in design and development ...... 42 2.4 Strategies of Power and Sociotechnical Networks ...... 52 3. Meanings, Designs, and Connections ...... 61
3.1 Research Design ...... 62 3.2 Phases of Research ...... 68 3.3 Overview of Data ...... 78 3.4 Ethical Considerations ...... 87 4. Design and History ...... 90
4.1 Cypherpunks: Bitcoin’s first relevant social group ...... 92 4.2 The ‘Block Chain’: Delegating banking to an algorithm ...... 102 4.3 Bitcoin Becomes an Actor: Enrolling ‘miners’ into the network ...... 112 4.4 The Contingency of Mining: Neoliberal values condensed in design ...... 118 5. Adaptations ...... 129
5.1 Namecoin: Adapting the Block Chain ...... 131 5.2 Faircoin: Rejecting the Mining Incentive Structure ...... 144 5.3 Interpreting ‘Freedom’ in Adaptation ...... 162 6. Networks ...... 165 3
6.1 Co-production in Libertarian Networks ...... 167 6.2 The Enrolment of Bitcoin into Strategies of Power ...... 193 6.3 The Irony of Cooptation ...... 210 7. Conclusion ...... 213
7.1 Strategies of Cooptation and Tactics of Counter-Conduct ...... 214 References ...... 226
Appendices ...... 235
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Declaration and Copyright
Declaration:
No portion of the work referred to in the thesis has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning
Copyright i. The author of this thesis (including any appendices and/or schedules to this thesis) owns certain copyright or related rights in it (the “Copyright”) and s/he has given The University of Manchester certain rights to use such Copyright, including for administrative purposes.
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Abstract
Bitcoin is an open source software program that allows its users to make transactions directly over a peer-to-peer network. The design for Bitcoin first appeared in 2008, and has since given rise to various adaptations, or ‘crypto-currencies’ constructed using the same ‘blockchain technology’. The aim of this thesis is to investigate the social elements active in these construction processes, as well as the social networks emerging around these technical practices. The thesis first aims to contextualise these practices by outlining the broad socio-economic and technical changes that made them possible. Theoretical and methodological discussions are then presented in chapters two and three as a means to establishing a process for investigating new technical practices sociologically. The greater part of the thesis then focuses on four case studies presented across three chapters. Firstly, the initial construction of Bitcoin is analysed with reference to the community of ‘cyber- libertarians’ that collaborated on its design and implementation. This is documented in chapter four. Chapter five then analyses two adaptations of Bitcoin, Namecoin and Faircoin, focusing on the particular interests and beliefs that motivated the actors involved. Chapter six then discusses a network of Bitcoin users primarily based in the United Kingdom, and traces the overlapping changes in their motivations and practices, which serve to influence directions in technical development. Ultimately, as outlined in chapter seven, I argue that Bitcoin illustrates the ambivalence of new digital technologies. While on the one hand Bitcoin as a technology is shown to be adaptable and open to modifications in its function and purpose, on the other, the social groups constructing variants of Bitcoin are too shown to be open to influence from broader forces of social power. Understanding these social forces is thus imperative if we are to understand how technology and society shape contemporary life.
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Acknowledgements
This thesis could not have been completed without the support and encouragement of many people. Firstly, I am especially grateful to my supervisors, Graeme Kirkpatrick and Kevin Gillan. From the initial encouragement to carry out the thesis through to the timely phone calls as I neared completion, their continual guidance provided me with inspiration and motivation throughout. I am also fortunate to have worked within a vibrant sociology department at the University of Manchester, where I have benefited from many engaging, enlightening and fun conversations with staff and fellow doctoral students. I am particularly grateful to Nick Thoburn and Gemma Edwards for sharing their time and insights at important stages in the thesis. I am also grateful to Pete Lampard for the many discussions that helped to clarify the ideas that have gone into this thesis, and I would like to thank Jamie Matthews, Feng Zhu, Aimee Harragan, and Matteo Tiratelli for offering their support, ideas and advice at various times.
I would like to give a special thanks to Steve and Audrey Redshaw, who helped me in so many ways, particularly in my final year when I needed a base in Manchester.
Finally, I would like to thank three people to whom this thesis is dedicated. I could not have written this thesis without the incredible support of my mother, Sarah, who is a constant source of inspiration for me. I am also indebted to my grandmother Sheila, whose support and regular phone calls helped me maintain focus throughout the writing process. My greatest debt is to my partner, Candela, who was there every step of the way offering encouragement and support and experiencing every high and low. Thank you all!
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List of Figures
Figure 1 - Phases of Research ...... 69
Figure 2 - List of Interviews ...... 81
Figure 3 - List of Observations ...... 82
Figure 4 - List of Texts ...... 84
Figure 5 - Map of Connections ...... 86
Figure 6 - Key for Map of Connections ...... 86
Figure 7 - The Block Chain ...... 109
Figure 8 - BitcoinTalk Posts ...... 110
Figure 9 - The Mining Incentive Structure ...... 115
Figure 10 - FairCoop's 'Web of Trust' ...... 160
Figure 11 - Activism in the Digital Age ...... 190
Figure 12 - Innovate Finance ...... 205
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1. Introduction
Bitcoin is an open source software program that allows its users to make transactions directly over a peer-to-peer network. The design for Bitcoin first appeared in 2008, and has since given rise to various adaptations, or ‘crypto-currencies’, as well as growing networks of users. Since beginning this doctoral thesis in 2013, the total number of people using crypto-currencies is estimated to have risen from 0.8 million to 4.3 million worldwide (Hileman & Rauchs, 2017: 27).1 This expansion has involved the development of various software programs and hardware devices, as well as networks of interconnected users sharing information and establishing spaces for interaction. The rise in Bitcoin use is therefore a social as well as a technical phenomenon. The aim of this thesis is to investigate the social elements active in the development of Bitcoin. This starts with a brief assessment of the broad socioeconomic processes that set the scene for Bitcoin’s emergence and development. These conditions motivated and facilitated the actors presented in this study in various ways, and thus serve as a necessary backdrop to the rest of the thesis. This is outlined in section 1.1. An overview of the thesis is then presented in section 1.2, which details how the aims and objectives of the study informed a particular approach and how this resulted in a number of case studies.
1.1 Networks and Crises
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution – Satoshi Nakamoto (2008: 1)
Bitcoin emerged in the wake of the 2008 financial crisis offering a means for disparate internet users to exchange value directly, outside the purview of financial institutions and state regulations. ‘Satoshi Nakamoto’, the username of a contributor to an internet mailing
1 This figure reflects the number of unique users of ‘digital wallets’ as of March 2017. Digital wallets are software programs that allow users to access the Bitcoin network. As there exist various other ways in which users can operate crypto-currency accounts, Hileman & Rauchs admit that the total number of crypto-currency users is likely to be considerably higher than their estimates. 10
list for cryptography enthusiasts, proposed the construction of a peer-to-peer network that could function as a form of currency. At this stage, ‘Bitcoin’ was nothing more than a string of characters, or ‘code’, which could act as a software program, a sequence of instructions for hardware devices. This was detailed along with a rationale for its purpose: to ‘allow for payments to be sent directly from one party to another without going through a financial institution’ (ibid.). This would be possible, the proposal claimed, through the construction of a computer network in which data processing was divided among users of the network and carried out on their personal hardware devices. It was argued that this would remove the necessity for large data-processing centres. The Bitcoin network would instead be ‘decentralised’ as information would flow from peer to peer, with no central authority to mediate the process. Subscribers of the Cryptography mailing list began to collaborate on Bitcoin’s construction, and by January 2009 the first ‘block’ of transaction data was processed. This was to be there first of many ‘blocks’, bound together as a ‘chain’ through a sophisticated encryption process that ensured the authenticity and security of the data.2 Written into the first block was the day’s headline from The Times newspaper: ‘The Times 03/Jan/2009 Chancellor on brink of second bailout for banks’.3 From the outset, Bitcoin was a project motivated by challenging the power of financial institutions. In the years preceding Bitcoin’s emergence, the global economy had undergone an intense process of financialisation, as a combination of deregulation and new networked technologies allowed capital to flow freely across borders at unprecedented speeds. This empowered the global finance sector, and created the conditions for the 2008 financial crisis. The motives behind the emergence of Bitcoin, and the technical developments that made it possible, are rooted in this global transformation.
As famously argued by Manuel Castells (1997), new information technologies began to diffuse widely in 1970s, converging into a ‘new technological paradigm’. New information processing and communication devices greatly accelerated the circulation, application, and generation of knowledge and information, triggering a ‘cumulative feedback loop between innovation and the uses of innovation’ that Castells heralded as the ‘information technology
2 ‘Block chain’ has since become a common term used for the technology underlying Bitcoin. 3 For a technical explanation of this process, and the raw data, see ‘Bitcoin wiki’. Accessible here: https://en.bitcoin.it/wiki/Genesis_block#cite_note-block-1 (accessed 21/09/17) 11
revolution’ (1997: 32). The new technological paradigm brought about by this process was characterised by global flows of information through networks of interconnected organisations. As a consequence, space and time were ‘compressed’ as information circulated at unprecedented speeds, considerably impacting on the way firms and institutions made strategic decisions. In this context, regions and cities that possessed the necessary infrastructure increasingly became ‘nodes’ in globalised networks, spaces that intersected global flows of information between organisations.
During this time, many Western economies were experiencing fiscal crises. The economic and productivity growth of the 1950-73 period was slowing, calling into question the dominant form of political-economic organisation, ‘embedded liberalism’.4 Embedded liberalism was a state-led strategy of Keynesian policies that aimed to maintain key sectors of an economy within tightly regulated frameworks. This strategy had delivered a ‘golden age’ of ‘low unemployment, low inflation, and rapidly growing living standards’ in the 1950s and 60s (Glyn, 2006: 1). By the mid-1970s however, unemployment and inflation were surging. The OPEC oil embargo had dramatically increased the price of oil, and ‘the Bretton Woods system of fixed exchange rates backed by gold reserves had fallen into disarray’ (Harvey, 2005: 13). The increased mobility of money to flow across state boundaries, due in part to new developments in technology, undermined attempts to control exchange rates, which under the Bretton Woods system had been the principal means of administering monetary policy. By the end of the decade, embedded liberalism was collapsing and politics in most Western nations was polarised between those that advocated social democracy and central planning, and those that championed deregulation and free markets. As the latter groups began to take power in many nations, sweeping programs of deregulation ‘dis- embedded’ liberalism, stripping away many of the regulatory restraints placed on capital flows. These actions were justified by a neoliberal discourse, committed to delivering ‘freedom’ for individuals by shrinking the capacities of nation states. The buccaneering
4 This term is taken from Harvey (2005). Castells provides an extensive account of the economic slowdown that served to amplify criticisms of this form of organising national economies, concluding: ‘Even if we account for the specificity of some countries, what appears clearly is that we observe a downward trend of productivity growth starting roughly around the same time that the information Technology Revolution took shape in the 1970s’ (1997: 71, emphasis in original) 12
entrepreneurial spirit of individuals and enterprises, unshackled by state regulations, was held up as the solution for reviving productivity.
During the course of the 1980s and 90s, a combination of deregulation and technological transformation gave rise to record levels of capital flowing through globalised networks of financial institutions. As Castells summarises,
The convergence of global deregulation of finance and the availability of new information technologies and new management techniques transformed the nature of capital markets. For the first time in history, a unified global capital market, working in real time, has emerged. (1997: 434)
The extraordinary speed at which capital now flowed between economies made them increasingly interdependent. It also turned currency markets into a ‘global casino’ as major investment banks and multinational corporations began to trade trillions of US dollars on a daily basis.5 New financial products such as ‘futures’ and ‘derivatives’ emerged in this context that generated profits by speculating on future prices as projected by computer programs. Use of this increasing array of financial innovations began to involve more and more forms of capital, including pension funds and private insurance liabilities, ‘introducing a question mark into the hard-bought securities of working people around the world’ (ibid. p436). In effect, financiers increasingly traded consumer debts and speculated on their repayment.
Compounding the risk for working people was a vast expansion in household debt, which in the 1990s rose by more than 20% in most Western nations (Glyn, 2006: 54). This had been stimulated by further financial deregulation, ‘generating aggressive competition for customers and much easier access to credit’ (ibid.). This created unstable economic conditions as the risks of loan defaults were increasingly overlooked. Moreover, the continued innovation of elaborate financial instruments gave rise to ‘secondary markets’, markets that traded bundles of assets – often consumer debts, including subprime mortgages – that were priced based on credit ratings alone, meaning speculators were not
5 ‘In 1995, US$1.2 trillion were exchanged every day on the currency market’ (Castells, 1997: 435) 13
required to know anything about the assets actually contained within the bundles (Crouch, 2011: 117). Short-term profiteering intensified in this environment as financial institutions encouraged consumers to take on loans and mortgages that would then be parcelled and sold as ‘assets’. Prices assigned to ‘bundles’ in secondary markets became more important than the risk assessments of specific assets. The incentive for investors to acquire information regarding underlying value was in this way replaced by the ‘dangerous incentive to rely on asset prices’. As Crouch states, secondary markets ‘came to represent a higher reality than the real economy’. The prices in secondary markets, Crouch explains, ‘had become heavily affected by a chain of guesses and gambles, and collapsed like a house of cards’ in the 2008-9 financial crisis (ibid. p45). Many of the debts that had been parcelled up in asset bundles and speculated on defaulted, triggering the bankruptcy of financial institutions across the world.
With economies worldwide thrown into disarray, national governments stepped in to bail out large financial institutions. This was mostly achieved through ‘quantitative easing’, a process in which central banks and governments create financial assets and liabilities and, in effect, loan ‘new money’ to entities such as financial institutions. As the financial assets and liabilities balance each other, in the same way as loans and debts, this process does not create capital as is sometimes claimed, it serves only to redistribute it.6 In this way governments took on the debt incurred by failing banks in the hope that it would stabilise their economies and consequently redistribute capital in national economies. In the US alone the amount of ‘financial assistance’ generated in this way is estimated to have totalled $16 trillion, yet it did not redistribute capital as intended, and patterns of wealth concentration that preceded the crisis continued (Pettifor, 2017: 62). This occurred largely because national governments did not use the crisis as an opportunity to re-regulate the global finance sector. As a result, the finance industry emerged from the crisis in a more empowered position, while other sectors experience more acutely the consequences of the economic downturn. The most lasting of these consequences is seen in programs of ‘austerity’, in which governments contract public spending in an apparent attempt to service government debt.
6 For an explanation of this process, see Picketty (2014: 550). 14
The rise of the ‘network society’ thus underpinned the global shift towards financialisation and the ensuing crisis. It also created the conditions however, for new forms of collective action and subjectivity. While the global finance sector proved adept at functioning as a global network, many smaller ‘micro-networks’ emerged as disparate users of networked technologies formed ‘virtual communities’ around shared interests and affinities (Rheingold, 1993). Personal computing first gave rise to mailing lists and bulletin boards, now almost antiquated predecessors to the vast social networking sites that, for some scholars, signal the arrival of ‘platform capitalism’ (Srnicek, 2017). Notwithstanding these current trends towards monopoly, Castells’ arguments that the rise of networked computers blurred the line between ‘users’ of technology and ‘doers’ remains valid. ‘New information technologies,’ Castells argued, ‘are not simply tools to be applied, but processes to be developed. Users and doers may become the same. Thus users can take control of technology, as in the case of the internet’ (1997: 32). In many cases, users of the internet continue to find new ways of employing the technology to establish new forms of community around shared interests (Feenberg & Friesen, 2012). Moreover, the ‘cumulative feedback loop’ of innovation that characterises the information technology revolution entails an increase in the diffusion of productive knowledge outside of proprietary restrictions (Castells, 1997: 95). This has allowed for the development of ‘open source’ technologies, where disparate internet users collaborate on constructing non-proprietary software programs to run computer systems (Berry, 2008). It was in this context that Bitcoin emerged. A ‘virtual community’ brought together by shared values collaborated on the construction of an open source technology that could function as an electronic currency, an innovation its developers believed would allow internet users to circumvent financial institutions and in the process challenge their position of power. Informing this radical vision however, were libertarian ideas that portrayed the financial crisis as the result of excessive state power, ultimately drawing on the self-same neoliberal doctrine that justified financialisation, regarding the maximisation of individuals expressing their material interests in free markets as the most effective means for satisfying human aspirations. As this thesis will show, the development of Bitcoin, far from challenging networks of financial power, appears in the most part to have revitalised strands of neoliberal discourse and provided new opportunities for innovation in the global finance sector. 15
1.2 Overview of Chapters
What human beings are and will become is decided in the shape of our tools no less than in the action of statesmen and political movements – Andrew Feenberg (2002: 3)
This thesis aims to provide a sociological analysis of Bitcoin, and this begins in the following chapter where three models from the tradition of science and technology studies (STS) are examined as a means of establishing a sociological framework with which to interpret Bitcoin. The first of these models is social constructionism, a branch of STS that highlights the importance of examining the social context in which technologies emerge. As shown in the work of Wiebe Bijker (1995), the social constructionist model provides a valuable means of interpreting the role played by the interests and beliefs of social groups in determining the directions in which technologies are developed. Bijker provides a range of concepts to illuminate this process, the most central being that of ‘interpretative flexibility’, which denotes a period in technical development in which one artefact gives rise to multiple ‘variants’. This is shown in Bijker’s case study of the bicycle, where the various interests of ‘relevant social groups’ influenced the development of different types of bicycle. Bijker’s insight is to show how ultimately, the variant which came to constitute the dominant type of bicycle did so not because it represented the most efficient form but because it satisfied the interests of multiple social groups. The period of interpretative flexibility thus came to an end for reasons of a social nature, and section 2.1 in chapter two discusses how these findings, and the concepts outlined by Bijker, offer a crucial way of understanding the processes that have given rise to various forms of Bitcoin.
One of Bijker’s key arguments is that social groups engage in ‘micropolitics’ as they seek to extend their understanding of a technical artefact to other actors. This often results in a ‘technological frame’, where one meaning attached to a technology becomes fixed and reified. This aspect of Bijker’s work is advanced in Andrew Feenberg’s critical constructionist model. Feenberg’s work (1999, 2002) highlights the ways in which the meanings attached to technology are done so within a broader context of power. Under capitalism, Feenberg argues, a particular set of norms concerning technology have arisen that prioritise 16
imperatives for control and efficiency in technical development. Instead of discussing ‘technological frames’, Feenberg therefore draws attention to one particular ‘hegemonic rationality’ that serves to guide technical development in ways that reproduce the structures of capitalism. In section 2.2 of chapter two, this argument is outlined in detail, along with the ways in which Feenberg asserts technology may be ‘democratised’. There are certain ways, Feenberg explains, in which social groups may ‘open’ technology to social deliberation and democratic participation. With regards to the internet, Feenberg highlights ways in which groups of users have been able to ‘creatively appropriate’ elements of the internet to serve new purposes that represent their interests. Such instances represent ‘micro-struggles’ for Feenberg that could ultimately converge into a form of counter- hegemony, offering a new way of understanding technology, a new ‘technological rationality’. These concepts, I argue, are vital for interpreting the political significance of technical experimentations among social groups. However, as chapter two turns to section 2.3, the work of Bruno Latour (1992, 2005) is drawn upon to critique Feenberg’s conception of social power. For Latour, social power is not located in ideology but in the intense activities of actors seeking to expand their respective networks. Latour’s actor-network model accordingly sees society as a myriad of ‘momentary associations’, as some networks expand and others diminish. Latour claims that in these processes machines may also constitute ‘actors’ as they perform many of the activities that sustain social networks. The actor-network model thus provides a unique approach to understanding the development of new technologies by outlining their potential to carry meanings and perform actions that sustain and expand the networks of which societies are comprised. Chapter two concludes with an assessment of the arguments presented by Feenberg and Latour, drawing on Dardot and Laval’s (2013) analysis of neoliberal governmentality to argue that while Latour’s model is more effective at clarifying contemporary forms of power, Feenberg’s insights into the way technology is implicated in reproducing power remain valuable.
Having outlined a means for interpreting Bitcoin sociologically in chapter two, chapter three follows with a constructionist model for investigating Bitcoin. Building on the insights of the three theoretical models, three key areas of investigation are identified:
(1) The meanings actors attach to Bitcoin. 17
(2) How social meanings influence processes of design. (3) How Bitcoin connects actors in sociotechnical networks.
Firstly, Bijker’s work had illustrated the importance of investigating meanings and is drawn on again to form a ‘heuristic’ strategy for interviewing actors engaging with Bitcoin. This strategy uses the interview process not only as a method for accessing social meanings, but also to ‘roll a snowball’ and generate an understanding of the contexts within which research participants act. As such, opportunities for further interviews and observations are sought from interviewees, as well as texts that they produce or circulate within their respective group. Secondly, influenced by Feenberg’s arguments concerning technology design as a process in which social interests are ‘condensed’ with technical logic, texts detailing the design process of Bitcoin variants were collected. These texts form the basis for a ‘technical code analysis’ which focuses on the ways in which social meanings and technical elements are brought together in design. Thirdly, following Latour’s arguments, the methodological approach taken prioritises ‘following the actors’ that engage with Bitcoin and tracing their connections with technologies, texts, and other actors. The resulting constructionist approach produced a variety of data sets and these are detailed in chapter three. Section 3.2 outlines how data collection started within a local group of Bitcoin enthusiasts and sprawled out as connections between actors, texts and technologies spread across national boundaries and involved various technologies. This brought to light a number of contexts which were shaping the construction of Bitcoin in various ways. In the latter phases of fieldwork, some emerging contexts were pursued while others were not, and this was largely a matter of pragmatic considerations, as specified in section 3.2.3 of chapter three.
The first case examined in detail is the small network of cryptography enthusiasts that initially constructed Bitcoin, and this is presented in chapter four. These actors constitute Bitcoin’s first ‘relevant social group’, a group brought together by shared concerns regarding the capacities of nation states to exploit computer networks as a means of enhancing their power. The construction of ‘crypto’ systems, networks in which information is encrypted, were seen as a means of addressing these concerns. In this context Bitcoin constituted one of many attempts to construct a cryptosystem that could function as an electronic currency. 18
In section 4.1, the previous attempts of these actors to construct ‘electronic cash’ are analysed, revealing many of the technical elements and social meanings that were later to come together in the design for Bitcoin. Bitcoin’s design is then analysed across two sections. The first examines the key innovation made in Bitcoin’s design, the ‘block chain’, and how this performs a libertarian program of action: automated banking. Section 4.3 then analyses the way Bitcoin is designed to ‘enrol’ an increasing amount of humans and machines into servicing the network. Bitcoin achieves this by automatically releasing rewards in units of Bitcoin to machines, and their human operators, that contribute to the maintenance of the network by processing transaction data. This section reveals that this element of Bitcoin’s design prescribes competitive practices among Bitcoin users, and this serves to expand it as a network. Section 4.4 then provides a ‘technical code analysis’ of this feature in Bitcoin, drawing on Feenberg’s concepts to interpret the role of neoliberal values in its construction.
Chapter five then moves on to examine how Bitcoin has been adapted to serve new purposes in different contexts. Two case studies are presented which focus on the construction of Bitcoin ‘variants’, Namecoin and Faircoin. In section 5.1, the interests, beliefs and practices of Namecoin’s developers are discussed, followed by an analysis of the choices made in Namecoin’s design and development. This analysis reveals the influence of social meanings in the design process, as an ideological commitment to limiting the capacity of large organisations to exert authority over flows of information on the internet leads the developers to construct a version of Bitcoin that allows users to register web domain names on a ‘block chain’, removing the necessity for an organisation to record and validate domain information. This, the developers believe, will ‘free’ information from institutional power and consequently liberate individuals from programs of surveillance and censorship. Section 5.2 then employs the same approach to examine a network of activists in Catalonia. Actors in this context encountered Bitcoin and were intrigued by its potential to assist in their shared goal of creating sustainable economic systems. An ideological commitment to communitarianism among these actors led to a rejection of Bitcoin’s ‘capitalistic’ features, and the technology was redesigned in a way that reflected their shared values of cooperation and sustainability. For these actors, Faircoin was understood as one of many 19
technologies that may enhance the freedom of communities to govern themselves. In concluding this chapter I draw on the two concepts of freedom outlined in Isiah Berlin’s famous (1969) essay to contrast the objectives of the two groups of actors discussed. I argue that this distinction clarifies an element of Feenberg’s critical constructionist model by highlighting a difference between types of ‘creative appropriation’. While the developers of both Namecoin and Faircoin consciously appropriated technology in the pursuit of emancipation, only Faircoin led to the opening of technology to social deliberation. I argue that this suggests creative appropriations of technology require a ‘positive’ conception of freedom as this prioritises the use of technologies as a means to practice self-governance rather than a developing tools to elude particular strategies of governance.
While chapter five focuses on groups that challenge the forms of usage that Bitcoin’s initial design prescribes, chapter six details the activities of social groups that follow these prescribed activities. For these groups, Bitcoin represents a technological breakthrough that is ushering in an era of libertarian social change. In section 6.1 the beliefs and practices of two organisations, ‘Bitcoin Manchester’ and the ‘Institute of Crypto-Anarchy’ are examined. For the actors involved in these organisations, using Bitcoin and learning libertarian monetary theory are interdependent parts of the same process. Each of Bitcoin’s technical components are understood with reference to libertarian ideas, and in turn belief in libertarian ideology is strengthened by an engagement with Bitcoin. Bitcoin demonstrates for these actors that libertarian ideas work, and in this sense I argue Bitcoin represents a ‘nonhuman actor’ in Latour’s terms as it ‘translates’ libertarian theory into a technical discourse that carries the authority of scientific truth. This chapter also examines how networks of libertarian Bitcoin users in the UK increasingly came up against groups with different interests in the technology. In section 6.2, entrepreneurs are interpreted as another ‘relevant social group’ alongside libertarians, similarly engaged in extending their definition of Bitcoin through ‘micropolitical’ activities that seek to develop the technology for commercial purposes. This takes place in a context in which the strategic interests of financial and state institutions appear to be transforming the social networks that have emerged around Bitcoin in the UK. Ethnographic findings indicate that a state-led strategy to foster innovation in the finance sector is occasioning a demographic change in Bitcoin 20
networks, and an attitudinal change among many actors. Ultimately, I argue that this represents the cooptation of Bitcoin by strategies of power, which enrol actors into developing Bitcoin in ways that energise dominant financial networks.
In the concluding chapter of this thesis, I address a key question that emerges in chapter two, reviewing the findings of the thesis in an effort to determine which networks emerging around Bitcoin are sustaining and energising dominant networks, and which exhibit the potential to transform them in ways that weaken their control. Bitcoin, I argue, remains in a stage of interpretative flexibility with many variants emerging. However, as Kline and Pinch assert, ‘interpretative flexibility does not continue forever’ (1999: 133). The strategic interests of powerful networks appear to be converging around a particular definition of Bitcoin in ways that significantly impact on the micropolitical activities of social groups engaging with the technology. As a result, Bitcoin is increasingly defined as an innovation in financial technology that promises to increase the efficiency of banks, rather than supplant them.
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2. The Strange Entangled Loop of Society and Technology
How sociology can help us to understand Bitcoin
The purpose of this chapter is to outline a theoretical framework with which to interpret Bitcoin sociologically. A significant degree of ambiguity has surrounded scholarly attempts to define Bitcoin and this presents an immediate obstacle concerning which fields of sociology are most appropriate. Should, for example, concepts from the sociology of money be prioritised? Or should Bitcoin be analysed alongside other peer-to-peer networks which have emerged in recent decades? While it is possible to offer a broad definition of Bitcoin as a new technology that brings such fields together, such efforts have led to considerable controversies. Debates continue over whether Bitcoin is a digital ‘currency’ or ‘asset’ (Baur et al, 2015), and while there appears to be increasing consensus that Bitcoin has provided a new digital ‘platform’ through its ‘blockchain technology’, what this means exactly, and what it is a ‘platform’ for, remain in question (Pilkington, 2015; Foroglou and Tsilidou, 2015; Blundell-Wignall, 2014; Scott 2016). For these reasons, the tradition of Science and Technology Studies (STS) immediately stands out as an invaluable source of concepts and frameworks with which to understand Bitcoin.
The debates and controversies arising around new technologies comprise a central focus for the “new sociology of technology” established by Weibe Bijker, Trevor Pinch and Thomas Hughes in the 1980s.7 STS has since splintered into various approaches, yet all of these stem from a common starting point for analysis. This centres on describing the ways in which different actors are involved in constructing new technologies. Such constructive processes, STS posits, are not confined to engineers but involve a variety of actors. Furthermore, they influence not only the meanings attached to a technology but also how it is designed and developed. New designs for example, often emerge as a response to problems with existing technologies, problems which arise when social groups interact with the technology. It is for this reason that studies of science and technology require sociological analysis, to throw light on the many actors and conditions that shape technology.
7 Bijker, Pinch and Hughes outline this origin (see 2012: preface) 22
This chapter will map the concepts emerging from STS and discuss their implications for an investigation of Bitcoin. In the first section, the ‘social construction of technology’ (SCOT) model will be discussed which offers an indispensable set of conceptual tools with which to interpret the influence of various social groups in technical development. This section will draw on the case studies of Weibe Bijker to illustrate how effectively the SCOT model can reveal the various social actors and conditions that shape emerging technologies. Subsequent sections build on Bijker’s insights critically, moving the discussion beyond how social conditions influence technology, to question how the interactions around technologies influence social systems. This begins in section 2.2 with a discussion of Andrew Feenberg’s ‘critical’ constructivism, whose work offers a means of transcending the level of local interactions around new technologies and interpreting the influence of broader and more powerful social interests. Interactions around technologies, Feenberg asserts, are sites in which social power is deployed, and are therefore ones in which it may also be resisted. In section 2.3, discussion turns to the actor-network theory of Bruno Latour, who reconceptualises the notion of ‘social’ interests put forward in the other two approaches. Latour’s arguments are persuasively made, and provide important considerations for the sociological analysis of technology as well as a range of useful concepts. The final section of this chapter draws on the work of Dardot and Laval (2013) to assess the merits of a constructivist approach in light of contemporary, neoliberal strategies of power. Ultimately, I argue that concepts from Latour’s actor-network theory help to sharpen the method pioneered by Bijker and the imperative of Feenberg’s work: to highlight the role of technology in reproducing forms of social power.
2.1 The Social Construction of Technology: Interpreting the social in design and development
Technological systems contain messy, complex, problem- solving components. They are both socially constructed and society shaping – Thomas P. Hughes (1987: 51) 23
In his recent book, Andrew Feenberg (2017) discusses M. C. Escher’s famous print, ‘Drawing Hands’, in which two illustrated hands appear to emerge from the page to paradoxically draw the other into existence. This image of ‘co-production’, Feenberg says, captures the strange entangled loop of society and technology. “Social groups exist through the technologies that bind their members together… But once bound together the members gain a power over the technologies that bind them” (p17). In many ways the aim of STS is to disentangle this loop and identify the processes of co-production. Each approach associated with STS provides a different means of achieving this, identifying distinct processes, and proposing different modes of interpretation. As we shall see in later sections, Feenberg’s work portrays the self-drawing hands of technology and society in a dialectical model of domination and resistance. In Bruno Latour’s work however, we will see a model which makes no distinction between society and technology, emphasising instead the co- production of sociotechnical networks by interdependent human and ‘nonhuman’ actors. To understand the insights of these approaches, and how they may be useful for investigating Bitcoin, requires a preliminary discussion of the social constructivist approach to technology. This first section will focus on the approach developed by Bijker and Pinch (1984), the Social Construction of Technology (SCOT) model. Particular attention will be paid to Bijker’s pioneering case studies (1995) in which he outlined the valuable concepts of interpretative flexibility, relevant social groups, stabilisation, closure, and technological frames. Such concepts, I argue, provide an indispensable toolkit for identifying both how to investigate Bitcoin and how to interpret data gathered. This section will conclude by reflecting on the usefulness of these concepts for investigating Bitcoin, and how power can be accounted for in the SCOT model.
Bijker and Pinch first outlined their SCOT model in an (1984) essay ‘The Social Construction of Facts and Artifacts’ as a ‘sociology of technology’ characterised by a distinctive ‘multi- directional view’ of developmental processes in technology. This challenged ‘Whiggish’ understandings of history which saw development as an uninterrupted, linear path of progress. This view was implicit in many historical accounts of technology that were influencing studies of innovation at the time, and challenging this view was a key feature of the science studies tradition. Stages in development, Bijker and Pinch argued, only appeared 24
linear after the fact. What historical analyses of technologies had shown, was that many variants of a new technology emerge and co-exist. What determines the success of one variant is a process of ‘variation and selection’ similar to the processes of evolution in biology. Moreover, such success is not contingent on technical superiority alone, but on a range of nontechnical factors specific to the contexts in which artefacts emerge. On this basis, Bijker and Pinch proposed a ‘multi-directional model’ for understanding technical development, a model which examines the different variants of artefact that arise. This model brings into focus the social factors that influence the ‘selection’ process.
The model put forward by Bijker and Pinch is founded primarily on research undertaken by Bijker and later elaborated in his 1995 work, Of Bicycles, Bakelites and Bulbs. Here three case studies are presented which provide historical analyses of technical development based on ‘thick description’. The influence here of Clifford Geertz’ (1973) anthropological work will be examined in more detail in the following chapter on methodology. The immediate point is that through ‘thick description’, Bijker is able to pay close attention to the meanings assigned to the many variants of technological artefacts discussed in his case studies. These meanings lie at the heart of the SCOT model, as they are instrumental in the identification of problems.
Bijker observes that technical development is primarily driven by problems that emerge with existing technologies, and how solutions for these problems are arrived at. His insight is that the identification of problems and solutions is not a matter left solely to engineers. It involves a variety of social groups, each productive of their own meanings that they attach to an artefact:
In deciding which problems are relevant, the social groups concerned with an artefact and the meanings that those groups give to the artefact play a crucial role: A problem is defined as such only when there is a social group for which it constitutes a “problem” (Bijker, Hughes, and Pinch 2012: 23)
The clearest example Bijker provides for this process is in his case study of the bicycle. Bijker describes a diverse range of bicycles that began to appear in mid-nineteenth-century 25
Europe. ‘Hobbyhorses’ and ‘velocipedes’ were variants which enjoyed much popularity in France. Some were ‘running machines’ with no pedals, while others had enlarged front wheels and small back wheels that faired particularly well in racing contests. This latter variant has become something of an historical oddity. Somewhat awkward and dangerous, the penny farthing or ‘high wheeler’, now serves as a symbol of Victorian eccentricity in popular culture. More significantly, it strikes us as an inferior predecessor to the contemporary bicycle. What Bijker’s study reveals however is that the high wheeler actually existed alongside many variants of bicycle, each associated with particular practices and social groups. Moreover, the high wheeler was in many ways the most popular form.
While it was acknowledged that there were several safety problems with the high wheeler, for many young and upper class men it was more desirable precisely because it was risky and difficult to use. For these ‘young men of means and nerve’, the high wheeler was a type of sports equipment used for racing (1995: 37-45). Safer variants of the bicycle existed but were used by other social groups who defined them as modes of transportation. The high wheeler and other cycling machines such as the tricycle, were not different stages in the history of the bicycle but separate artefacts with distinct meanings. Bijker sought to interpret the ways that social groups had generated those meanings, and in the process, constituted the artefacts as distinct entities. He did this by introducing two concepts.
Firstly, these different groups represented relevant social groups, groups which ‘share the same set of meanings, attached to a specific artefact’ (Bijker, Hughes, and Pinch 2012: 23). These groups are relevant for understanding technology because the meanings they assign to artefacts distinguish it from other artefacts, define its purpose, its problems, and influence its development. Many relevant social groups had seen particular variants of bicycle as modes of transportation, and this had led to safety problems which influenced designs for a ‘safety bicycle’. The sporting interests of young upper class men however, fuelled the production of bicycles with an enlarged front wheel. Bijker therefore states that
Relevant social groups do not simply see different aspects of one artefact. The meanings given by a relevant social group actually constitute the artefact. There are as 26
many artefacts as there are relevant social groups; there is no artefact not constituted by a relevant social group. (1995: 77)
On this basis, Bijker argues that the starting point for analysis in the SCOT model should be to describe the world as it exists for these social groups, and how they come to define problems with the technology (1995: 49-50). Bijker also notes that many ‘nonusers’ of artefacts may also be considered relevant in this process, citing the example of ‘anti-cyclists’ that shared negative views on the dangers associated with the bicycle (Bijker, Hughes, and Pinch 2012: 24).
To account for the range of meanings that social groups attach to artefacts, Bijker introduces the concept of interpretative flexibility. Bijker’s historical analysis of the bicycle shows that during the mid to late nineteenth century there was a period of interpretative flexibility. A key constructionist aspect of this concept is that it depicts a period in which the bicycle did not simply mean many things to many people, it was many things. This is integral to the SCOT model. Interpretative flexibility represents a moment in which an innovation gives rise to a range of different artefacts. From an historical perspective, this appears as a developmental stage only when, in an evolutionary sense, some variants ‘die’ while others ‘survive’ (1984: 411). Bijker introduced two further concepts to explain how the ‘survival’ of artefacts depends as much on social conditions as it does technical elements.
Of course, ultimately the high wheeler became an anachronism and a low-wheeled bicycle prevailed. Yet the high wheeler had been defined by its young, male, upper class riders as a sports object for racing. The safety bicycle on the other hand, existing alongside the high wheeler, had been defined by its users as a mode of transportation. This distinction raises the question, why did the high wheeler not continue to exist on its own terms as a racing bike? In the way that, for example, the skateboard has persisted as a sports object for many groups in recent decades? Bijker explained this by detailing the emergence of the air tire, and introducing two concepts that are closely related, closure and stabilisation.
The air tire had at first been introduced as a solution to vibration. This was a problem identified by many users of low-wheeled bicycles. Groups of sporting cyclists riding high 27
wheelers did not express concern for such a problem. When racing cyclists did use the air tire however, they found that it made low-wheel bicycles faster than high wheelers. Manufacturers of air tires therefore promoted their product as ‘high-speed tires’ and sponsored racing events. This began a process Bijker describes as closure. The marketing efforts of air tire manufacturers and the interests of other relevant social groups were increasingly satisfied by one artefact, the low-wheeled bicycle with air tires. This began to close the period of interpretative flexibility for both tires and bicycles. Different technologies, understood in different ways by different social groups, gave way to one device that fit the interests of each group.
Closure, in the analysis of technology, means that the interpretative flexibility of an artefact diminishes. Consensus among the different relevant social groups about the dominant meaning of an artefact emerges and the ‘pluralism of artefacts’ decreases (1995: 86)
The innovation of air tires had led to the reconciliation of various social groups around one particular model of bicycle. This triggered the decline of high wheelers, which remained meaningful only for diminishing groups of enthusiasts. At the same time, it spurred the continued existence of the low-wheeled bicycle, assigning to it a new meaning and purpose: sport.
Another factor in the decline of interpretative flexibility is the stabilisation of meaning within relevant social groups. This concept has a discursive element to it, as it focuses on changes in the way artefacts are described, changes that signal a stabilisation in the meanings generated by a social group. With reference to the low-wheeled bicycle, Bijker describes how a group of engineers increasingly used the term ‘safety bicycle’ to denote the combination of a specific set of features. This stabilised the meaning of one variant as the ‘safety’ for this group, identifying that variant as significant, and in the process dismissing other variants. Stabilisation is therefore a related process to closure, it also reveals a process of selection, yet it denotes the discursive development of an artefact within a social group (or groups) rather than the reconciliation of different interests around one artefact. The 28
‘stabilisation of an artefact’ Bijker and Pinch summarise, signals ‘the closure of debate’ (Bijker, Hughes, and Pinch 2012: 37).
One of the major questions unanswered in Bijker’s study of the bicycle is the role played by power in the defining of objects, and in explaining the success of some artefacts and the decline of others. Why are some meanings ultimately privileged over others? And how do some social groups become ‘relevant’ while others are excluded? Bijker turns to these questions in later case studies, putting forward a framework that links ‘semiotic power’ with a ‘micropolitics of power’.
To outline Bijker’s understanding of power in the SCOT model, it is necessary to briefly introduce a final concept from his case studies. In his study of the Bakelite, one of the first synthetic plastics, Bijker introduced the concept of technological frame to expand his interpretation of ‘meaning’ that relevant social groups attach to artefacts. Bijker explained that when the meaning attached to artefacts begins to stabilise, it tends to involve a range of goals, key problems, ideas, practices, and knowledge that structure interactions:
A technological frame structures the interactions among the actors of a relevant social group. Thus it is not an individual’s characteristic, nor a characteristic of systems or institutions; technological frames are located between actors, not in actors or above actors. A technological frame is built up when interaction “around” an artefact begins. Existing practice does guide future practice, though without logical determination. If existing interactions move members of an emerging relevant social group in the same direction, a technological frame will build up; if not, there will be no frame, no relevant social group, no future interaction. (1995: 123)
Bijker cites the influence of Thomas Kuhn (1970) here, and this is clear in the way he sets out the formation of a technological frame as a combination of technical possibilities and normative assumptions that could develop into a ‘paradigm’ in scientific thinking. Yet more relevant to this discussion is the influence of Foucault’s concepts of ‘power/knowledge’ and ‘micropolitics’ which Bijker elaborates later in the book when discussing the role of power in the SCOT model. 29
Bijker argues that the interactions around an artefact generate meaning, and when this meaning starts to ‘stabilise’ it can become ‘fixed’ for a time. As these stabilised meanings diffuse through social groups, they begin to constitute a technological frame which defines objects, identifies who can do what with them, and where and how they can do it. For Bijker, technological frames thus represent the ‘taken-for-granted categories of existence’ which arise when ‘meanings become fixed or reified in certain forms’ (1995: 263) As these technological frames expand across many social groups, they constitute power through the structuration of action. This, he says, is a ‘semiotic power’ that structures action for social groups by defining objects and assigning practices to subjects.
To explain the various meanings generated by relevant social groups in these terms, Bijker describes how the formation of technological frames always involves a ‘micropolitics of power’. Bijker draws on Foucault’s theory of disciplinary power in which various practices and techniques cumulatively contribute to the transformation and structuration of action. The processes in which meaning is attached to artefacts can be read in this way, Bijker explains:
In Foucault’s (1975) study of the development of discipline, the micropolitics of power results in producing obedient human bodies; in my framework the focus will be on producing technological frames (1995: 263)
Bijker’s use of Foucault’s disciplinary power to explain the formation of technological frames is not detailed in much length, yet it reveals much regarding the degree of agency he affords to relevant social groups. The interactions of relevant social groups around new technologies constitute ‘micropolitics’ as the generation of meaning involves the simultaneous exertion of power.
In Foucault’s work we see how the production of scientific knowledge has historically involved a process of objectification that requires force. Commonly we see this process whenever matter is taken into a laboratory for study. Foucault’s insight was to trace how this process was applied to human subjects, with institutions and ultimately entire bodies of 30
knowledge arising predicated on the subjugation of human bodies as objects of knowledge. Foucault therefore argues that
power and knowledge directly imply one another; that there is no power relation without the correlative constitution of a field of knowledge, nor any knowledge that does not presuppose and constitute at the same time power relations (1979: 27)
Foucault thus speaks of the spread of fields of knowledge as the simultaneous spread of techniques of power, which increasingly envelop everyday life. Fields of knowledge become and remain dominant ‘discourses’ through the exercising of a machinery of power: a range of procedures, techniques and mechanisms that allow for the production and diffusion of knowledge. Fields that cannot sustain this process become marginalised and lose their claims to ‘truth’.
For Bijker, it follows that the success of the meanings generated by relevant social groups concerning new technologies is largely determined by the corresponding means by which these meanings can be produced and disseminated. This is a process Bijker depicts in his case study of fluorescent lighting, a technology that emerged in the ‘capital-intensive’ ‘oligopolistic market’ of 1930s America (1995: 200). The relevant social groups in this case were economically powerful organisations such as General Electric, along with ‘cartels’ of other companies and the US government. Ultimately, Bijker showed how these actors exercised different technological frames that defined variants of the fluorescent lamp, frames they were able to project upon the US public through marketing and teaching strategies, often involving a vision for a more modernised America. The interpretative flexibility of fluorescent lighting came to an end when one technological frame became dominant after a range of relevant social groups had engaged in a series of micropolitical struggles. From then on, this technological frame defined fluorescent lighting, structuring the way subsequent innovations were developed and how we understand them.
Technological frames, therefore, are very closely aligned to Foucault’s conception of power/knowledge (1980; Sheridan, 2008). There is no discernible centre of power productive of the ways we understand and use technology. Instead, emerging artefacts 31
combine with the interests and beliefs of relevant social groups, giving rise to a ‘frame’. Some frames carry meaning that can reach levels of fixity approximating ‘truth’, whereas other frames and artefacts fade away, their meanings and associated practices marginalised and subjugated, like the once-popular penny farthing races that now appear quaint and comical.
In this reading of SCOT, interpretative flexibility represents an opening for micropolitics, a period in which social groups are able to attach meanings to new objects that could have potentially transformative social implications should they become fixed and reified. Existing technological frames would however, possess the upper hand, providing meanings and practices likely to envelop new technologies. Networks of relevant social groups engaged in ‘micropolitics’ around fluorescent lighting, drawing on a machinery of power to participate in marketing, patents, innovations, and making scientific claims. Ultimately one technological frame emerged that socially constructed fluorescent lamps: one definitive truth came to define them as objects, establishing their place in social life and the networks of electricity that fostered their development. The artefacts that added to the now stable and fixed technological frame, have been recorded in history as part of the ‘straightforward goal-oriented path toward high intensity general illumination,’ and the controversies between many actors previously involved were marginalised, ‘disappearing from the story’ (1995: 267). The exercising of particular forms of ‘micropower’, such as marketing, had facilitated the rise to dominance of one technological frame.
This reading of Foucauldian power/knowledge within the SCOT model goes some way in helping us to understand the role played by power in the social construction of technology. It points our attention towards instances of ‘micropolitics’ to understand why some meanings become dominant over others, and how the meanings of some social groups may be marginalised while others stabilise into reified technological frames, or ‘truths’. Through certain strategies, some relevant social groups are able to expand their technological frame, yet not all groups are able to exercise such strategies. Why they cannot is largely unaddressed by Bijker. Furthermore, the conception of power in the SCOT model suggests we ought to investigate existing technological frames which may be defining the technologies around us and enveloping new innovations. How we identify these frames 32
however, is less clear in Bijker’s writing. This is significant because if technological frames structure human action as Bijker suggests, they may constitute a form of social domination. This issue is not addressed by Bijker, whose study focuses instead on providing a means of understanding particular case studies and does not attempt to map a general theory of power. For such an understanding of power, we must return to the work of Andrew Feenberg, who argues that modernity has been dominated by something that equates to one particular ‘technological frame’ – hegemonic technological rationality. First however, I want to briefly recap the insights the SCOT model has presented for understanding Bitcoin.
Bijker and Pinch’s SCOT model can be summarised in seven key insights valuable for understanding the emergence of a new technology such as Bitcoin. (1) Their multi- directional model suggests we should examine the many variants of Bitcoin that have emerged, and detail the social contexts in which they have done so. (2) Their reading of problems as a driver of technical development suggests it is crucial to investigate the meanings attached to technologies by social groups, as these meanings are instrumental in the emergence of problems, problems which trigger new designs and developments. This insight also highlights the need to (3) identify ‘relevant social groups’ that attach their shared set of meanings to an artefact. The SCOT model also helps us to (4) understand the debates surrounding the purpose and meaning of Bitcoin, debates such as those referred to at the beginning of this chapter. The SCOT model would suggest these debates show that Bitcoin appears to be in a period of ‘interpretative flexibility’, existing as many distinct artefacts each with their own meaning and purpose.
The concept of ‘closure’ (5) suggests that an investigation of Bitcoin should highlight instances in which the interests of social groups, and the meanings they give to particular variants of Bitcoin, are brought together and reconciled by a new innovation. This may signal that a process of ‘closure’ is underway, throwing light on the direction in which Bitcoin is being developed by showing which variants are prevailing and which are fading away. (6) The concept of stabilisation can also help us to interpret the debates surrounding Bitcoin. Should these debates, within or among social groups, reach one definition that then becomes dominant, this would signal the ‘stabilisation of the artefact’ within that group (or groups). An investigation of Bitcoin should therefore pay close attention to the definitions 33
for artefacts expressed by social groups and how they change. Such changes may be a sign that interpretative flexibility is decreasing and that one meaning is becoming dominant, reaching the ‘fixed and reified’ state of a ‘technological frame’. Finally, (7) this latter concept can help us understand how to interpret the role of power in the emergence of Bitcoin. The concept of ‘technological frames’ directs attention towards the ways relevant social groups are utilising strategies which amplify their particular ‘frame’. This final point is at this stage rather under-theorised, and will be expanded in the following sections, beginning with a discussion of Feenberg’s critical theory of technology.
2.2 Critical Constructivism: Interpreting politics in design and development
In subjecting human beings to technical control at the expense of traditional modes of life while sharply restricting participation in design, technocracy perpetuates elite power structures inherited from the past in technically rational forms – Andrew Feenberg (2006: 181)
Feenberg’s ‘critical constructivism’ situates the insights of the SCOT model within a broader historical understanding of power relations in modern societies. The capacity for technology to structure human action, Feenberg observes, affords considerable power to those that govern its design and development. Under capitalism this has allowed the managers and operatives of industry to determine much of social life in ways that have become normative and unquestioned. Instead of discussing ‘technological frames’, Feenberg therefore draws attention to one particular ‘hegemonic rationality’ which has justified the technocratic administration of technical development throughout the modern era. This rationality defines technology as politically neutral. As a consequence, the ability of industry to reproduce the conditions of its supremacy through its authority over technical development is largely unchallenged by public scrutiny or accountability. However, Feenberg argues that the capacity for technology to structure action also highlights its liberating potential. 34
Through participation in technology design, social groups can realise this potential and influence technical development in ways that serve their interests. Ultimately, such participation could challenge hegemonic definitions of technology and result in a new ‘democratic rationalisation’ of technology. In Feenberg’s critical constructivism we therefore see the insights of SCOT informing a dialectical model of domination and resistance, in which interpretative flexibility constitutes an historic moment in which social groups can contest technocratic power and ‘democratise’ technology. This section will elaborate on these insights from Feenberg’s theory, focusing on three key concepts he introduces: hegemonic technological rationality, operational autonomy, and democratic rationalisations. Ultimately, I argue that Feenberg’s work provides the broader focus necessary for understanding the significance of the interactions that take place around new technologies.
In Questioning Technology (1999), Feenberg outlines the contribution of the SCOT model for understanding the social forces that influence technical development. Social constructivism has revealed how there always exists a range of possibilities in design and development, and the choice between alternatives often “depends neither on the technical nor economic efficiency, but on the ‘fit’ between devices and the interests and beliefs of the various social groups that influence the design process” (79). Feenberg’s insight is to highlight the political implications of this process. Not all social groups, Feenberg observes, are able to influence the design process. This capacity is restricted to those that can mobilise considerable resources, and their influence on technical development often serves to reproduce the conditions that secure their authority. Feenberg draws on research by David Noble (1984) to illustrate that this process is largely a product of how technology is perceived.
Noble’s study traced the emergence of numerical controlled machine tools (NCM) that automate much of modern manufacturing. His findings revealed that at the time of NCM’s emergence, ‘record-playback’ machinery was also available that provided a similar function. Record-playback machinery however, failed to attract much investment while in contrast, NCM received considerable and sustained investment. This, Noble claims, is due to the ‘total control’ offered by NCM as, unlike record-playback, it removed the necessity for skilled labour. Feenberg summarises: 35
Managers found the prospect of gaining total control so attractive that a consensus quickly formed in favour of the digital systems, long before these were proven and even after it had become apparent that they could not offer all the promised cost savings and productivity increases. Noble’s argument refutes the instrumentalist notion of the neutrality of technology by displaying the actual workings of a major choice that defies conventional economic and technical logic. (2002: 49)
Feenberg highlights here the influence of managerial interests in the development of NCM, yet his emphasis is not that technical development had been manipulated by a particular group. Instead, Feenberg argues that this reflects a more complex matter involving how technology is perceived in such contexts. The interests of those funding and designing technology is undoubtedly significant, but for Feenberg the choice between NCM and record-playback was not perceived as a ‘nontechnical’ decision by those involved. On the contrary, NCM was chosen as it appeared technically superior and more efficient. Despite the failings of NCM that Noble’s study exposes, the actors involved in its development shared an understanding of technical ‘progress’ in which increases in managerial control are immanent and normative.
Feenberg argues that historically under the expansion of capitalism, imperatives for increasing control, power, and efficiency have been ‘condensed’ with technical logic in what he terms the ‘capitalist technical code’. While many nontechnical values, such as ethical and social considerations, are perceived as separate and often inhibiting to technical reasoning, others – such the initiative to increase the level of control held by management – are assumed integral. This has given rise to what Feenberg terms hegemonic technological rationality (HTR), a perception of technology that characterises the modern era. The social imperatives of capitalism are condensed with technical reason in a rationality which serves to (1) reproduce capitalist imperatives in neutral, technical discourse; (2) conceal the influence of powerful interests in technical development; and (3) consign technical development to technocratic control. It is in this sense that ‘technocracy perpetuates elite power structures inherited from the past in technically rational forms’ (2006: 181). HTR is an effective hegemony as it normalises a process that reproduces power structures in new technical forms with no recourse to democratic processes 36
Feenberg argues that HTR underlies the ability of capitalism as a social system to produce strategies of power with no obligation to regard certain consequences, or ‘externalities’. HTR frees capitalism from such limitations by integrating its goals into normative conceptions of technical development. This provides its dominant operatives, such as managers and technicians, enhanced operational autonomy – the ability to make strategic choices concerning various areas of social life.
The preservation and enlargement of operational autonomy lies at the heart of the capitalist technical code. Any society in which technical development is governed by this code will exhibit the chief traits of capitalism regardless of its property system or political arrangements (1995: 93)
Technocracy thus underpins capitalist domination for Feenberg. In this analysis a form of technological agency becomes a principal mode of resistance. It is vital for democracies that citizens play an active role in influencing the direction of technical development. The concept of operational autonomy helps to clarify a form of domination which, following Feenberg’s argument, contextualises all cases of technical innovation and development. Furthermore, this concept highlights the political saliency of studying the emergence of new technologies sociologically. The processes in which social groups may be able to attach meanings to new artefacts are recast in Feenberg’s theory as ‘democratic interventions’ in technical development. These forms of resistance offer a valuable framework for interpreting the emergence of new technologies.
Feenberg introduces three concepts for interpreting the ‘democratisation of technology’. The key outcome is to ‘open technical issues to general democratic debate and lay out the parameters for official ‘technology assessment’’ (1999: 121). Ultimately, such interventions in design could lead to a new democratic rationalisation of technology in which social and ethical considerations, rather than capitalist imperatives, inform the dominant ‘technical code’. Briefly, forms of democratic intervention consist of: (1) controversies, in which attention is drawn to incidents such as environmental or public safety threats, sparking debate and in some cases collective action; (2) public participation in design, in which dialogue is established between developers of technology and communities; and (3) 37
‘creative appropriations’ in which users are able to ‘reinvent’ technology through appropriating it to new purposes and investing it with new meanings.
These concepts provide a more thorough conceptualisation of the processes Bijker outlines in the SCOT model, in which ‘relevant social groups’ attach meanings to technical artefacts and contribute to developing ‘technological frames’. With Feenberg’s model, we can see how the meanings involved in instances of ‘micropolitics’ are in conflict with HTR. The development of new ‘technological frames’ may cumulatively contribute to a new way of understanding technology in which democratic participation in design becomes normative. This would represent an ‘alternative modernity’, Feenberg claims, as it would fundamentally transform the role of technology in society.
In explaining the role of controversies in technical development, Feenberg describes the influence of environmentalism, which has brought technology into public discourse in new and important ways. Controversial incidents, such as accidents at nuclear plants, have played a significant role in triggering wider public debates around technology and amplifying ecological considerations. This has led to ethical-based ‘technical codes’ that reflect public interest, and are enforced via legal regulations (1999: 122). Through generating public debate around controversies, political activism can open technical issues to public scrutiny and participation.
The second form of public participation in design that Feenberg identifies is structured around ‘innovative dialogue’ between communities and technologists. Feenberg cites as an example Steven Epstein’s (1996) study of activists campaigning for more influence in the development of medical technologies to assist AIDs patients. Patients had previously been restricted from accessing information about experimental treatment but after much campaigning, they not only gained access to these records, they were invited to sit on important regulatory committees that determined the direction of technical development in this field. ‘Activists began to have an important say in how studies were evaluated, and which lines of research should be funded’ (Epstein, in Kleinman, 2000: 23). For Feenberg, this represents a model for technical development to be restructured along more 38
democratic lines, in which communities establish constructive communication networks with developers of technology.
In more recent writings Feenberg has increasingly placed emphasis on ‘creative appropriations’ as a key form of democratic rationalisation. One of Feenberg’s chief empirical examples for democratising technology is described in such terms, the reimagining of the French Minitel system by groups of users (1995: 161). Moreover,
Feenberg calls the type of democratic rationalisation most relevant to the Internet “creative appropriation,” the process in which users innovate new functionalities for already existing technologies (Bakardjieva & Feenberg, 2002: 187).
Feenberg argues that the internet allows certain groups to add new socio-technical “layers” to computer networks, forming communities around shared relations to technology that enable them to perceive and actualise alternative meanings and purposes. Feenberg states this is a democratic process as it opens spaces for collective reflection on technology design, and opportunities to appropriate technology in ways that align with the values and interests of those groups. The concept of ‘creative appropriation’ is similar to the interpretation of ‘micropolitics’ outlined by Bijker, indeed, they both draw from Foucault’s vocabulary to outline their ideas. I would argue ‘creative appropriation’ however, is a more substantive concept as it recasts ‘interpretative flexibility’ as more than a period of ‘pluralism’: it is an historic moment in which social groups are able to conceive new possibilities for both technical and social change.
Feenberg describes creative appropriations as ‘tactics’ which constitute a principal means of subverting HTR. These tactics stem from interactions with technology in which users push the perceived limits of an artefacts functionality and insert new meanings: “Tactics thus differ from outright opposition in that they subvert the dominant codes from within by introducing various unexpected delays, combinations, and ironies into the application of strategies” (1999: 113). Feenberg’s argument here is rooted in a Foucauldian conception of power, and more specifically, in Michel de Certeau’s response to this conception. 39
In The Practice of Everyday Life (1984) Certeau discusses the ramifications of Foucault’s theory of disciplinary power on human agency. If, as Foucault posits, power in modern societies has shifted away from institutions and is increasingly situated in minuscule techniques – techniques that culminate in widespread practices of domination regulating behaviour, organising space, and producing knowledge – how is it that an entire society can resist being reduced to it? In what ways do human agents resist these techniques? This is the focus of Certeau’s investigation, to “bring to light the clandestine forms taken by the dispersed, tactical, and makeshift creativity of groups and individuals already caught in the nets of ‘discipline’” (1984: xiv). It is within this conceptual framework Feenberg posits the idea of tactical challenges to HTR, an idea that implies users of technology may be able to subtly appropriate the technologies around them, redefining their meanings and functionalities.
Certeau argues the minuscule techniques of Foucault’s theory culminate in practices of domination as they originate from a privileged position in the social system. This position both justifies and informs them through dominant rationalities. Certeau cites the examples of techniques emerging from an enterprise or scientific institution that act, from this privileged base, upon externalities defining them as, for example, ‘competitors’, ‘targets’, or ‘objects of research’. These practices become widespread and begin to ‘inform a system’ (1984, 48): producing knowledge, developing a discourse, becoming dominant and normative. Certeau identifies this process as strategy. Strategy underlies modern political, economic and scientific rationalities. However, Certeau maintains that society always consists of practices that do not inform a system, do not produce knowledge, and yet account for much of social life. These practices, Certeau states, are tactics, scattered techniques and practices ‘dominated but not erased’ by strategy. Strategy defines human action, delimiting its movements in much the same way as the rules of a game or the structure of a language. Tactics are the ways seemingly powerless individuals or groups seek to manipulate these definitions from within; seizing an opportunity to bend the rules of the game, inserting their own meanings and accents into language.
Feenberg sees in these concepts a model for technological agency and democratic rationalisation. HTR justifies and informs the spread of techniques that maximise the 40
operational autonomy of capitalist enterprise. This is analogous to Certeau’s strategy. Technology is presented to everyday users as the complete device, with a designated function, structured around certain activities and within the process of its design capitalist imperatives have played a prominent role. However, these activities and functions are nevertheless carried out by users who have the capacity to appropriate these technologies in various ways; ways of operating technology not intended in its design. This tactical capacity is the ‘margin of manoeuvre’ held by everyday users of technology and it holds political potential. Tactical practices can sometimes ‘inform the system’, revealing alternative potentialities for technology:
Action on the margin may be reincorporated into strategies, sometimes in ways that restructure domination at a higher level, sometimes in ways that weaken its control. Foucault’s “subjugated knowledges” are elaborated in the “space” of tactical involvement, the margin of manoeuvre opened by strategies (Feenberg, 2002: 84-5)
Communities forming around shared relations to internet technologies, therefore, may be able to open up a new ‘truth’ through their tactical practices of creative appropriation, revealing alternative rationalisations that may cumulatively redefine the internet in much the same way users of the Minitel system appropriated it to suit their interests of “amusement, companionship, and sex” (1999: 126).
Feenberg asserts that the internet remains in a stage of interpretative flexibility as it has yet to establish a concrete definition and purpose and this makes it particularly open to creative appropriations. Although he warns of encroaching business strategies for defining the internet around market rationality, exemplified in the net neutrality issue, he nonetheless asserts that the internet is still dominated by the free communication of users capable of reinventing it with new meanings and definitions (2012: 11). Internet technologies are currently at the centre of many creative appropriations, many of which may undermine HTR. Should these appropriations diffuse through wider networks of users, they may trigger a democratisation of technology, as tactics come to ‘inform the system’ in a way that normalises the agency of users. 41
Feenberg’s concept of democratic rationalisation, and in particular ‘creative appropriation’, significantly sharpens the analysis of micropolitics offered by Bijker. Feenberg’s model offers a means of identifying how the interactions around new technologies may alter the role of technology in social life more broadly, by challenging hegemonic assumptions that justify and maintain technocratic dominance. This illuminates the importance of cases in which users are asserting agency in technical development, and Feenberg’s three subcategories help to clarify how and why these interactions are important sites for sociological investigation.
The concept of hegemonic technological rationality demystifies a form of social power active in the development of technologies and provides a means of interpreting how some social imperatives may be ‘condensed’ within technology design, while others remain notionally ‘nontechnical’. Specifically, HTR illustrates how the imperative to reduce democratic accountability and enhance the operational autonomy of capitalism can be concealed in an ostensibly neutral, technical discourse. This helps to explain why some meanings attached to technology are privileged over others; those consistent with hegemonic norms are more likely to reach fixity and become, in Bijker’s terms, ‘stable technological frames’. Feenberg’s model thus illustrates how these frames tend to serve the interests of capitalism. These insights make Feenberg’s model a valuable and necessary elaboration to those of the SCOT model. Problems arise however, when trying to draw on HTR as a generalizable contextualisation for all interactions with technologies. As Kirkpatrick (2017) notes, the increased digitisation of everyday life, coupled with the aestheticisation of contemporary technologies, problematizes Feenberg’s argument: do all users and producers still retain unexamined assumptions that prioritise efficiency and administrative control? Moreover, as Manovich (2009) argues, dominant companies in digital industries have responded to the dynamism of internet users by reorienting strategies around the co- optation and harnessing of user creativity. This entails that users of big data-driven industries are actively encouraged to experiment in the ‘margin of manoeuvre’, as it is this activity that generates the content, the apps, and the behavioural data that make profits for platform owners. In this context, in which capitalist control has been reconfigured, it becomes difficult to see how a singular, monolithic rationality is guiding all technical 42
development (Kirkpatrick, 2008: 154). In the following section, the conceptualisation of social power as put forward by Feenberg will be re-examined as pertaining to a ‘diffusion model’ of power, in which overarching forces such as HTR are criticised as ‘magical ghosts’, abstractions which appear to exist of their own accord. This is rooted in Bruno Latour’s reconceptualization of ‘social’ power.
2.3 Actor-Network Theory: Reconceptualising ‘the social’ in design and development
The social has never explained anything; the social has to be explained instead. It’s the very notion of a social explanation that has to be dealt with – Bruno Latour (2005: 97)
So far this chapter has discussed how social groups may influence technical development, and how broader social forces may act to prioritise the interests of some groups over others in this process. Together these approaches offer a means of interpreting the localised interactions that take place around new technologies, and how these interactions can play a considerable role in the structures of power in a society. This third section will examine actor-network theory (ANT), specifically as outlined by Bruno Latour (1992; 1999; 2005),8 whose work presents a substantial challenge to the assumptions implicit in sociological approaches to understanding technology, and society more generally. Like Bijker and Feenberg, Latour’s work is influenced greatly by the insights of STS. The controversial conclusion Latour reaches however, is that STS has forcefully demonstrated that conventional conceptions of ‘the social’ are fundamentally flawed. Latour argues that STS has shown that there are no fixed and stable social ‘forces’ or ‘factors’ which lie behind
8 While Latour is a leading proponent of ANT, the approach is characteristically not one that can be defined by fixed positions and is subject to change when put forward by other scholars (see Law, 1997). I maintain focus on Latour’s work here as his approach goes beyond a particular form of investigation to make substantive claims concerning the nature of society and how to interpret sociotechnical relations. 43
technical development which can be revealed and drawn on for explanation. Technical development is instead produced and sustained via the continuous activity of interacting agents. These agents, which Latour asserts can be objects as well as humans, are constantly at work, forming and maintaining particular types of association with one another through which meaning and force are transported. Should this interaction cease, and the associations break down, meanings and forces dissolve with them. There is therefore no repository of social forces or factors that may be investigated outside of associations, no distinct realm of ‘the social’ to be revealed and analysed. For Latour, the task of the sociologist is one of tracing and explaining new associations as they arise, and attempting to reassemble through documentation the networks of interacting agents these associations have given rise to. This argument reconceptualises ‘the social’ as ‘a fluid visible only when new associations are being made’ (2005: 79). While this conception of the social is problematic, the subsequent method Latour develops for investigating processes of construction is highly valuable for interpreting how interactions between technical objects and human subjects play out in networks. This section will begin by outlining Latour’s objection to conventional conceptions of the social, before providing an overview of his alternative approach to interpreting sociotechnical relations. Latour introduces a lengthy vocabulary of terms as he seeks to establish a ‘sociology of associations’. This section will give precedence to his concepts of prescription, delegation, and programs. These concepts, I argue, provide a nuanced and detailed means of interpreting the interactions that take place around new technologies, and enhance the insights of other approaches discussed so far. Particular attention will also be paid to Latour’s conception of mediators as agents that transform the meanings and types of power active in any given situation. The profound effects of mediators means that they leave a ‘trace’, something Latour asserts must be documented in any attempt to understand the networks of which society is comprised. I conclude this section by arguing that while there are considerable, seemingly insuperable differences in the approaches of Latour, Bijker and Feenberg, the conceptualisation of power underlying their respective theories allows for insights from all three can be brought together to form a theoretical foundation with which to interpret Bitcoin as a social, as well as a technical, phenomenon. 44
Prior to his formulation of ANT Latour had contributed significantly to the emergence of STS as a discipline. His work during the 1980s greatly advanced constructivism as a means of understanding scientific facts and technical artefacts. Both were shown in Latour’s work to be constructed, rather than discovered or invented, a distinction which illuminated the range of conditions that made facts and artefacts possible, and challenged the apparent autonomy of scientific entities. Technologies, Latour argued, must be understood within the matrix of interacting agents whose activity constructs and sustains them. Latour’s particular version of constructivism has been characterised by his insistence that interacting agents can also take the form of ‘nonhuman’ entities. As he states in a 1992 essay,
Those advocating the actor network approach agree with the constructivist claim that sociotechnical systems are developed through negotiations between people, institutions, and organisations. But they make the additional interesting argument that artefacts are part of these negotiations as well (151)
The attribution of agency to nonhuman entities sets Latour’s work apart from others in the field of STS, yet it is a more radical and far-reaching argument that characterises his actor- network approach. Latour’s constructivist studies of science and technology led him to conclude that sociology was inadequately equipped to offer explanations of scientific phenomena. Behind this failure, Latour argues, lies a fundamental flaw in social theory. STS scholars, in their attempts to offer social explanations for scientific activity were, for the first time Latour claims, forced to confront their underlying assumption that a social reality exists behind the phenomena they observe. ‘Society’ and the many ‘social forces’ of which it is comprised, could not be drawn upon to explain science because there were no discoverable social forces or social reality lying behind the activity of scientists. This led Latour to conclude that all social explanations were consequently discredited, for none of them could provide proof that such hidden forces exist. This constitutes the second and most controversial distinction between Latour’s actor-network theory, and that of other sociological approaches:
ANT scholars are mainly defined as those who have drawn, from the thirty odd years of sociology of science, a completely different conclusion than those of their best and 45
closest colleagues. Whereas the latter have decided that social theory works even on science, we have concluded that, overall and in the details, social theory has failed on science so radically that it’s safe to postulate that it had always failed elsewhere as well. Social explanations cannot be ‘extended’ to science, thus they cannot expand anywhere else (2005: 94)
Latour castigates those that maintain a conviction in the existence of a discernible social reality as ‘sociologists of the social’ who persist in offering explanations which ‘substitute’ what they have observed for hidden, invisible forces that lie behind phenomena. For Latour, there is no evidence for such a hidden reality and the greatest contribution of STS has been to expose this.
This assessment of social theory leads Latour to argue that STS must move away from theoretical abstractions that draw together disparate instances of construction, and instead focus solely on documenting the activities of agents themselves. This imploration raises significant questions that Latour’s actor-network model fails to answer. Chiefly, how may we conceptualise patterns of interacting agents without formulating abstractions that transcend their ongoing activities? Latour’s line of criticism would too readily dismiss Bijker’s technological frames and Feenberg’s hegemonic technological rationality as invisible forces for which there is no evidence, rather than opening ways of critiquing them as abstractions developed for conceptualising patterns of social activity, which they were of course conceived to be. As we will see, Latour attempts to avoid generating such abstractions by focusing on extensive documentation, ‘following the actors’ involved in construction processes and tracing the connections they create. While his dismissal of social theory is problematic then, this subsequent method for investigation remains entirely compatible with the constructionist approach developed in this chapter so far. Moreover, Latour’s actor-network model can be drawn on to refine this approach in two significant ways.
Firstly, Latour’s model provides a set of conceptual tools which allow for a more penetrating analysis of localised interactions. These concepts are thus a focal point of chapter three, in which a constructionist method for investigating Bitcoin in discussed. Secondly, these tools 46
serve to illuminate the role of technical artefacts in the (re)production of meanings and practices. This is because, in Latour’s approach, the co-production of society and technology applies right down to the level of human subjectivity. Just as technologies must be understood in terms of the networks of interacting agents that produce and sustain them, so too must humans be scrutinised in terms of the complex interactions that give rise to their beliefs and intentions. The interests and beliefs of social groups do not pertain to a ‘hidden social reality’ of human subjectivity that influences the construction of artefacts; interests and beliefs are themselves constructed in these interactions between humans and nonhuman entities. Leaving aside the aforementioned issues with this concept of social reality, Latour’s approach here throws light on the subtle ways in which technical objects carry meanings and consequently elicit particular practices among networks of users. This is made clear in his claim that objects have ‘agency’.
A core tenet of Latour’s actor-network theory is the assertion that humans should not be privileged in sociological inquiry. All entities involved in performative moments of ‘association’ are ‘social’ as they are implicated in the construction and carrying of meanings and forces from one agent to the next. This is primarily how Latour reconceptualises the ‘social’, as a ‘momentary association which is characterised by the way it gathers together into new shapes’ (2005: 65, emphasis added). The social is what is continually performed by agents when interacting with one another, and these associations exist only as they are being performed. This conceptualisation of action is the sense in which objects can exert ‘agency’, as they too are carriers and constructors of meanings and forces. Focusing only on the role of humans in this process overlooks the crucial role objects play in making associations ‘durable’. Where groups of social animals such as baboons have only social skills holding them together as groups, humans have found a means of integrating objects into social relations in ways that solidify associations. ‘Like humble servants,’ Latour states of objects, ‘they live on the margins of the social doing most of the work but never allowed to be represented as such’ (2005: 73). Latour observes that human social relations always involve objects in this way, and so he speaks not of social relations, but of sociotechnical relations. 47
In his (1992) essay Where are the Missing Masses? Latour introduces three concepts to explain the role of nonhumans in sociotechnical networks. Firstly, Latour explains how both humans and machines play equal roles in performing the programs of action which characterise sociotechnical networks. Latour describes as an example the process of getting into a car with the intention of driving without a seatbelt. The car sounds such a repetitive and irritating alarm that he submits to its intention, to fasten his belt. Latour claims this is an everyday instance which raises an important question, was he ‘dominated by the mindless power of an artefact?’ Or is the artefact enforcing a law he has already freely accepted as a citizen? Either way, the alarm has played a role in an ethical code or law that permeates society. Latour breaks this down further by blurring the lines between his routinized instinct to fasten his seatbelt, and the alarm function of the car:
Where would the morality be in those two extreme cases? In the electric currents flowing in the machine between the switch and the sensor? Or in the electric currents flowing down my spine in the automatism of my routinized behaviour? In both cases the result would be the same from an outside observer – say a watchful policeman: this assembly of a driver and a car obeys the law (152)
For Latour, the ‘assembly’ of human and machine are here performing a ‘program of action’. In this case, the program is ‘if a car is moving, then a driver wears a seatbelt’. Included in this program are the engineers that designed the car with its alarm function, the police that monitor behaviour, the individual in the car, and the car itself. Each of these actors, both human and nonhuman, play an equal role in the enforcement of this program.
Latour elaborates on this process by introducing a second concept, delegation. Nonhumans are an important focus for sociological analysis because actions are ‘delegated’ to them. In the above scenario, an instruction to drive with a seatbelt based on an ethic of safe driving has been delegated to the car, which it performs routinely through an alarm. Latour offers another example by discussing automated door hinges. Where once a human played the role of closing hotel doors, a nonhuman now performs this task. For sociologists of the social, this action disappears from view because it is now delegated to a nonhuman and no longer constitutes social action. Yet Latour stresses that it remains the same action, one 48
which characterises and structures an aspect of everyday life. This inverse of delegation, in which nonhumans project programs of action back upon humans, Latour terms prescription:
I will call… the behaviour imposed back onto the human by nonhuman delegates prescription. Prescription is the moral and ethical dimension of mechanisms… We have been able to delegate to nonhumans not only force as we have known it for centuries but also values, duties, and ethics. It is because of this morality that we, humans, behave so ethically, no matter how weak and wicked we feel we are. The sum of morality does not only remain stable but increases enormously with the population of nonhumans.’ (157)
For Latour then, technologies structure action by performing programs that prescribe certain values, duties, and forms of behaviour which have been delegated to them in previous interactions. This is the sense in which nonhumans make associations more durable, as they are more effective at relaying programs. As Latour states,
It’s the power exerted through entities that don’t sleep and associations that don’t break down that allow power to last longer and expand further – and to achieve such a feat, many more materials than social compacts have to be devised (2005: 70)
The ‘encoding’, ‘inscription’ or ‘delegation’ of repertoires of action to nonhumans is for Latour a defining feature of human activity, a process that lies at the heart of social relations. Programs of action cumulatively give rise to collectives, and these programs are performed by humans and nonhumans alike. Crucially, Latour asserts that this highlights not only the capacity of technologies to carry values, meanings and forces, but that nonhuman entities are intrinsic components in their construction and perpetuation. The concepts put forward here help to clarify the role played by nonhumans in sociotechnical relations, highlighting the value of analysing how new technologies participate in and perform programs of action. Latour argues a ‘sociology of the social’ overlooks human action once it has been delegated to nonhumans and ‘disappears’ from view. A key insight to take from his approach is to study the ways nonhumans participate in human activities. 49
While the concepts discussed so far clarify the role of nonhumans in holding together the interactions of agents, the discussion has so far skirted around the notion of ‘agency’ being put forward. In accounting for the ‘agency of objects’, Latour introduces two further concepts that explain his understanding of agency by differentiating between two types of actors, intermediaries and mediators. Latour maintains that the social is to be discovered in the associations between human and nonhuman actors, who are constantly at work, carrying and constructing programs of action. Those that simply carry programs are intermediaries:
An intermediary, in my vocabulary, is what transports meaning or force without transformation: defining its inputs is enough to define its outputs (2005: 39).
Humans and nonhumans both perform the role of intermediaries whenever they relay a message or act in accordance with a program. Both the man and the car are intermediaries when playing their part in the program of safe driving. Those that go beyond transportation by altering the program they perform, are mediators:
Mediators transform, translate, distort and modify the meaning or the elements they are supposed to carry (2005: 39).
Mediators are key to Latour’s conception of agency as they identify a source of action.9 Programs exist in society as they are constantly performed by humans and nonhumans, yet it is when these programs are transformed that we may witness agency. As such transformations can be performed by nonhumans as well as humans, Latour’s approach entails that technical artefacts do not reflect the meanings shared by social groups, they are active participants in constructing those meanings. Each disruption or alteration of meaning triggered by a machine Latour interprets as the machine impressing its ‘agency’ upon those interacting with it.
Such moments of transformation are doubly important in Latour’s framework, as not only do they signal changes in the shape of sociotechnical relations, they also ‘leave a trace’.
9 In his earlier work, Latour referred to this distinction using the term actant to mean ‘anything that acts’ and actor ‘to mean what is made the source of an action’ (1992: 177). 50
Latour asserts that humans and nonhumans continuously shift from being intermediaries to mediators, performing and transforming meanings and forces throughout sociotechnical networks. Understanding these networks requires an analysis of associations, yet associations are often silent and unnoticeable. The simple relay of a message from one node to another reveals little about what drives sociotechnical activity. Transformations however, alter the nature of the network by introducing modified, unexpected meanings or forces. This upheaval makes social ties ‘momentarily visible’ by exposing a source of activity that powers sociotechnical networks. This is the context in which Latour redefines the social ‘as a fluid visible only when new associations are being made’ (2005: 79), because here at last, Latour asserts, we find evidence for the social as something that exists as a force. This entails that innovations, and records of how particular innovations emerged, become key sites for sociological investigation as they reveal the agents of social change. This aspect of Latour’s approach has significant methodological implications that will be discussed in the next chapter. A more immediate implication is how this conception of mediators as agents identifies a source of power in society. Latour’s conclusions regarding the social as a performance of programs by associated humans and nonhumans entails that power too resides in associations. In these arguments we find another valuable concept for understanding the role of technical objects in sociotechnical networks: enrolment.
Latour outlines a model for understanding power in a 1984 essay The Powers of Association, in which he asserts that society is continually being defined by the actors of which it is comprised, and it is in this act of ‘defining’ that society is performed:
Society is not the referent of an ostensive definition discovered by social scientists despite the ignorance of their informants. Rather, it is performed through everyone’s efforts to define it. Those who are powerful are not those who ‘hold’ power in principle, but those who practically define or redefine what ‘holds’ everyone together (1984: 273)
Social power for Latour therefore lies in the ‘intense activity of enrolling, convincing and enlisting’ (1984: 273) in which actors constantly engage: performing, and enrolling others into the various meanings and practices that bond them together. Intermediaries perform 51
existing networks of power by transporting meanings and forces to one another, and on the occasions that they transport meanings and forces to new actors, they are enrolling these actors into existing networks of power. Humans or nonhumans may, on the other hand, act as mediators when they transform these meanings and forces as they transport them, introducing modifications, distortions or translations. In this model of understanding social power and the role of technologies in its reproduction, we start to see the Foucauldian influences that bring together the seemingly insuperable differences between the models of Feenberg and Latour. This is the subject of the following, conclusive section of this chapter which aims to outline a model for understanding Bitcoin sociologically drawing on the insights of each model discussed so far. Before this concluding discussion, I wish to quickly recap the key insights of Latour’s approach.
The insights I have highlighted in Latour’s approach can be summarised in four key points. Firstly, Latour’s reconceptualization of the social suggests we should examine variants of Bitcoin not as reflections of social interests, but as nonhuman agents active in the co- production of interests and beliefs. Secondly, Latour’s concepts of program, delegation, and prescription clarify how we may interpret the active role played by variants of Bitcoin in performing programs of action alongside the human actors in moments of interaction and association; how aspects of a program have been delegated to a variant of Bitcoin, and how the technologies prescribe programs back upon human users. Thirdly, this latter process may help to explain how more actors are collected or enrolled into a growing network of Bitcoin users that share particular meanings and engage in particular practices, a process of enrolment in which the variant of Bitcoin is itself active. Finally, this process of enrolment can be interpreted as a form of social power, as it draws actors into particular forms of action based on particular meanings. A key question therefore becomes how sociotechnical networks forming around variants of Bitcoin are drawing actors in, or conversely, how emerging networks are themselves being drawn in to other, more dominant networks.
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2.4 Strategies of Power and Sociotechnical Networks
The three models discussed in this chapter offer a means of clarifying the controversies that arise in the interactions around new technologies. As new technologies are developed, different meanings emerge which define not only their purpose, but begin to inform the directions in which they are developed. The SCOT model illuminates the role played by various social groups in this process, showing how each meaning constitutes a new artefact, and how groups engage in ‘micropolitics’, advancing their variant of an artefact at the expense of others. Feenberg’s critical constructivism elaborated on this by illustrating how the meanings generated by social groups are done so within the context of capitalism, both an economic and cultural system that owes much of its dominance to ingrained assumptions regarding technology as politically neutral. As STS has shown, technology is not neutral and Feenberg asserts it must accordingly be brought into the public sphere and become democratised. Feenberg’s model thus highlights the political significance of the interactions around new technologies: technical development is ambivalent, many artefacts act to sustain existing power relations, but experimentation among social groups can also reveal alternatives. In both Feenberg and Bijker’s writings we see the influence of Foucault’s conception of disciplinary power: the interactions around new technologies are caught up in micropolitical struggles, as generating meaning involves the simultaneous exercising of power. Constructing a technological artefact – including adaptations of meaning and purpose – is a process that requires a machinery of procedures, techniques and strategies. Feenberg goes further that this to argue that the micropolitical struggles between social groups constructing variants of artefacts are conditioned by an overarching hegemonic rationality which serves to repress their emancipatory potential. As we have seen, Latour contests this line of theoretical abstraction, outlining instead a model for tracing the intense activities of ‘enrolment’ in which humans and machines sustain and expand sociotechnical networks. Despite the opposing position Latour claims to take against ‘sociologists of the social’ in this respect, his model nonetheless helps to develop the constructionist approach of Bijker and Feenberg by offering conceptual tools that show how technical objects may serve to sustain and expand strategies of power, and conversely, how ‘mediators’ may thwart and subtly modify the growth of such strategies, in some cases giving rise to new and 53
alternative sociotechnical networks, networks that would in Feenberg’s terms constitute ‘democratic rationalisations’. Problems arise however, when interrogating the attribution of emancipation to these networks, and it is at this juncture that Latour’s more fluid image of sociotechnical networks may offer more clarity. In brief, while some emerging sociotechnical networks may challenge dominant networks of power, Latour’s model reminds us that this is a messy and uncertain process, and that subsequently analysis must focus on which networks emerging around new technologies are sustaining and energising dominant networks, and which are transforming them in ways that weaken their control. In this concluding section, I elaborate on this focal point, with reference to the character of digital industries and the Foucauldian aspects of Latour’s work to propose a reworking of Feenberg’s critical constructivism more suited to contemporary forms of power and technical arrangements.
In Technology and Social Power (2008), Graeme Kirkpatrick draws on the work of Saskia Sassen to outline how contemporary global economies complicate Feenberg’s model. Firstly, the digital technologies that have proliferated in everyday life exhibit an aesthetic imperative and an essential openness inconsistent with HTR: we rarely encounter our interconnected devices as possessing meanings and purposes already enclosed during the design process. Digital devices are instead predicated on social groups incorporating them into their meaningful daily practices, and using them to open up new spaces for interaction. Kirkpatrick points out that much of this activity is mediated by an interface that sets limits on experimentation and appropriation, and this argument can be extended to include the rise of the ‘platform’ as the prevailing business model in digital industries, based as it is on incentivising and commodifying creative practices all within the boundaries of monopolised infrastructures (Srnicek, 2017). Alongside this however, is the increase in users that break these confines and ‘hack’ digital technology. Kirkpatrick speaks of hackers and hacktivists as a new ‘global class’, and this again can be reinforced by more recent studies into online communities dedicated to constructing and maintaining peer-to-peer networks that defy and undermine online commerce (Coleman, 2014). The productive and creative character of contemporary technical practices blurs the traditional lines between user and producer, and this sits uneasily with Feenberg’s dialectical model. As Kirkpatrick states, 54
Hegemonic technological rationality was important in a context where the central social antagonism was that between labour and capital. For Feenberg, for example, the central opposition is the traditional one of self-realisation through labour and cultural expression versus domination under the rubric of efficiency. However, as Sassen’s analysis shows, in the contemporary global economy there are multiple social logics at work shaping digital technology (2008: 152)
Alongside the aesthetic imperatives and the openness of digital technologies, another logic at work Kirkpatrick identifies is ‘risk-management through surveillance’. This logic permeates emboldened finance markets, in which context digital technologies have emerged as tools for assessing and trading risk assessments. This logic has been explored by a number of scholars and notably theorised as ‘surveillance capitalism’ by Shoshana Zuboff (2015). Surveillance capitalism, in Zuboff’s words, seeks to ‘textualise’ the market: to make it transparent and knowable in new ways via increasingly extensive recording. This logic underlies the rise of big data, the increasingly dominant means of profit-making in digital industries oriented around the immense archiving and analysis of internet usage. As Kirkpatrick notes, nation states too have extended surveillance programs in the face of an authority diminished by increases in the mobility of capital. This trend has been intensified by the rise of big data, which has made possible unprecedented new techniques of surveillance such as the gathering of ‘metadata’ and ‘predictive analytics’ (Lyon, 2014). Kirkpatrick argues that
The central contradiction of digital-global society seems not to be that between capitalist efficiency and workers’ self-realisation but rather between risk-management through surveillance as against openness in technology design and innovative use of technology (2008: 153)
In light of intensified surveillance strategies, in both corporate and state forms, and the increased digitisation of everyday life through the proliferation of smart phones and other platform devices which incentivise productivity and creativity in users, largely as a means of generating big data, this contradiction between surveillance and user creativity is an indispensable context within which to assess the interactions around new digital 55
technologies. This considerably complicates Feenberg’s distinction between ‘strategic’ producers that encode specific values within the design process, which must be resisted by ‘tactical’ appropriations. As Manovich (2009) notes,
Today strategies used by social media companies often look more like tactics in the original formulation by de Certeau while tactics look like strategies. Since the companies that create social media platforms make money from having as many users as possible visit them (they do so by serving ads, by selling data about usage to other companies, by selling add-on services, and so on), they have a direct interest in having users pour as much of their lives into these platforms as possible. Consequently, they give users unlimited storage space for all their media and the ability to customize their online lives (for instance, by controlling what is seen by whom) by expanding the functionality of the platforms themselves. (325)
So how should we interpret power relations around new technologies in light of this new contradiction between surveillance and user creativity? One way is to examine the locus between what Foucault terms ‘technologies of power’ and ‘technologies of the self’.
In Technologies of the Self Foucault (2000) offers a concise overview of his method by outlining four types of ‘technology’ that produce knowledge:
(1) technologies of production, which permit us to produce, transform, or manipulate things; (2) technologies of sign systems, which permit us to use signs, meanings, symbols, or signification; (3) technologies of power, which determine the conduct of individuals and submit them to certain ends or domination, an objectivizing of the subject; (4) technologies of self, which permit individuals to effect by their own means, or with the help of others, a certain number of operations on their own bodies and souls, thoughts, conduct, and way of being, so as to transform themselves in order to attain a certain state of happiness, purity, wisdom, perfection, or immortality (225)
Foucault explains how these technologies overlap, interpreting Marx’s Capital as an exploration of the relations between technologies of production and domination. He claims 56
his own studies of disciplinary power largely focused on technologies of power which objectify human subjects, yet he states how he was increasingly drawn to relations between technologies of power and of the self. The overlap between these technologies of knowledge Foucault calls ‘governmentality’. Governmentality functions via a diffusion of technologies of power that objectify, record and supervise subjects; and technologies of the self which permit individuals to continuously work at transforming themselves, often in correspondence with dominant discourses.
Foucault observed contemporary forms of governmentality as consisting of human subjects increasingly engaging in practices of self-betterment while at the same time being objectified for purposes of ‘biopolitics’: bodies of knowledge pertaining to entire populations that facilitate governmental administration. This has been picked up by Dardot and Laval (2013) as a means of interpreting neoliberalism. Neoliberal power, they argue, resides not in ideology nor in institutions. This is because it is a ‘governmentality’, a form of existence oriented around technologies of power and of the self. Dardot and Laval’s work helps to clarify the social logics of surveillance and creativity by situating them within a broader context of neoliberal governmentality. Citizens of neoliberal regimes ‘must learn to become ‘active’ and ‘autonomous’ subjects through the action they must perform on themselves’ (268) and digital technologies are implicated in these ‘life strategies’ of self- development, as ‘subtle techniques of motivation, incentivization and stimulation’ (260). Consistent with Latour’s conception of expanding sociotechnical networks, neoliberal governmentality resides not in the ownership of machinery or an all-pervasive ideology. Power resides instead in the continuous activities of subjects and their nonhuman counterparts that carry meanings, prescribe certain practices, and enrol others to do the same. Dardot and Laval document the rise of neoliberalism in corresponding terms: from a marginal hybrid of activities oriented around social Darwinism and rehashed laissez faire economics, through to ‘normalisation’, alliances with practices of biopolitics and techniques of self-transformation, ultimately culminating in immense networks of neoliberal power that generate and sustain a discourse which in turn informs action at a strategic level:
From the subject via the enterprise to the state, a single discourse makes it possible to connect a definition of man with the way in which he wants to ‘make a success’ of his 57
life, as well as the way that he must be ‘guided’, ‘encouraged’, ‘trained’, and ‘empowered’ to achieve his ‘objectives’. In other words, neoliberal rationality produces the subject it requires by deploying the means of governing him so that he really does conduct himself as an entity in a competition, who must maximise his results by exposing himself to risks and taking full responsibility for possible failures. (2013: 261)
In this context, we can see the interactions around new technologies as already caught up in networks of neoliberal governmentality that extensively surveil subjects while incentivising and guiding their creative activities. Latour’s concepts help to sharpen an analysis of technology within this context, drawing attention to the way nonhuman entities sustain this system alongside the activities of human subjects. Latour’s conception of mediators suggests that disrupting and transforming neoliberal power also lies in the interactions between human and nonhuman agents, and it is at this juncture we may retain and remodel the key insights of Bijker and Feenberg to establish a constructivist framework with which to investigate Bitcoin.
Feenberg’s work performs the vital task of situating the insights of the SCOT model within broader understandings of power. In light of new technical arrangements however, oriented around a tension between surveillance and the creative activities of users which comprise key elements of neoliberal governmentality, we must reconsider the role of power in the interactions around new technologies. Bijker and Feenberg effectively highlight the micropolitical character of these interactions, how social groups must engage in various tactics to generate and sustain new meanings. Moreover, Feenberg raises significant questions regarding the broader forces influencing these micropolitical processes. HTR however, does not adequately answer these questions.
We must shift focus away from access to design and development predicated on this as being inherently emancipatory, and toward determining which of the many various networks that emerge around new technologies are sustaining and energising dominant networks, and which are transforming them in ways that construct transgressive networks, networks of active refusal to neoliberal norms and capable of enrolling others into their 58
expansion. Dardot and Laval argue that neoliberal governmentality cannot be reduced to the government of others, its power lies in the continuous ‘self-government’ of neoliberal subjects, whose activities are guided by an array of techniques. As a consequence of this ‘subjectivation’, we must
free ourselves from the illusion that the alternative subject is to be found ‘already there’ in one shape or another, in the manner of a given that at most has to be activated or stimulated (2013: 317).
In this context, technical politics – that is, understanding the emancipatory implications of technical practices – can no longer be oriented solely only around opening technical development to public participation. Sociological investigation must uncover new forms of existence emerging in collective acts of what Dardot and Laval term ‘counter-conduct’. Such practices would naturally involve technical artefacts, and Latour’s insights suggest those that are able to delegate these programs to artefacts are far more likely to make them durable and capable of enrolling the activity of others.
It is possible here to retain Feenberg’s reading of de Certeau without the overarching concept of HTR: which activities are performing and being incorporated into strategies of power; and which are tactically disrupting and transforming these strategies, giving rise to ‘counter-conduct’? In this way, we may lose the ‘macro-concepts’ Feenberg derives from the Frankfurt School to critique ‘the role of capitalism in the cultural generalisation of instrumental rationality’ (2017: 59), but we are able to maintain the Foucauldian objective of Feenberg’s technical politics, to
recover the “local, discontinuous, disqualified, illegitimate knowledges” of the dominated in opposition to the “unitary body of theory which would filter, hierarchise and order them in the name of some true knowledge and some arbitrary idea of what constitutes a science and its objects” (Feenberg, 2002: 74; quoting Foucault, 1980: 83)
A sociological investigation of Bitcoin can achieve this objective by bringing to light its many manifestations and their ‘associations’ with existing sociotechnical networks. Bitcoin is undoubtedly in a period of interpretative flexibility, as the proliferation of various alt-coins 59
and adaptations demonstrate. Reworking Feenberg’s insights in light of Latour’s arguments and Dardot and Laval’s analysis of neoliberal power, an investigation of Bitcoin variants can open up the local, illegitimate knowledges that reveal how dominant discourses are being resisted, and how they may expand to generate new ‘truths’.
In sum, the SCOT model provides a framework with which to investigate the interactions of social groups with new technologies, drawing attention to the many variants of a technical artefact that emerge in response to the meanings shared among those groups. Such meanings proliferate when technical artefacts exhibit interpretative flexibility: a period in which a dominant definition has yet to take hold. Bijker’s case studies reveal how the rise of a dominant ‘technological frame’ involves micropolitical struggles, drawing on Foucauldian concepts of disciplinary power to explain how some meanings become dominant at the expense of others. Feenberg’s critical constructivism provides a means of interpreting these micropolitical struggles within broader systems of power and domination, highlighting how overarching meanings influence technical development in ways that sustain social power structures. This argument emphasises the political significance of interactions around new technologies, revealing their emancipatory potential. Feenberg outlines incisive concepts for interpreting the ways in which hegemonic technological rationality can be challenged and design and development may be opened up to democratic participation. Aspects of Feenberg’s model are problematic however, and Latour’s arguments effectively challenge many of its implicit assumptions. Latour inveighs against notions of social meanings and forces that are abstracted from the sociotechnical activities in which they are generated and sustained. Latour insists that the ‘social’, including forces of power and domination, is to be found only in the continuous activities of interacting human and nonhuman agents. Meanings and forces in society are performed, Latour states, and we must focus not on rationalities that lie behind action, but on the associations between actors in which programs of action are carried out. This action may be performed by nonhuman entities as well as human subjects, yet it only becomes visible in moments of transformation. Such moments include technical innovation, which can lead to disruptions, modifications, and transformations of sociotechnical relations. The resulting conceptual apparatus devised by Latour can serve to sharpen analyses of contemporary forms of power and digital 60
technology, which stress the centrality of productive and creative subjects within networks of surveillance and incentivised creativity. This entails that the key insights of Bijker and Feenberg must be reconsidered. It is clear that the SCOT model alone cannot provide a framework for the analysis of interactions around new technologies, it must be supplemented by an appreciation of broader forces which condition such interactions. Feenberg’s model provides a means of achieving this synthesis, yet his concept of hegemonic technological rationality sits uneasily within the context of neoliberal governmentality. However, the aspects of Feenberg’s work which have done much to develop Foucault’s ideas as a means of interpreting technology remain considerably important. As the ongoing, and as yet unresolved, debates around the meaning of Bitcoin demonstrate, it is a technology that remains in a stage of interpretative flexibility. Combining Feenberg’s approach with a consideration of Latour’s arguments allows us to interpret the sociological and political significance of the various meanings and variants of Bitcoin being generated by different social groups. On this basis, this thesis analyses these variants in light of their associations with dominant sociotechnical networks, examining the construction of Bitcoin, the construction of subsequent variants, and the incorporation of these activities into broader sociotechnical networks. Before the results of these three tasks are presented, the methodology is outlined in the following chapter.
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3. Meanings, Designs, and Connections
A Constructionist Method for Investigating Bitcoin
The previous chapter discussed three sociological approaches for interpreting the design and development of technologies and concluded that, notwithstanding their significant differences, they highlight three key areas for investigation:
(4) The meanings actors attach to variants of Bitcoin (5) How shared meanings may be ‘delegated’ to Bitcoin variants or ‘condensed’ with technical logic during processes of design. (6) How Bitcoin variants may be implicated in connecting actors in sociotechnical networks: carrying meanings, prescribing certain practices, and enrolling actors into performing programs of action.
This chapter outlines the methodological approach taken for investigating Bitcoin with respect to these key questions. Firstly, each approach discussed in the previous chapter carried specific methodological implications. Section 3.1 elaborates on the key research aims and details how the approaches discussed in the previous chapter formed the basis for a research design. In brief, an ethnographic strategy was developed with the aim of throwing light on the contexts in which Bitcoin was being used at developed in various ways. This was combined with a hermeneutic approach for analysing design, which aimed at uncovering the ways in which variants of Bitcoin may carry and prescribe particular norms, values, and practices. This methodological strategy developed over the course of the thesis, and this is discussed in section 3.2, which outlines how concepts from ‘digital ethnography’ allowed for an analysis of textual data available online. This data ultimately constituted the largest of the data sets, supplementing and enriching the interviews and observations conducted. An overview of all the data gathered is provided in section 3.3, including a visual representation of the connections between the sources of data used. Section 3.4 then 62
briefly covers the ethical matters considered in the thesis, before a summary of the methodology concludes the chapter.
3.1 Research Design
The previous chapter detailed three theoretical models which may be summarised as constructionist approaches to understanding technology. While there remain many differences and tensions between them, each model starts with the observation that technologies are constructed by agents in real world settings, and as a result processes of construction inevitably involve a range of contingencies, uncertainties, and nontechnical elements which converge at local sites of design and development. The principal aim of this thesis is to throw light on such contingent and nontechnical elements active in constructions of Bitcoin. Following from the insights discussed in the previous chapter, this aim was refined into three areas of investigation: the meanings actors attach to Bitcoin variants; how meanings may be interpreted in design; and how Bitcoin variants may connect actors in particular ways.
Firstly, ‘meanings’ were established as a key site for investigation in Bijker and Pinch’s SCOT model. Bijker’s case studies revealed how social groups attach meanings to technical artefacts, assigning purpose and functionality. In so doing they effectively constitute the artefact they interact with as an entity distinct from similar variants, and influence new directions of development. Primarily this occurs through the identification of problems with the artefact, problems which emanate from the artefact’s assigned purpose and must be overcome through alteration and innovation. It is only when meanings become stabilised and fixed across many social groups therefore, that a technical artefact remains in one dominant and unchanging form. In Feenberg’s work also, we see the importance of the meanings which are attached to technology. Technology is constituted by meaning, Feenberg agrees, yet meanings are overdetermined by social power. How we understand technology is shaped by hegemonic conceptions that have taken root under the expansion of capitalist society. Yet, as Raymond Williams once put it, “no dominant culture ever in 63
reality includes or exhausts all human practice, human energy and human intention” (1977: 125). Feenberg takes such arguments concerning the limits of hegemony and applies them to technology: hegemonic meanings govern technical development, yet social groups retain a ‘margin of manoeuvre’ in which they can generate meanings that subvert this domination. The meanings social groups attach to technology are clearly an important site for investigation, and so the first methodological step taken was to refine what to look for: what exactly constitutes ‘meaning’ and how can it be observed?
For Bijker, meanings were identified as the shared interests and beliefs of ‘relevant social groups’ which give purpose to an artefact. This is specified further as the range of goals the artefact is understood to assist; perceived problems with its form and functionality; and the knowledge required to interact with it.10 Gathering data concerning meaning in the SCOT model therefore requires a qualitative analysis of interactions between social groups and technical artefacts. One way Bijker proposes to achieve this is through ‘thick description’, citing the anthropological work of Clifford Geertz as an example of interpreting the meanings held by social groups in particular contexts (Bijker et al, 2012: xvii). In The Interpretation of Cultures (1973) Geertz defines thick description as an analysis of the multiple levels of meaning generated by actors in any given situation. This prioritises methods such as interviews, observation and documentary analysis which can help explain the elements of context that make forms of behaviour meaningful for actors. Geertz famously draws on Gilbert Ryle’s analysis of winking to emphasise the importance of this approach. Qualitative methods are necessary for identifying the established codes of behaviour within a context that differentiate the involuntary twitch of an eye from a conspiratorial signal. Bijker insists that if we are to understand how technical artefacts are constructed, the same interpretive analysis must be applied to the interactions between relevant social groups and technologies. The meanings shared by a relevant social group must be interpreted within the context that the group acts, in order to differentiate between two variants which may ostensibly appear as the same artefact.
10 Bijker’s elaboration here is instructive, and constitutes the basis for the interview schedules and coding of texts outlined below, in section 3.3. 64
Bijker offers two ‘rules’ for identifying relevant social groups: ‘roll a snowball’ and ‘follow the actors’ (1995: 46). Existing relevant literature concerning a technical artefact should help to identify a number of actors, Bijker claims, which may be sought out for interviews. The criteria for selecting participants is not limited to practical engagement with the technical artefact in question but defined by those that attach meanings to the artefact in question. Bijker illustrated the strengths of this approach in his study of the bicycle, where the meanings shared by ‘anti-cyclists’ played an important role in demonstrating the interpretative flexibility of the artefact (Bijker, Hughes, and Pinch 2012: 24). Crucially, once initial participants are identified, each interview must be used as an opportunity to establish connections between actors: identifying further interviewees, further opportunities for observation, and relevant texts. The interview process must therefore progress in stages that are interspersed with reflections that help to assemble a picture of a relevant social group, and distinctions between groups, which then informs the next stage of the process. Bijker refers to this approach as heuristic due to the focus on the categories of meaning generated by actors, and how actors inform each step of the research. This involves both “a negative heuristic to avoid a facile projection of the analyst’s own categories, which might lead to retrospective distortion and Whiggish accounts; and a positive heuristic to help identify relevant social groups that do not figure in the standard histories of the specific technology” (1995: 48). Bijker places interviews at the heart of this approach, as they offer the most direct and detailed way of discovering the meanings shared by a relevant social group, allowing for flexibility and interviewee-led discussion. Bijker also stresses the importance of texts however, and this is borne out in his own case studies.
Bijker’s historical case studies identify social groups and establish shared meanings largely via a content analysis of documents generated by various groups that have interacted with a technical artefact. His study of the bicycle for example references magazines, newspapers, patents and journals which document the different ways in which variants of the bicycle were perceived and used by different groups, and how engineers arrived at decisions regarding development. With Bitcoin, such content analysis is made possible by the public nature of its development. Bitcoin, and its many variants, are open source projects, which means their technical development is done so publicly, as it is primarily driven by the 65
voluntary efforts of disparate internet users that discuss how to contribute. As a result, there exist extensive archives of discussions on internet forums in which Bitcoin, as well as preceding digital cash projects and subsequent variants of crypto-currency, were proposed and collaborated on. Such discussions involve a variety of texts, including technical documents that outline and justify choices made in designs, as well as nontechnical documents produced to inform others of their activities, and pre-existing texts cited as sources of inspiration. Alongside a heuristic interview process therefore, a content analysis of forum discussions and documents thus represents a valuable source of data for ascertaining the shared meanings held by actors engaging with variants of Bitcoin and involved their development. Such content analysis is also integral to the second key site of investigation, technology design.
As we saw in the previous chapter, Feenberg’s arguments largely echo and expand Bijker’s definition of meaning by situating it within a broader theory of power. Feenberg agrees that the symbolic aspect of a technical artefact largely determines its use and evolution, but argues that these meanings must be understood in regards to the broader cultural and political struggles that shape them. Feenberg’s work outlines how certain definitions of technology have overcome these struggles and become dominant and reified. Feenberg refers to these dominant definitions as ‘technical codes’, such as the ‘capitalist technical code’ discussed in the previous chapter.
Technical codes define the object in strictly technical terms in accordance with the social meaning it has acquired. These codes are usually invisible because, like culture itself, they appear self-evident. (1999: 88)
Social meanings that influence technical development, Feenberg argues, are ‘condensed’ with technical logic in design processes. When this happens, culturally contingent meanings are recast in technical forms. This process acts depoliticise cultural values by concealing them within technical discourses. Feenberg’s theory here holds similarities with Latour’s concept of delegation, in which actions and meanings disappear from view once they become delegated to nonhuman actors.11 This entails that the meanings attached to
11 Feenberg discusses this comparison, see 1999: 84-85. 66
technology are not always objectively and empirically observable. Feenberg therefore argues that a ‘hermeneutics of technology’ is necessary to uncover these meanings, and this method places an analytical focus on design. By examining the choices made by actors in design processes, and interpreting how these choices were influenced by broader cultural discourses, it becomes possible to uncover “the valuative dimensions of technology [that] are ‘embodied’ in devices through design” (1999: 176). Feenberg’s approach has been utilised by Flanigan et al (2010), who provide a ‘technical code analysis’ of the internet by tracing design choices made during the historical development of the many elements that converged as ‘the internet’, establishing the contingency of these choices on the cultural discourses that influenced them.
Feenberg’s work demonstrates the importance of involving a hermeneutic method in an analysis of Bitcoin. As stated above, there exist an abundance of publicly available design papers and technical discussions between developers and users of Bitcoin on archived internet forums. This data allows for a ‘technical code analysis’ of Bitcoin variants, examining the choices made during design and development, and the meanings that informed these choices.
Feenberg’s focus on meanings condensed in design stems from an observation also expressed by Latour: norms may be carried by machines in ways that obscure their valuative content. However, where Feenberg argues that it is necessary to interpret the choices of actors in terms of broader cultural discourses which inform them, Latour asserts that a researcher must resist the ‘modernist’ urge to jump to abstract structures for explanation and instead ‘follow the actors themselves’ (2005: 179).
Despite these epistemological tensions, the methodology outlined in Latour’s approach largely reaffirms the importance of following actors ethnographically and examining design processes critically. Latour’s focus on the associations that ‘hold society together’ entails that social research must ‘follow the actors themselves’ as they engage in their continuous connecting activities. This intuitively lends itself to an ethnographic approach, prioritising the observation and recording of actors’ own ‘world-making’ activities and the ‘traces’ they leave behind. Furthermore, Latour’s argument that these connecting activities are often 67
‘delegated’ to nonhuman actors reinforces the importance of analysing the choices made in technology design processes. By uncovering the traces left behind by actors involved in technical development, Latour argues, it is possible to make visible once again the action that is now performed by machines. Archives and other documentation of historical technical development processes are key here, allowing a researcher to recapture the “state of crisis in which machines, devices, and implements were born” (2005: 81).
As discussed in the previous chapter, the aspect of Latour’s approach that most distinguishes it from those of Bijker and Feenberg is the claim that ‘objects too have agency’. The methodological implications of this argument entail an empirical focus on how technical artefacts connect actors. While Bijker and Feenberg highlight the importance of understanding how technical artefacts are shaped by social contexts, Latour conversely emphasises the role of technical artefacts in constructing social contexts. This entails that the interactions between social groups and Bitcoin variants may be productive of new contexts through the meanings they carry, the practices they prescribe, and the ways in which they may enrol actors into particular programs of action. While it is important to investigate how Bitcoin may be defined and shaped by social groups, Latour’s approach suggests it is also necessary to examine how social groups may be forming around meanings carried by Bitcoin. This added a further analytical focus to the ethnographic and hermeneutic strategies outlined above. To the former, it added an imperative to investigate the role of Bitcoin in transporting and transforming shared meanings.12 This was reflected in the organisation of interviews, observations, and documentary analysis. To the latter, it added an emphasis on the ways in which the design of Bitcoin variants outlined a specific means of connecting humans and machines: what programs of action were delegated, and what practices were prescribed.
In combining the insights of Bijker, Feenberg, and Latour, a constructionist approach to investigating Bitcoin was established that integrated a hermeneutics of technology design into an ethnography of relevant actors. This approach developed as I began to identify research participants.
12 The implication here is that a Bitcoin variant may constitute a ‘mediator’. See previous chapter, section 2.3 68
3.2 Phases of Research
3.2.1 Entry Points to the Field
The research design, addressing three areas for investigation, involved an ethnographic approach which aimed to identify the nontechnical elements in construction processes via interviews, observations, and documentary analysis. This approach initially followed the orthodox ethnographic means of sampling by way of pragmatic considerations: identifying geographically local actors engaging with Bitcoin. Following Bijker’s arguments concerning a progressive, heuristic interviewing strategy, such actors were sought out as ‘gatekeepers’: potential research participants with access to “key sources and avenues of opportunity” for entering the ‘field’ (Hammersley and Adkinson: 2007: 27). This first took place at a local event in Manchester promoting new technologies for transgressive politics, ‘Activism in the Digital Age’. A group of artists based in Manchester organised a series of talks delivered by various groups, two of which involved Bitcoin. Both of these groups made presentations that involved defining the meaning and purpose of Bitcoin, and articulated how it addressed, for them, particular economic and political problems. These actors, fitting the criteria for research participants through their shared meanings attached to Bitcoin, were approached as gatekeepers. One of the groups had travelled from the Czech Republic, and an email correspondence was established with this group that over time led to interviews and observations at their ‘Crypto-Anarchy Institute’ in Prague. The other group comprised of two organisers of a local Bitcoin ‘meet-up’, a space for Bitcoin enthusiasts to regularly meet, to share knowledge and discuss developments in Bitcoin technology. The local meet-up group became a key entry point from which I ‘rolled a snowball’ and ‘followed the actors’. 69
Figure 1 - Phases of Research
The ‘Activism in the Digital Age’ event also highlighted the importance of collecting internet- based texts as part of the ethnographic process, as many were drawn on in presentations and discussed between attendees. This was largely anticipated during the research design stage. The diffusion of digital technologies in recent decades has led to an ‘ongoing expansion of the social’ via new techniques of mediation, archiving, and valuation, with considerable consequences for conducting social research (Adkins and Lury, 2011). This has led to the emergence of ‘digital ethnography’ as a means of integrating into qualitative research the many forms of online communication that increasingly comprise much of social life (Murthy, 2008; Pink et al, 2015). The major contribution of this new approach is to expand the definition of what constitutes a ‘field’, moving beyond traditional physical configurations to follow actors as they interact through various digital mediums, and leave a ‘trace’ online. This expansion of the notion of ‘field’ increases the importance of texts. Hine, (2008) argues that the rise of digitally mediated communications has blurred the traditional distinctions between texts and interactions. Discourse analysis, she states, which has often been criticised for lacking a means to verify the interpretations that it produces, is now an indispensable method in ethnography due to the detailed archives of discussions and texts circulated on digital media. As Hine states, “the distinction between texts and interaction 70
blurs, since the material of discourse analysis [now] encompasses textualized records of interaction as well as solely written texts” (53). This has led to methods such as ‘discourse- centred online ethnography’ that outline ways of identifying ‘fields of computer-mediated discourse’ through the observation of archived interactions (Androutsopolous, 2008). These methods focus largely on the online activities of research participants, supplementing data from interviews and observations. Following this approach, an analysis of internet forums, blogs, videos, and websites identified by research participants began to supplement interviews from the outset. These ‘documents’ of various forms were collected and analysed alongside data from interviews and observations pertaining to particular research participants.13 Such documents, having been identified by research participants at various points, were discussed in interviews with participants in order to verify the meanings expressed in them.14
Internet forums also constituted a second key entry point. Early field interviews – unstructured encounters conducted at opportune moments and recorded in written notes – indicated that the forums ‘BitcoinTalk’ and ‘Reddit’ were important sources of information. These forums only provided occasional supplementary data for interviews, with specific posts rarely referenced by interviewees. However, an exploration of their archives corroborated the claims in existing literature on Bitcoin at the time, that its design was first proposed on the Cryptography mailing list and its subsequent development discussed on BitcoinTalk.15 Following Feenberg’s arguments concerning design as a key site for investigation, and Latour’s arguments regarding the importance of uncovering the ‘trace’ left behind by actors during technical development, the archives of the Cryptography mailing list and BitcoinTalk emerged as important sources to begin an historical ‘technical code analysis’ of Bitcoin’s design and development. I began to collect texts from these forums frequently, in the form of discussion threads and design papers, as I moved into the first field phase.
13 See below, figures 2 and 4. 14 One of the key necessities in ‘discourse-centred online ethnography’, Androutsopolous argues, it to ‘confront’ research participants with the online material they have produced/referenced during interviews. 15 Existing literature at this time consisted of journalistic accounts of Bitcoin. Two important sources at this stage were Frisby (2012), and the newly established Bitcoin news site, CoinDesk. 71
3.2.2 First Field Phase: Emerging contexts
Collecting texts concerning the design and development of Bitcoin followed a snowballing strategy that started with the paper that outlined its initial design, and the discussions threads from the moment this paper was posted on the Cryptography mailing list. Following the constructionist approach, the various controversies that preceded design were examined. The design paper made reference to a number of problems identified by actors on the mailing list, and proposed how particular technical elements may be brought together to address them. These proposals referenced specific papers, previous technical designs, which were then sought out for analysis. The problems referred to in the Bitcoin design paper related to controversies that were much discussed on the Cryptography mailing list prior to Bitcoin’s design. An analysis of the archives of Cryptography started with an identification of the discussion threads that addressed these problems and controversies: namely, the various reasons expressed for constructing digital cash systems, particular design proposals, and the obstacles these efforts have encountered. Such archived discussion threads provided many links: to posts on other mailing lists, such as the ‘Cypherpunk mailing list’; the personal websites and blogs of frequent discussants; documents cited as important texts, such as ‘A Cypherpunk’s Manifesto’; design papers produced or circulated by discussants, such as ‘B-money’; and press releases and news stories from media websites. Gradually, it became possible to trace many technical and nontechnical elements that formed part of the construction process of Bitcoin. The resulting map of connected actors, techniques and texts constituted the ‘context’ in which Bitcoin emerged, drawn together by collecting texts and following their connections to other texts. This was expanded through the archives of BitcoinTalk, which it emerged was set up shortly after Bitcoin’s initial design as a space for people to discuss and collaborate on Bitcoin’s development. Discussions on these internet forums, and the various connected texts, were recorded and copied into plain text documents for coding.
Attending events quickly became the principal source for ethnographic data. The Digital Activism event had introduced me to a local group of Bitcoin enthusiasts that met monthly to discuss Bitcoin, at first using the social networking website Meetup, before establishing their own site ‘Bitcoin Manchester’ (the content of which also became a useful source of 72
data). I started attending these local events, conducting observations and impromptu interviews where possible. These initial interviews were not recorded with an audio device, yet they acted as important pilot studies for constructing later interview schedules, and some provided valuable data. Observations followed the strategy of ‘thick description’, making many written notes during the proceedings and typing up reflections after the event in an attempt to understand common reference points, values, and codes of behaviour. The technical and entrepreneurial vernacular expressed at these events presented an obstacle at first, in terms of participating in discussions, as did the issues discussed. Gradually, this became less of an obstacle and these details began to inform the identification of a discursive context. Events also provided many connections to important texts based online, and events based in other locations. The most significant source of data obtained at events however, came via the opportunities they provided to arrange in-depth interviews.
Interviews provided a crucial means of accessing the meanings actors were attaching to Bitcoin. In designing an interview schedule, Bijker’s definition of ‘meanings’ provided a foundation. The aim of each interview was to establish (1) the interests and beliefs held by the interviewee that both preceded their encounter with Bitcoin, and (2) emerged alongside their interaction with Bitcoin. Each interviewee was asked to (3) define Bitcoin and (4) explain its purpose, (5) the knowledge required to interact with it, and (6) any problems that exist with the technology. Such aims did not directly correspond to questions, as a priority was to create an environment in which interviewees could describe Bitcoin in their own terms, emphasising experiences and forms of knowledge they felt were relevant and important. Each interviewee was encouraged to ‘tell the story’ of their involvement with Bitcoin, meaning that interviews began as interviewee-led discussions, before moving to more specific questions. It was hoped this would reveal connections to devices, actors, or texts that the interviewee felt were important, as well as meanings.
The questions asked were open-ended and devised to prompt interviewees into elaborating as much as possible on how they understood Bitcoin. The interview schedule for initial interviews followed the following questions:
1) How did you first come across Bitcoin? 73
2) What interested you about Bitcoin? 3) Could you define what Bitcoin is? 4) How did you first use Bitcoin? 5) What was your background at the time you encountered Bitcoin? 6) What would you say are the obstacles for people getting involved with Bitcoin? 7) What would you say are the incentives for people to get involved with Bitcoin? 8) How important are forums and/or events for people using Bitcoin? 9) What would you say you have learnt from your experiences with Bitcoin? 10) What do you see as the future for Bitcoin?
The interviews that emerged from interacting with the Bitcoin Manchester group all took place in public buildings that were suggested by the interviewee at the time of arrangement. The shared experiences of meet-up groups provided a topic with which to build rapport and an environment of trust with each interviewee.
Before interviews began, I explained the purpose of the research, how data would be stored, and asked consent for the use of their identity. Each participant was also given a consent form that specified these issues further.16 At the end of these interviews, an informal discussion usually followed that provided an opportunity to identify further potential interviewees, events, and texts. From the frequently discussed meanings and connections in these interviews, alongside documentary and observation data, I began to map the shared meanings and practices of a network of Bitcoin users in the UK. Not all interviewees fit into this network, or context, however. One interviewee for example, Loz Kaye, was contacted after local Bitcoin enthusiasts in Manchester had referred to his use of Bitcoin during a local election campaign. Kaye was leader of the UK Pirate Party, and had used Bitcoin to help raise campaign funds. While consistent themes and connections were emerging among local Bitcoin enthusiasts, Kaye represented an outlier, describing meanings, practices and connections that diverged from those noted among other interviewees. This was to reoccur as the fieldwork expanded, with many connections appearing between some actors, comprising particular contexts of activity, while others represented actors in entirely separate contexts.
16 See below, section 3.4. 74
3.2.3 Second Field Phase: Selecting Cases
The organisers of Bitcoin Manchester had modelled their ‘meet-up’ group on similar events they had attended in other locations. Their connections to these other groups provided an avenue to expand the range of research participants. Much of this involved meet-ups and interviews in London, where some connections between actors, texts and techniques emerged as a second context oriented around a distinct set of meanings that defined Bitcoin as ‘blockchain technology’. This phase of research was defined by a sprawling amount of data that presented many potential avenues for investigation. Selecting which connections to pursue became an ongoing process that shaped the thesis.
An increasing number of Bitcoin variants, or ‘altcoins’, emerged as topics of interest among research participants. Following the connections of participants to various data sets regarding these variants opened many potential directions. A first way in which the expanding range of variants was narrowed came via by the activities of research participants themselves. While many interviewees had expressed interest in different variants, their engagement with these variants was often limited. These instances reduced the possible connections to follow. The meanings they attached to these variants ultimately served more effectively as a means of sharpening the definitions they provided for Bitcoin, which they contrasted against ‘altcoins’.
Pragmatic considerations also reduced the possibility to pursue certain connections. Some variants provided far less online documentation than others, and some developers and users of variants were more receptive to correspondence than others. This served to highlight how much activity was not straightforwardly observable or accessible in the construction of Bitcoin variants. Some contexts, such as illegal markets on the ‘dark net’, appear to be influencing the development of Bitcoin variants in specific ways.17 The
17 Some altcoins discussed by research particpants were designed specifically for anonymous trading. (See for example, Zcash, https://z.cash/ - accessed 15/08/2017) or more recently, Monero. Few users or developers of these altcoins emerged in the course of research. Such altcoins are noted for their prevalent use on the ‘dark net’, a significant area of Bitcoin development this thesis does not cover. For Monero’s recent emergence as the ‘altcoin’ of choice for dark net drugs markets, see https://motherboard.vice.com/en_us/article/jpgv8k/monero-cryptocurrency-dark-net-drug-dealers- 75
pragmatic difficulties of tracing a network of actors, texts and techniques connected by shared interests in forms of criminality however, prevented important contexts such as this from becoming a key case study.
In some instances, it became clear that a range of Bitcoin variants converged around a specific set of meanings, and so what had appeared to be sprawling data was enclosed thematically in one context via the repetition of shared definitions and practices among groups of actors. This is what transpired in London, where it gradually became clear that a number of initially distinct variants and actors were connected by understandings of Bitcoin as ‘blockchain technology’, a disruptive innovation for enhancing financial services.
During this phase of research, it became increasingly difficult to maintain physical, geographical boundaries as explanatory factors that may help constitute a context. While the theoretical framework of the thesis had not placed particular emphasis on geographical contexts, it nevertheless felt intuitive to retain an analytical focus on such factors. However, it became increasingly clear in ‘following the actors’ that they were continually on the move. To take Bitcoin Manchester as an example, the two organisers were frequently visiting various countries, and moved semi-permanently between cities throughout Europe during the course of our correspondence. Sometimes one or the other would visit Manchester to host a meet-up event. Attendees to Bitcoin Manchester were similarly transitory. Additionally, during the course of interviews local contexts were rarely mentioned, often in spite of efforts on my part to inquire about their significance. The vast majority of research participants were highly mobile individuals whose identities, interests and beliefs pertained to a broadly libertarian worldview that held national boundaries to be anachronistic and, sometimes, ‘statist’. The only exception here were the communitarians in Catalonia.
The activities of a communitarian anarchist movement in Catalonia, ‘Cooperative Integral Catalana’, became a key focus for a case study primarily due to the radical distinction between their shared meanings and those of all other research participants. One interviewee, met through connections to the Bitcoin Manchester group, had discussed how
hope-more-anonymous-than-bitcoin-alphabay or https://www.wired.com/2017/01/monero-drug- dealers-cryptocurrency-choice-fire/ both accessed 02/09/17) 76
an old acquaintance of his from an anarchist squat in London had travelled to Barcelona to help develop a ‘left-wing Bitcoin’. The developer in question, Amir Taaki, was a well-known figure among Bitcoin enthusiasts and proved highly difficult to contact.18 Those at the collective he had joined however, were receptive to my approach, after I found contact details online. I travelled to Barcelona where I conducted two in-depth interviews with key figures from the cooperative. One of these interviews was conducted in English, the other in Spanish with the help of a translator.19 These research participants provided me with a considerable amount of textual data, in the form of design papers, forum discussions, blog posts, and media reports. The historical and socio-economic context of Catalonia became a key factor in this case study as it reappeared in many forms in the data.
Another case study emerged from the archival research I was undertaking on the BitcoinTalk forum. Shortly after BitcoinTalk was set up as a space to discuss the development of Bitcoin, an adapted variant of Bitcoin called Namecoin was posted to the site. Namecoin subsequently attracted developers who collaborated on its construction and this was documented both on BitcoinTalk and on Namecoin’s own website. As the first adaptation of Bitcoin, and one that diverged from its monetary definition, Namecoin stood out as a potential avenue for investigation. Through its website I was able to contact two of its key developers, with whom I arranged interviews. Both of these interviews took place via open source communication tools at the request of the interviewees.20 Again, these interviewees provided much online data to supplement the interviews. This data began to constitute a ‘context’ as a distinct set of shared meanings and practices distinguished the two developers from other research participants, most notably their commitment to specific privacy- enhancing and open source communication tools.
The selection of case studies took place as the second field phase came to an end. Some avenues were left unexplored, with projects such as ‘Counterparty’, ‘Maidsafe’, and
18 It now appears Taaki may have been in Syria at that time, fighting for the Kurdish People’s Protection Unit. See http://www.bbc.co.uk/news/uk-39417937 (accessed 02/09/17) 19 Candela Palencia Morales, who also transcribed and translated the interview. We worked closely together on these processes, to ensure understanding on my part. 20 Jeremy Rand was interviewed via video-conferencing platform ‘Jitsi’: https://jitsi.org/ ; Daniel Kraft via an XMPP private messaging service, accessed via ‘Pidgin’ software: https://www.pidgin.im/ 77
‘BitNation’ all having been considered as case studies. BitNation, a group committed to developing Bitcoin as a platform for ‘governance services’ such as land registration and even marriage certification, represents the largest amount of unused data. Three interviews were conducted with figures from BitNation, as well as considerable quantities of textual data, such as blogs and recorded forum interactions. Ultimately, as I entered the writing up phase, the quality of data meant that other contexts were prioritised as case studies.
3.2.4 Writing Up Phase
Most interview data was transcribed while fieldwork was still in progress, using the open source tool ‘Otranscribe’, which maintains the security of the data as audio files and written transcriptions are not uploaded.21 While transcribing interviews, I took notes about emerging themes: certain consistencies and issues elaborated by more than one interviewee. I began coding the data on printed out transcriptions, and largely followed Bijker’s break down of ‘meaning’: recording instances in which the purpose of Bitcoin- related technology was expressed; the range of goals the technology is understood to assist; perceived problems with the form and functionality of the technology; the knowledge required to interact with it; and the general ideas, values and beliefs expressed by the interviewee.
Each ‘story’ provided by an interviewee was at first seemingly unique, but during the course of transcription certain connections and themes emerged. This was facilitated through the writing of ‘think-pieces’, short documents that explored potential themes arising from groups of interviews. Gradually, actors, techniques and texts containing recurrent ideas, events and techniques, were drawn together as contexts: a range of meanings and practices that converge around a particular worldview, identifying what Latour terms panoramas.22
21 http://otranscribe.com/ 22 Latour uses the word context to refer to a set of ideas collected and circulated by actors via specific connections. This activity often constitutes a panorama, a means of ‘collecting, framing, and ordering’ meanings, objects and forces in a way that projects a vision of the world particular to those actors: “From time to time, contexts are gathered, summed up, and staged inside specific rooms 78
As discussed in the previous chapter however, such contexts are constructed by actors. Undoubtedly, as the researcher I was ‘constructing’ contexts in this sense by collecting and framing particular actors within thematic codes. The key reflexive imperative during this process was to minimise the effects of such researcher bias by maintaining focus on the connections identified by research participants themselves, and those made evident in texts, such as specific references. Analysis was necessarily interpretive at times however, particularly the hermeneutic ‘technical code analysis’ of design papers. Here I followed the ‘realist’ approach to ethnographic writing, prioritising the authenticity of representation through multiple data sources (Rode, 2011). This process preceded a return to theory, which helped to clarify commonly expressed shared meanings as technological frames or codes which may challenge, or become incorporated into, established discourses.
In the coding of texts, including interview transcripts, web pages, blogs, design papers, and archived forum discussions, it was possible to identify connections between actors by noting the frequency with which certain issues and terms were used. Topics such as ‘gold’, ‘surveillance’, and ‘open source’ quickly emerged as key concerns within particular texts. How these concerns were articulated and addressed then provided further layer of detail that connected certain actors. Gradually a picture emerged of certain contexts, maps of connected actors that share certain meanings and practices. An overview of these connections is provided in the following section.
3.3 Overview of Data
Following the approach of ‘digital ethnography’ resulted in three major sets of data: interview transcripts, observations, and texts collected from websites.
3.3.1 Interviews
into coherent panoramas adding their many contradictory structuring effects to the sites to be ‘contextualised’ and ‘structured’.” (2005: 191) 79
In total 18 in-depth interviews were conducted, along with three field interviews conducted during or after participant observations. Of the 21 interviewees, 19 also provided textual data: texts that they had produced personally, or texts that had been produced by the organisation they were part of. The websites through which these texts were accessed are listed in the table below, with the number of texts taken from the source in brackets. A total of 74 web pages were collected from these sources.
Interviewee Associated Associated Texts Organisation(s) Arlyn Culwick BitNation/Blocknet Organisation website (1): https://blocknet.co/ Ash Moran Bitcoin Manchester Organisation website (6):
http://www.bitcoinmanchester.org.uk/ Daniel Kraft Namecoin Organisation websites (8): https://namecoin.org/
https://forum.namecoin.org/ David Bailey HardBTC/BitNation n/a Dug Campbell Scottish Bitcoin Meet-up Personal website (2): http://www.dugcampbell.com/ Hugh Halford- UKDCA/London Bitcoin Organisation website (3): Thompson Meet-up https://www.ukdca.org/ Jeremy Rand Namecoin Organisation websites (8): https://namecoin.org/
https://forum.namecoin.org/ Jon Harrison Bitcoin Manchester/ Organisation website (3): London Bitcoin Meet- https://www.ukdca.org/ up/UKDCA 80
Jose Roco Bitcoin Manchester Organisation website (6):
http://www.bitcoinmanchester.org.uk/ Juanito Piquete CIC/FairCoop Organisation websites (28):
https://fair.coop/
https://cooperativa.cat/en/ Ken Kappler Ethereum Organisation website & blogs (3):
https://blog.ethereum.org/ Loz Kaye UK Pirate Party Organisation website (1):
https://www.pirateparty.org.uk/ Martin Sip Crypto-Anarchy Institute Organisation website (3):
https://www.paralelnipolis.cz/koncepty/ cryptoanarchy-institute/ Max Flores Bitcoin Manchester Organisation website (6):
http://www.bitcoinmanchester.org.uk/ Narigamba BitLand/BitNation Personal website (3): Mwinsuubo http://narigamba.blogspot.co.uk/ Nick Lambert Maidsafe Organisation website (3):
https://blog.maidsafe.net/ Stefan Blasel CIC/FairCoop Organisation websites (28):
https://fair.coop/
https://cooperativa.cat/en/ Susanne BitNation Organisation website (10): Tarkowski- https://blog.bitnation.co/ 81
Templehof Nikki Wiles* CounterParty CounterParty website posts (1) https://counterparty.io/ Rhian Lewis* London Women in n/a Bitcoin/Count My Crypto Janina Lowisz* BitNation BitNation blogs (1) https://blog.bitnation.co/ambassador- interview-janina-lowisz/ Figure 2 - List of Interviews
3.3.2 Observations
Over the course of 13 months I attended 13 events organised by interviewees. Events were important spaces for many people to learn about Bitcoin. This entailed that particular artefacts and techniques were shared at such spaces, along with the knowledge and meanings associated with Bitcoin-related technologies. As Bitcoin variants and devices were often used entrepreneurially, events also constituted ‘networking sites’ for some interviewees. The majority of the events attended were based in Manchester, organised by the Bitcoin Manchester group.
Date Event Location 24/09/2014 Activism in the Digital Age Manchester 06/10/2014 Bitcoin Manchester meet-up Manchester 07/11/2014 Bitcoin Manchester meet-up Manchester 01/12/2014 Bitcoin Manchester meet-up Manchester 23/02/2015 Crypto-Anarchy Institute meeting Prague 24/02/2015 Crypto-Anarchy Institute meeting Prague 13/04/2015 Bitcoin Manchester meet-up Manchester 82
11/05/2015 Bitcoin Manchester meet-up Manchester 12/05/2015 Coinscrum Bitcoin meet-up London 13/05/2015 Ethereum meet-up London 01/06/2015 Bitcoin Manchester meet-up Manchester 12/10/2015 Bitcoin Manchester meet-up Manchester 11/11/2015 Bitcoin Manchester meet-up Manchester Figure 3 - List of Observations
3.3.3 Texts
Texts sourced from internet sites were web pages or PDF files. These were copied into plain text documents and coded offline. A total of 193 texts were analysed in this way. Pages taken from forum archives, such as BitcoinTalk, were done so via a snowballing method that followed links and connections from one discussion thread to another. Other texts were identified by interviewees, as detailed above. Each source of textual data is associated with an actor and Bitcoin variant. These connections are illustrated in figure 5 ‘map of connections’, via the numbers given in the table below.
No Source of Textual Quantity Link to Website . Data of Texts 1 The design paper for 1 https://bitcoin.org/bitcoin.pdf Bitcoin 2 BitcoinTalk 35 https://bitcointalk.org/ 3 Reddit 21 https://www.reddit.com/r/Bitcoin/ 4 Cryptography mailing 43 http://www.metzdowd.com/pipermail/cryptogr list aphy/ 5 ‘Blind Signatures for 1 http://sceweb.sce.uhcl.edu/yang/teaching/csci Untraceable 5234WebSecurityFall2011/Chaum-blind- 83
Payments’ – Chaum, signatures.PDF D. 6 The design paper for 1 http://www.hashcash.org/papers/hashcash.pdf Hashcash 7 Adam Back’s personal 5 http://www.cypherspace.org/adam/ website 8 Wei Dai’s personal 2 http://www.weidai.com/ website 9 ‘How to Time-Stamp a 1 https://www.anf.es/pdf/Haber_Stornetta.pdf Digital Document’ – Haber, S & Stornetta, W 10 Nick Szabo’s personal 5 http://szabo.best.vwh.net website 11 ‘A Cypherpunk’s 1 http://www.activism.net/cypherpunk/manifest Manifesto’ – Hughes, o.html E 12 ‘The Crypto-Anarchist 1 http://www.activism.net/cypherpunk/crypto- Manifesto’ – May, T anarchy.html 13 ‘The Cyphernomicon’ 1 https://www.cypherpunks.to/faq/cyphernomic – May, T ron/cyphernomicon.txt 14 Namecoin Wesbite 8 https://namecoin.org/ 15 CIC Website 12 https://cooperativa.cat/en/ 16 FairCoop Wesbite 16 https://fair.coop/ 17 Design paper for 1 https://chain.fair-coin.org/download/FairCoin2- Faircoin V2 white-paper-V1.1.pdf 18 CES Website posts 2 https://www.community-exchange.org/home/ 19 Crypto Anarchy 3 https://www.paralelnipolis.cz/koncepty/crypto Institute Website anarchy-institute/ 20 Bitcoin Manchester 6 http://www.bitcoinmanchester.org.uk 84
website 21 UKDCA 3 https://www.ukdca.org/ 22 BitNation website 10 https://blog.bitnation.co/ 23 Maidsafe website 3 https://blog.maidsafe.net/ 24 Narigamba 3 http://narigamba.blogspot.co.uk/ Mwinsuubo’s website 25 BitLand proposal 1 https://docs.google.com/document/u/0/d/1VB QBWn22RJNHeFymzFuuR6dEegYufuz0iivjXQDP q-U/mobilebasic# 26 UK Pirate Party 1 https://www.pirateparty.org.uk/ Website 27 Ethereum website 3 https://blog.ethereum.org/ 28 Dug Campbell’s 2 http://www.dugcampbell.com/ personal website 29 Counterparty Website 1 https://counterparty.io/ 30 Blocknet Website 1 https://blocknet.co/ Figure 4 - List of Texts
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Figure 5 - Map of Connections
3.3.4 Overview of Connected Actors, Texts, and Artefacts
The major practice that connected most actors encountered in the research was the definition and use of Bitcoin as currency. This practice connected most interviewees. The exceptions here were those using Bitcoin as part of an effort to develop a different technology, such as Faircoin.
A differentiation is made between the ‘strength’ of associations based on the level of influence and activity observed during the course of the thesis. An interviewee such as Jon Harrison for example, engaged in multiple activities with another interviewee, Ash Moran, throughout the course of the thesis. Harrison’s connection to Amir Taaki however, was discussed only as a past association in an interview. Similarly, some actors on internet forums made frequent comments in many discussion threads, such as John Gilmore’s regular posts on the Cryptography mailing list.
Figure 6 - Key for Map of Connections
Other figures, such as David Chaum, were present only via texts they had produced elsewhere, which were then discussed on the forum.
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3.4 Ethical Considerations
To ensure that the thesis met with the British Sociological Association’s Statement of Ethical Practice, each research participant was given a consent form ahead of interviews and observations.23 The organisers of meetings were contacted prior to participant observation and sent a consent form via email. Interviewees were also sent consent forms prior to an interview taking place, and asked to confirm their consent on the day of the interview. The consent form made participants aware of the aims of the thesis, why they had been chosen, and what participation in the thesis involved. This included the opportunity to remain anonymous, though no research participant requested this. The consent form also made participants aware that they could withdraw from the research at any point, including the subsequent removal and destruction of any data from the thesis pertaining to them, should they decide to request this withdrawal at a later date. Participants were also made aware of the outcomes of the research via the consent form, which specified that the PhD thesis would be available after all examinations had been passed, via request to the University of Manchester library, and that some parts of the thesis may also be used in academic conferences and publications.
As noted by Varis (2016), digital ethnography raises particular ethical concerns regarding distinctions between public and private interactions. Interactions that have been archived on internet forums may be publicly accessible, yet this does not automatically entail that it may be used as part of social research without the permission of the actors involved. Considerations must be made regarding the “type of platform, the sensitivity of the issue investigated, and the possible harm caused to those whose communications are being studied” (Varis, 2016: 63-4). The forums involved in this thesis were open platforms that invited the participation of all users and sought to spread technical knowledge. For these reasons, the Cryptography mailing list, BitcoinTalk, and Reddit forums were considered acceptable sources of data.24 In accordance with the Data Protection Act and the University
23 BSA statement of ethics, from March, 2002: https://www.britsoc.co.uk/media/23902/statementofethicalpractice.pdf (accessed 05/09/2017) Consent form available in the appendix, page: 24 The ethics statement of the Association of Internet Researchers was considered here: https://aoir.org/ethics/ (accessed 05/09/17) 88
Data Protection Policy, all data collected from interviews and observations was stored securely within computer facilities to which only I as the researcher retained access to.25
Summary
Following a constructionist model informed by the three scholars discussed in the previous chapter, this chapter has outlined the methodological approach taken in the thesis which aimed to address three key areas for investigating Bitcoin: meanings, designs, and connections. Firstly, Bijker’s work had demonstrated the importance of investigating the meanings that social groups attach to technical artefacts. Bijker’s elaboration of what constitutes meaning – summarised as the key goals, problems, definitions, knowledge and beliefs expressed by relevant social groups – formed the basis for a progressive, ‘heuristic’ interview strategy. This strategy used the interview process not only as a method for accessing meanings, but also to ‘roll a snowball’ and generate an understanding of the contexts within which research participants act. To this end, each interview was used as an opportunity to gather more data: identifying particular texts that interviewees felt were important, following connections between actors to locate further interviewees, and attending events alongside interviewees as a means of participant observation. This approach was developed with reference to literature on ‘digital ethnographies’ which emphasises the importance of analysing the online activities of research participants. Internet forums that archived the interactions around Bitcoin’s initial development were targeted in this way, again following a method outlined by Bijker in his historical case studies.
Secondly, influenced by Feenberg’s arguments, texts concerning the design process of Bitcoin variants were sought out for analysis. This ‘technical code analysis’ of design focused on the intersections between social elements (shared meanings and procedures that define use) and technical elements (techniques and devices) that are brought together in design
25 Data Protection Act: https://www.gov.uk/data-protection ; University of Manchester Data Protection Policy: https://documents.manchester.ac.uk/DocuInfo.aspx?DocID=14914 (both accessed 05/09/17) 89
processes in order to reveal how meanings may be condensed with technical logic in design. This form of analysis also drew from Latour’s concept of delegation to investigate design as a site in which action is delegated to machines, or ‘nonhumans’. This area of investigation developed throughout the thesis as research participants identified particular Bitcoin variants, the technical designs for which were analysed in light of this approach.
Thirdly, following Latour’s arguments, the methodological approach taken prioritised ‘following the actors’ and their connections with other actors, technologies, and texts. Again, this approach developed throughout the course of the thesis. As outlined in section 3.2, data collection started within a local group of Bitcoin enthusiasts and sprawled out as connections between actors, texts and technologies spread across national boundaries and involved various technologies. This brought to light a number of contexts which were shaping the construction of Bitcoin technology in various ways. In the latter phases of research, some emerging contexts were pursued while others were not, and this was largely a matter of pragmatic considerations, as specified in section 3.2.3. The cases selected included a group of privacy advocates developing ‘Namecoin’, activists in a Catalan anarchist movement developing ‘Faircoin’, and networks of entrepreneurs in the UK committed to developing ‘blockchain technology’, as well as groups of libertarians using Bitcoin in ways consistent with its initial design: as electronic currency. An overview of the data underpinning these case studies is offered in section 3.3, as well as the data unused in the thesis, representing avenues and potential contexts left unexplored.
By tracing the shared meanings of those engaging with Bitcoin, how these meanings influence design, and how they connect actors in particular ways, this thesis seeks to offer a constructionist analysis of Bitcoin: to throw light on the many nontechnical elements which have shaped its development in particular situations. This begins in the following chapter, with an analysis of Bitcoin’s initial construction.
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4. Design and History
The Construction of a Cyber-Libertarian Technique
When reflecting on the cultural impact of digital technologies, Langdon Winner questioned the kinds of practices, norms, and social relations that societies may want to emerge alongside these innovations. Winner noted that a popular ideology had already arisen to answer this question. He termed this ‘cyber-libertarianism’, “a collection of ideas that links enthusiasm for electronically mediated forms of living with radical, right wing libertarian ideas about the proper definition of freedom, social life, economics, and politics” (1997: 14). Building on his previous work in which he examined the extent to which technologies are socially constructed (1980, 1993), Winner stressed the need to focus on the complex motives and particular contexts of the various actors that influence the development of a technology. Where particular groups of actors shared motives and beliefs, it was possible to identify prevailing ideologies emerging around technical practices. This process, Winner argued, led to the emergence of cyber-libertarianism as a political ideology. Various ideas and arguments from earlier social thought had been brought together in a vision that appealed to many engaging with computer networks. What struck Winner about cyber- libertarianism was that it revived a deterministic understanding of technology that historians and sociologists such as himself had debunked in earlier understandings of technology and culture. Cyber-libertarianism expressed an interpretation of digital technology as a driving force of social change:
There is no time to pause, reflect or ask for more influence in shaping these developments. Enormous feats of quick adaptation are required of all of us just to respond to the requirements new technology casts upon us each day. In the writings of cyber-libertarians those able to rise to the challenge are the champions of the coming millennium. The rest are fated to languish in the dust. (1997: 15)
The aim of this chapter is to show how Bitcoin was first constructed in a context characterised by cyber-libertarianism, and how this set of shared beliefs and interests shaped its technical form. Through archival data it is possible to trace the interests that 91
brought together Bitcoin’s initial developers, the problems they identified with society and existing technologies, and how they sought to address their concerns by developing digital technologies. ‘Cypherpunks’, a group of actors sharing and generating cyber-libertarian meanings, constitute the first ‘relevant social group’ in Bitcoin’s history. In this chapter’s first section, archives from the internet forum to which Bitcoin was first proposed are analysed alongside technical designs containing the components that would later be brought together in the design for Bitcoin. The role played by the shared meanings of Cypherpunk actors in Bitcoin’s development show how it was socially constructed. As analysis turns to its design however, it becomes clear that Bitcoin may itself be interpreted as an ‘actor’ as it seeks to enrol people into particular activities.
Bitcoin’s design reveals how aspects of cyber-libertarian ideology are imprinted into its functionality. It proposes to replace corruptible financial institutions with an ostensibly incorruptible computer program that carries out the tasks of recording and validating transactions, as well as regulating the supply of money within the network. This has since become known as the ‘blockchain’. For this program to function it is necessary for a continuously growing number of users to commit their personal computational energy to the network. These users are incentivised to do so via rewards in Bitcoin, and are known as ‘miners’. In analysing Bitcoin’s design, I move beyond social constructionism by examining the role of the technology itself in expanding a network of cyber-libertarianism. Drawing on Bruno Latour’s concepts, I argue that Bitcoin’s design reveals the power of cyber- libertarianism as a panorama: a vision of society that has been constructed and sustained by actors who collect, frame, and organise the ideas, objects and actors that they encounter.26 The actions of cyber-libertarians are interpreted here as efforts to expand their sociotechnical network by ‘delegating’ a program of action which in turn ‘enrols’ human actors. In this sense, Bitcoin becomes a ‘nonhuman’ actor that plays a parallel role to human actors in maintaining and growing the connections which comprise the Bitcoin network. In these sections I also draw on Andrew Feenberg’s work to offer an interpretation of this
26 See Latour (2005: 183-190). Panoramas, Latour argues, are totalising worldviews constructed and sustained by groups of actors in a local context. ‘They collect, they frame, they rank, they order, they organise… they offer a preview of the collective with which they should not be confused’ (189). Communism, for example, would constitute such a panorama, framing the meaning and purpose of objects and actors, and offering a preview of a particular type of society. 92
process as a reproduction of ideology in new technical forms. While Latour’s concepts are helpful in understanding the programs of action holding Bitcoin and a network of actors together, I argue that the clear influence of neoliberal economic theory in these programs indicates connections to the types of broader hegemonic beliefs that Feenberg insists we must seek out.
4.1 Cypherpunks: Bitcoin’s first relevant social group
We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money. (Hughes, 1993)
Bitcoin was first proposed in a white paper posted to the Cryptography mailing list at metzdowd.com in 2008.27 The archives of the mailing list reveal a forum chiefly concerned with the design and development of computer networks in which user information is encrypted. In posts that detail the motives for these designs, it is possible to trace connections with texts and other mailing lists associated with Cypherpunk activists – a subculture committed to creating alternative computer networks that challenge those run by powerful organisations, organisations they see as threatening the privacy and security of individuals. The development of alternative and encrypted networks was the primary means by which these actors sought to bring about social and political change: expanding anonymised and computer-mediated interactions while subverting the capacities of nation states. Of these alternative networks, an electronic payments system that encrypted user information and did not require banks was a central aim. Such projects were thus familiar to the subscribers to Cryptography, as were the obstacles and difficulties in designing them. Bitcoin emerged within this context: an apparent solution to some of the key problems that
27 The Cryptography mailing list is publicly archived, available at http://www.metzdowd.com/pipermail/cryptography/ (accessed 19/05/2016) 93
had long frustrated the attempts of Cypherpunks to construct an encrypted form of electronic money.
The Cryptography mailing list states its purpose as a forum for discussion on the “technical aspects of cryptosystems, social repercussions of cryptosystems, and the politics of cryptography”.28 The first of these concerns is the most frequently discussed, with extensive discussion threads addressing technical issues with various encryption-based computer programs. These discussions are interspersed with concerns regarding the implications of increasing computerisation in everyday life. Such computerisation, it is observed, entails the recording and circulation of vast amounts of personal information across the world. Many subscribers opened discussions on the social implications of this, ranging from the development of malicious hardware devices that are specifically designed for identity fraud, to the potential levels of surveillance and corruption among corporations and intelligence agencies. One post from October 2008 for example, responds to the beginnings of the financial crisis, referencing a report on flaws in UK credit card security which led to largescale incidents of fraud. The post articulates a common concern: if criminals were able to exploit these flaws for their own gain, what capabilities were being amassed by nation states?
I’ve long suspected that NSA’s (still secret) budget (approved by a tiny number of manipulated Congressmen) has been, uh, augmented, by its ability to manipulate financial markets using inside information obtained from domestic and global mass wiretaps. You don’t suppose NSA is behind the recent market volatility, do you? It’s easiest to skim off billions when trillions are hurriedly sloshing around in a panic.29
Posts such as this begin discussions regarding the incompetence of organisations responsible for data protection, and the capacity for government agencies to target data centres with surveillance programs. Threats to security and privacy were observed in all cases where powerful organisations were entrusted with protecting data. Instances of corruption, failure and error among these organisations were frequently discussed. Mass
28 See http://www.metzdowd.com/mailman/listinfo/cryptography (accessed 19/05/2016) 29 Posted by John Gilmore (2008) available at http://www.mail- archive.com/cryptography%40metzdowd.com/msg09911.html (accessed 19/05/2016) 94
surveillance, where it was not directly precipitating malpractice, was noted for producing alarming vulnerabilities. These concerns frame the way in which world events are discussed and how Cypherpunks must respond. This perhaps expressed most clearly in a post that responds to the signing of the 2001 US Patriots Act, brought in to increase the powers of the US state after the September 11th attacks. The post calls on subscribers of Cryptography to ‘go back to their roots’, to develop and promote technologies that can help defeat this increased level of intrusion into private life on the part of the US government:
Every one of these policies is an opportunity, not a threat. To the extent that these crackdowns engender concern about privacy violations from a growing segment of the population, this is a chance for cyherpunks to spread their knowledge and their technology. You don’t have to be a paranoid [sic] any more to be afraid that the government is spying on you. John Ashcroft himself boasts that Big Government will be watching.
Cyperpunks should be taking advantage of this opportunity to promote their message of privacy through technology. For the first time since the group was formed, they can make a legitimate case that the threat of government surveillance is increasing. With the Bill of Rights being tossed out the window and the AG openly admitting to bending the rules to achieve his goals, a wide community is going to be receptive to this message.
OF course there are presently substantial numbers who are caught up in the collectivist urge and who might view attempts to protect privacy as unpatriotic. But this is a temporary phenomenon, already fading. The flags which flew from every car and building in sight a few weeks ago are disappearing. Yet the Draconian new regulations will not go away. Inevitably there will be a growing segment of the population which sees the government as a fearsome threat.
It is time for cypherpunks to go back to their roots. Let us put the cypher back in cypherpunk. There are other places where people can whine about how evil congress is or fantasize about secession from the U.S. Focus on crypto and what role it can play 95
in the current crisis. Believe it or not, no one else is doing that. No one in the world is speaking out to say, here are tools which can circumvent the government’s efforts to take away our privacy. If the cypherpunk’s don’t do it, no one will.30
As is emphatically illustrated in this post, Cypherpunks are politically committed to combating the powers of the state by developing ‘crypto’ systems. Cryptosystems are a means of securing information across a computer network through the use of algorithms that convert plaintext (data that needs protecting) to ciphertext (encrypted data) and back again. Crucially, the ability to encrypt and decrypt lies only with those that possess the cryptographic key that can trigger this conversion process. In this way, Cryptosystems are discussed as a means of shifting power away from large centralised organisations, to individual computer users.
Empowered with technologies of encryption, it is argued, individuals would no longer require large organisations to provide security and privacy as services. Instead, these tasks would be performed by algorithms. The potential for corruption and failure would therefore be minimised, as would the necessity to trust in institutions. In this, subscribers to Cryptography were pursuing the aims of Cypherpunks and Crypto-anarchists, online subcultures advocating and developing cryptography as a means to achieve social change. Key projects associated with Cypherpunks, such as ‘Pretty Good Privacy’ email encryption, were frequently discussed in detail. Moreover, many posts are signed with the names of key figures associated with the Cypherpunk movement, such as John Gilmore, quoted above, founder of the Electronic Frontier Foundation and the Cypherpunks mailing list, a forum referenced in many posts.31
The development of a cryptosystem that could provide a means of making anonymous transactions was a principal aim of Cypherpunks, and efforts made in this direction were frequently scrutinised on the Cryptography mailing list. The concept of digital anonymous
30 Posted by R. A. Hettinga (2001) available at http://www.metzdowd.com/pipermail/cryptography/2001-October/001169.html (accessed 04/02/2017) 31 On John Gilmore’s position within the Cypherpunk movement, see https://www.eff.org/about/board/john-gilmore (accessed 19/05/2016) 96
markets had been presented in the more polemical Cypherpunk texts throughout the 1990s. Timothy C May’s (1994) document The Cyphernomicon is a particularly prominent example of this. New innovations in cryptography, May stated, were to generate markets which would be free from surveillance.
Strong crypto is here. It is widely available.
2.3.2. It implies many changes in the way the world works. Private channels between parties who have never met and who never will meet are possible. Totally anonymous, unlinkable, untraceable communications and exchanges are possible.
2.3.3. Transactions can only be *voluntary*, since the parties are untraceable and unknown and can withdraw at any time. This has profound implications for the conventional approach of using the threat of force, directed against parties by governments or by others. In particular, threats of force will fail.
2.3.4. What emerges from this is unclear, but I think it will be a form of anarcho- capitalist market system I call "crypto anarchy”
In texts such as May’s, new innovations in cryptography – or ‘strong crypto’ – are identified as the drivers of a sweeping social change set to liberate individuals from old hierarchies of power and control.32 ‘Crypto anarchy’ is described as a fast approaching future in which governments are made redundant by technical progress, and individuals are subsequently freed from their coercive and supervisory forces. Cryptosystems are defined as emancipatory tools that help bring about this future, allowing groups of internet users to evade and subvert the corruption and incompetence liable to any governments or large organisations committed to recording and gathering mass amounts of personal information. Furthermore, a technical superiority is assigned to cryptosystems which gives their diffusion, and its perceived consequences, a sense of historical inevitability. As May went on to state when considering the effect of cryptosystems on governments:
32 May’s earlier (1992) document The Crypto Anarchist Manifesto and Eric Hughes’ (1993) A Cypherpunk’s Manifesto represent additional sources here. 97
It dawned on me that public key crypto and anonymous digital cash systems, information markets, etc. meant the end of governments as we know them… Not everyone is a fan of it. But it’s coming, and fast.
This technological determinism and libertarian worldview constitute the dominant frames of meaning on the Cryptography mailing list. In a word, cryptosystems are defined as disruptive networks which allow groups to enact and prefigure a crypto anarchist society. Digital cash systems, it is argued, will inevitably grow in importance, and inevitably cause the decline of the nation state. At the heart of the ‘crypto-anarchy’ vision are free markets. Replacing governmental law which relies on ‘threats of force’, are laws of the market, and this is made possible by anonymous communication and electronically-mediated exchange.
The earliest posts in the Cryptography archives reference David Chaum’s commercial efforts to devise an electronic cash system that encrypted transaction information, protecting the identity of its users.33 Chaum had instigated a series of attempts to create encrypted payments systems with his 1981 paper Blind Signatures for Untraceable Payments. A professor of computer science at the University of California, Santa Barbara, Chaum outlined the design for a cryptosystem in which the digital signatures of users could be encrypted to ensure a high level of anonymity. Such a system was necessary, Chaum explained, as leading designs in the field were threatening to impact substantially on personal privacy by placing third parties in a position to record all information related to user transactions. “A new kind of cryptography, blind signatures”, Chaum explained, “allows realization of untraceable payments systems which offer improved auditability and control compared to current systems, while at the same time offering increased personal privacy” (1998: 203). Chaum’s own efforts included Ecash and Digicash, and as a subscriber to Cryptography commented, by the late 1990s these efforts were in decline.34 Chaum’s work had presented to the
33 The earliest posts accessible in the Cryptography archives are from 2001. Of these, one is entitled ‘ECash Technologies (digicash.com) announces layoffs’ and is available here: http://www.metzdowd.com/pipermail/cryptography/2001-March/000003.html (accessed 19/05/2016) Many later posts also reference Chaum’s work. 34 Chaum’s vision for ECash and Digicash ultimately culminated in commercial efforts to provide electronic payments systems. By the late 1990s these ventures were in decline, and Chaum had been removed as CEO. The story of Digicash is available here: http://cryptome.org/jya/digicrash.htm (accessed 19/05/2016) 98
Cypherpunks the possibilities but also the obstacles of designing electronic cash systems, and these issues would continue to fuel discussions on the Cryptography and Cypherpunk mailing lists.35
Various other attempts to create electronic cash systems are discussed in the posts of Cryptography. Wei Dai, a computer engineer who frequented the Cypherpunk mailing lists, had in 1998 proposed a protocol for achieving an untraceable medium of exchange, and named it B-money. In outlining the purpose for B-money, Dai stressed the importance of an anonymous decentralised monetary system to the crypto-anarchy vision.
I am fascinated by Tim May's crypto-anarchy. Unlike the communities traditionally associated with the word "anarchy", in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It's a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.
Until now it's not clear, even theoretically, how such a community could operate. A community is defined by the cooperation of its participants, and efficient cooperation requires a medium of exchange (money) and a way to enforce contracts. Traditionally these services have been provided by the government or government sponsored institutions and only to legal entities. In this article I describe a protocol by which these services can be provided to and by untraceable entities.36
Dai proposed a network in which transactions were publicly broadcast. This would replace the need for a third party to record transaction information on central servers. Instead, transaction information would be encrypted and recorded by other users on the network.
At the crux of Dai’s design was a means of ensuring the identities of users could not be linked to the identities they used when participating in the network. “The protocol proposed
35 For a discussion of Chaum’s influence to the Cypherpunk movement more broadly, see Julian Assange’s (2012) book Cypherpunks: Freedom and the Future of the Internet. OR books: London 36 This extract from Dai’s b-money proposal is taken from his personal website. It is undated. Available here http://www.weidai.com/bmoney.txt (accessed 15/06/16) 99
in this article” Dai wrote, “allows untraceable pseudonymous entities to cooperate with each other more efficiently… I hope this is a step toward making crypto-anarchy a practical as well as theoretical possibility” (1998: 1). Dai’s b-money designs proved influential, particularly for the most frequently discussed digital cash project on the Cryptography mailing list, Hashcash.
Adam Back, a frequent poster to Cryptography, in 1997 published a paper in response to some of the key problems that arose when developing electronic cash systems: Hashcash – A Denial of Service Counter-Measure, was initially announced on a Cypherpunk mailing list.37 A denial of service attack is an attempt to disrupt a computer network by overloading its servers with ‘useless traffic’. As Back explains, Hashcash “was originally proposed as a mechanism to throttle systematic abuse of un-metered internet resources such as email, and anonymous remailiers.” (2002: 1) These were issues affecting all projects based on free- to-access computer networks, the most common of which becoming well-known as email ‘spamming’.
Back proposed a system in which sending data across the network was a costly process. At the centre was a cryptographic puzzle that required a certain amount of time and computational power to solve before data could be sent. This ensured that sending data across the network would be unproductive for those wanting to flood the network with useless traffic. Solving the cryptographic puzzle involved generating a hash, a string of data with a fixed size. This hash must pass a series of tests written into the Hashcash algorithm. If the data passes these tests, a ‘token’ is created and attached to the data, which would demonstrate what Back called ‘proof-of-work’: proof that the sender of the data has taken the time to generate the token. The processing time to match the conditions for one email address was small enough to ensure it would not significantly inconvenience a regular PC. To send emails to multiple addresses however, the hashing process would be large enough to obstruct email spam or denial of service attacks. Back outlined how this served as a counter-measure to malicious attacks. He also specified in his design that there were many possible applications for Hashcash. These applications reveal much about the context within
37 Back provides the link on his personal website - http://www.cypherspace.org/adam/ - to the original posting of the HashCash paper. 100
which they were presented and developed. It is hoped a brief discussion on micropayments will help to illustrate the interpretative flexibility of these technical innovations.
Hashcash drew together many technical elements and innovations found in designs for micropayment systems. The concept of micropayments was in the 1990s garnering particular interest among corporations involved in information markets and electronic finance. Micropayments could allow for the sale of internet content in a “pay-per-click” system that would empower internet vendors (Herzberg & Yochai, 1997). The cost to users would be fractional, yet the scale of use would lead to considerable profits for content providers. Micropayments could also allow financial organisations to provide services for small transactions across computer networks, which had previously been considered unfeasible due to the costs incurred. As one article published by the IBM Research Division claimed, micropayments would “require the inclusion of a third party such as a micro- payment broker” (Hauser et al, 1996: 1) that would render the operation unfeasible. That is to say, offering third party verification on transactions below a certain value was unprofitable. Hauser et al thus proposed a solution bringing together symmetric cryptography and digital signatures: “each individual micro-payment is digitally signed by the buyer with a highly efficient but specialised signature scheme… chains of coupons can be used to implement efficient one-time signatures” (1996: 3). This is significant as it effectively proposes a system of micropayments built on cryptographic proof rather than third party verification. Each transaction would generate a digital signature, made unique through encryption. This would make transactions near-impossible to reverse. This process would act as automated verification, eliminating the need for a third party to actively maintain records of every transaction.
Hauser et al credit the design for this process to a number of computer scientists working in the 1980s, stating ‘several applications of this idea are known’. 38 The aim of the Hauser et al paper was to apply these ideas to enhance systems of electronic payments under
38 The initial reference given by Hauser et al for a micropayments system based on cryptographic proof is: Ralph C. Merkle (1987) ‘A digital signature based on a conventional encryption function’. In Carl Pomerance, editor, Advances in Cryptology { CRYPTO '87, number 293 in Lecture Notes in Computer Science, pages 369{378, Santa Barbara, CA, USA, August 1987. Springer-Verlag, Berlin Germany. 101
development by corporations, specifically IBM’s ‘Internet Keyed Payments Protocol’. As we shall see, their work anticipates many of the innovations eventually brought together as Bitcoin twelve years later.39 The immediate point is that technical innovations in encrypted electronic payments systems appear in multiple contexts in the 1990s. Cryptographic hash functions and digital signatures are techniques which illustrate interpretative flexibility, on the one hand brought together in designs for micropayments that aim to increase the efficiency of central servers, and on the other in designs for digital cash that seek to establish ‘decentralised’ networks in which data is processed across many nodes. As a frequenter of the Cypherpunk and Cryptography mailing lists, Adam Back’s design for Hashcash emerged within a context of the Cypherpunk movement, committed to replacing centralised computer networks altogether. Technical innovations such as one-time digital signatures and hash functions were in this context defined as ways of subverting and supplanting institutions. Since the expansion of Bitcoin as a technology, many users have understood its technical elements as evidence that decentralised monetary systems are superior and inevitable.40 Hauser et al’s paper shows that other applications of these techniques defined them as ways of bolstering centralised networks and the organisations running them. Only through the extensive efforts of many cyber-libertarian developers were these technical elements brought together to construct digital cash systems, and as we will see in the following sections, many problems had to be solved before Bitcoin ultimately became a successful concatenation of these technical elements.
In the initial 1997 posting of his Hashcash paper, Back concludes by detailing some potential usages for his designs, including ways to improve Chaum’s Digicash system. In a 2002 republication, Back proposes the idea of “hashcash as a minting mechanism for Wei Dai’s b- money electronic cash proposal, an electronic cash scheme without a banking interface” (2002: 7). The token generated by the ‘proof-of-work’ function could act as a unit of currency. Specifically, a currency without banks. This concatenation of flexible technical
39 This idea for a ‘chain of coupons’ based on ‘one-time signatures’ is the essentially the idea underpinning the ‘block chain’ in the bitcoin network, detailed in the next section. 40 See chapter 6, ‘Incorporation’. Libertarian groups of Bitcoin users see its technical functionality as a justification for the superiority and inevitability of a decentralised monetary system that will replace many functions of nation states. 102
innovations was brought together in response to the shared interests and values of the Cypherpunks. This was to happen again in the design for bitcoin.
4.2 The ‘Block Chain’: Delegating banking to an algorithm
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double- spending. It's completely decentralized with no server or central authority (Satoshi Nakamoto)41
The archives of the Cryptography mailing list show frequent discussions on the problems that occur in designing electronic cash systems. The most common is the ‘double-spending problem’. In rejecting the authority of a trusted third party to verify when a transaction has taken place, problems arise in ensuring that particular tokens are not duplicated, effectively allowing users to spend money they don’t have. Banks solve this problem through vigorous authentication processes, ensuring physical money is difficult to forge, and verifying that all electronic transactions result in the correct adjustments to account balances. A cyber- libertarian cash system therefore required a decentralised process to carry out authentication and prevent fraudulent transactions. This was the key innovation proposed in the design of Bitcoin. The solution, now known as the blockchain, made possible a process in which proof of publication was secured through the actions of individual nodes across the network.42 This section examines this key innovation in the design of Bitcoin and interprets how it brings together many technical elements and social meanings to perform a libertarian program of action: automated and ‘decentralised’ banking.
41 Post to the Cryptography mailing list. Available here: http://www.metzdowd.com/pipermail/cryptography/2009-January/014994.html (accessed 21/06/2016) 42 In the initial design and forum discussions, ‘chains’ of ‘blocks’ are discussed without the direct labelling of ‘block chain’ as a distinct entity. This term develops later among groups of enthusiasts and entrepreneurs as the innovation ‘underlying’ crypto-currencies. See chapter 6, ‘Incorporation’. 103
On October 31st 2008 Satoshi Nakamoto first announced to the Cryptography mailing list a new decentralised currency system. An abstract for the design was posted, along with a link to a white paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. This was Nakamoto’s first post to the mailing list, and it received no replies until it was reposted three months later. Little is known about Nakamoto’s true identity. Unlike other subscribers such as Adam Back and Wei Dai, there are no available connections to trace his/her activities preceding the first proposal for Bitcoin.43 This is problematic for identifying the conditions that led Nakamoto to write the paper. However, the document brings together many of the issues, actors and texts prominent on the Cryptography mailing list. Moreover, it outlines a concatenation of technical elements that were already being circulated on the forum; articulates them within a framework of meaning consistent with that expressed in other posts; and triggers a collaborative effort that takes place across three internet forums, where various actors contribute to discussions regarding the direction of its development. 44
The ‘electronic cash system’ Nakamoto proposes in the white paper expresses the Cypherpunk aim of constructing a form of digital cash that does not require centralised financial institutions. As outlined in previous designs for digital cash systems, Bitcoin was to be a cryptosystem that provided individuals with the privacy and security normally delivered by banks.
43 At the time of writing the true identity of Nakamoto is still unconfirmed, although current evidence now suggests Australian cryptographer Craig Wright. Andrew O’Hagan presents this evidence in a publication for the London Review of Books, accessible here: http://www.lrb.co.uk/v38/n13/andrew-ohagan/the-satoshi-affair (accessed 21/06/16). This issue is not addressed in the research, and neutral pronouns are used where necessary. 44 The initial post by Nakamoto announcing the design for bitcoin is accessible in the archives here http://www.metzdowd.com/pipermail/cryptography/2008-October/014810.html (accessed 02/06/16). It received no responses, prompting the author to repost the announcement on the 8th of January 2009, available here: http://www.metzdowd.com/pipermail/cryptography/2009- January/014994.html (accessed 02/06/16) as well as posting it on another forum, the P2P Foundation on 11th February 2009, available here http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source (accessed 02/06/2016). BitcoinTalk was subsequently set up as a forum dedicated to developing Bitcoin, from which time discussions moved from Cryptography and the P2P Foundation to BitcoinTalk. Nakamoto’s contributions to these discussions is archived here: http://satoshi.nakamotoinstitute.org/posts/ (accessed 02/06/2016) 104
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. (Nakamoto, 2008: 1)
The influence of Chaum and other developers from the Cryptography forum is immediately visible in the identification of digital signatures as a key technique for constructing a digital cash system. The major addition offered in Nakamoto’s white paper is the design of a public ledger, comparable to the record-keeping carried out by banks. Banks manage electronic finance through the verification of transactions and adjustments to account balances. All information on transactions and balances is kept securely within databases on central servers that banks alter on request from clients, who are subject to security checks to confirm their identities. The design for Bitcoin hinges on an attempt to replace this ‘centralised’ system of record-keeping with a ‘decentralised’ peer-to-peer network. This entails that all information on transactions and balances is broadcast to every node in the network, and these nodes are then responsible for storing the data and verifying transactions. Nodes are encouraged to carry out this service through an incentive-structure called mining, which will be the focus of the next section. The result is an ever-increasing record of verified transactions encrypted and stored in servers across the entire network. In brief, this solves the double-spending problem by ensuring all users are committed to maintaining the integrity of the ledger. Significantly, this addresses a key concern of the Cypherpunks, and does so by modifying their previous efforts.
As discussed previously, users of the Cryptography mailing list had identified the construction of a digital cash system as an essential element of crypto-anarchy: a vision for society in which encryption technologies diminish the power of nation states and liberate individuals. Digital cash would function without the need for ‘trusted third parties’ or institutions, and would thus be ‘decentralised’. These convictions, shared among the subscribers to Cryptography, involved the identification of certain problems with existing monetary systems, including criticisms of their own efforts to construct cryptosystems that could function as currencies. The design for Bitcoin is thoroughly shaped by this context. 105
From the shared meanings that define the purpose of such a system, and the specific problems with constructing one that Bitcoin proposes to solve, to the technical elements from the previous efforts of Cypherpunks that Bitcoin brings together in its design.
The white paper starts by outlining the strengths of the Cypherpunk aim to replace contemporary banking systems with cryptosystems. Starting with some dilemmas common in the development of technologies for internet commerce, the justification for Bitcoin swiftly moves on to a critique of the contemporary financial systems per se, due to the necessity for users to trust institutions.
Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model (ibid: 1)
Trusting financial institutions to mediate electronic transactions means the public are required to pay significant fees. This is particularly problematic, Nakamoto argues, when two individuals want to transfer small amounts electronically. Here, the paper echoes the earlier issues identified by designers of micropayment systems: “The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions.” (ibid: 1) This is problematic, as it precludes the development of an electronic cash system.
Cash represents the untraceable type of money consistent with Cypherpunk values. Cash allows for everyday transactions between individuals that, in the moment of transaction, require no third party to record or verify the event. Due to the relative anonymity of internet users however, third parties are necessary for recording transactions and mediating disputes that may occur. This leads precisely to the type of surveillance anathema to Cypherpunks. The record-keeping of third party organisations involves the gathering of immense amounts of their clients’ personal information in order to make security checks:
Merchants must be wary of their customers, hassling them for more information than they would otherwise need… These costs and payments uncertainties can be avoided 106
in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted third party (ibid: 1)
The current model of internet commerce, it is argued, therefore requires escalating levels of trust. The more transactions that take place through the internet, the more information required by financial institutions, and the more individuals are required to trust them to store and use it responsibly. The scope of Bitcoin thus goes beyond that of micropayments, which aimed to increase the efficiency of online commerce, to challenge the entire ‘trust- based model’ of finance on the internet. “What is needed” the author concludes, “is an electronic payments system based on cryptographic proof instead of trust” (ibid: 1).
This emphasis on trust significantly distinguishes Bitcoin from designs for micropayments technologies aimed at improving existing monetary systems, and reveals its Cypherpunk influences. Like the digital cash projects of Adam Back and Wei Dai, Bitcoin prioritises delegating to an algorithm the actions of recording and validating financial transactions, as algorithms are perceived as more trustworthy and efficient than human-run institutions. Indeed, Nakamoto lists Wei Dai in the footnotes, referencing how Dai’s B-money broadcasts transactions across its entire network. “Without a trusted party”, Nakamoto agrees, “transactions must be publicly announced” (ibid. 2). The design for Bitcoin modifies and advances this technical aspect of B-money, as well as carrying its ideological objective. As with B-money, in the Bitcoin network transaction information is automatically broadcast to all the other nodes for validation because this precludes the need for corruptible financial institutions to record it. A further connection is the definition of digital signatures as a new form of ‘physical’ money.
In outlining Bitcoin as a new monetary system, Nakamoto details the technical existence of units of currency. Units of currency in Bitcoin are encrypted records: digital signatures representing account balances that may only be altered by those that can operate a corresponding cryptographic key. Nakamoto refers to these records as ‘coins’: 107
We define an electronic coin as a chain of digital signatures. Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin (ibid: 2)
The terminology of physical currencies is used in line with the stated aim of designing electronic cash. The unit of currency is thus a ‘coin’ to represent the familiar process in which an object signifying value is moved from one owner to another. This assists the author in explaining how a chain of digital signatures can function as money. It also maintains focus on the construction of Bitcoin as electronic ‘cash’, as opposed to the credit offered by banks. Electronic coins are thus referred to like cash – things in the possession of owners – despite a technical explanation which effectively describes credit money, an agreed-upon balance attributed to a client.
Nakamoto explains that coins in the Bitcoin network are designed to exist only as digital signatures registered on a public ledger. When a transaction occurs, the addresses (personal accounts) of the two users involved are altered on the public ledger, the respective values updated when every node in the network accepts, processes and validates the transaction. In other words, the signatures that represent coins remain exactly where they are, but new signatures are created that signify changes in ownership. The terminology of coins being transferred from one owner to the next signifies a meaning attached to Bitcoin in its design. A particular concatenation of technical elements, elaborated below, is defined as electronic cash in Bitcoin’s design, carrying the meanings consistent with the efforts of a network of actors committed to developing digital cash systems.
The technical element Nakamoto’s paper brings into focus are ‘time-stamp servers’. Digital signatures, proof-of-work cryptographic hash functions, and automated broadcasting of transactions information across a peer-to-peer network, are elements in Bitcoin’s design that were already being circulated and modified by actors on the Cryptography mailing list (associated with the work of Chaum, Back, and Dai, respectively). Bitcoin brings these techniques together alongside designs for time-stamp servers first articulated in a paper by Stuart Haber and W. Scott Stornetta in 1991. Haber and Stornetta’s paper considered changes in intellectual property rights triggered by the “prospect of a world in which all text, 108
audio, picture, and video documents are in digital form on easily modifiable media” (1991: 0). They proposed a means of attaching a time to a digital signature that would be ‘unforgeable’. Digital documents, they stated, are too easy to tamper with. What is needed is an automated means of time-stamping the data, without the need for a third party:
First, one must find a way to time-stamp the data itself, without any reliance on the characteristics of the medium on which the data appears, so that it is impossible to change even one bit of the document without the change being apparent. Second, it should be impossible to stamp a document with a time and date different from the actual one. (1991: 1)
To do this, Haber and Stornetta outlined a design for a server which would include a hash function. A cryptographic hash function generates a fixed value for a string of data. Hashes are a form of encryption commonly used in data storage, as large amounts of information (strings of data) can be reduced to much smaller fixed values. They also act as a security mechanism: while it is relatively simple for a computer to inspect that a hash accurately contains the data it is supposed to, the function is practically impossible to reverse engineer.45
Haber and Stornetta described a process in which “the hashes of documents submitted to TSS [time-stamp servers] are linked together, and certificates recording the linking of a given document are distributed to other clients” (1991: 11). This means all the information contained in a document could be registered on the server at a particular time, and an automated hash function would instantly compress the information, along with the time of publication, into a string of code near-impossible to invert. It would therefore be possible to use a computer to check what the registered information was, in its entirety, and when it was published. It would not be possible however, to modify any of this information. In this
45 This time-stamping technique has recently emerged as a key functionality and purpose for Bitcoin among particular groups of artists (see for example, Ascribe: https://www.ascribe.io/) and academics researching ways of developing ‘blockchain technology’ as a computer network that records and verifies authorship and copyright information (see Open Music Initiative, http://www.mdx.ac.uk/our-research/research-groups/blockchain-for-creative-industries). These ‘relevant social groups’ are not examined in the thesis, yet their activities illustrate the interpretative flexibility of Bitcoin, something that is examined in the next chapter. 109
way, an algorithm that encrypts and distributes data could record user information securely, rather than a third party organisation. Haber and Stornetta referred to this as ‘distributed trust’.
After outlining the need for a new monetary system within a Cyber-libertarian frame of meaning, and explaining the major obstacle to overcome in the double-spending problem, Satoshi Nakamoto states “the solution we propose begins with a timestamp server” (2008: 2). Nakamoto’s insight was to employ Haber and Stornetta’s innovation as currency. A cryptographic hash function, instead of timestamping digital documents, would timestamp digital cash. This would ensure all digital signatures – or ‘coins’ – would be near-impossible to duplicate or manipulate. It would do this by ensuring that each new digital signature submitted to the server would be grouped together with all the information of previous transactions and time-stamped: “each timestamp includes the previous timestamp in its hash, forming a chain, with each additional timestamp reinforcing the ones before it” (ibid.).
Figure 7 - The Block Chain
Transaction information broadcast to the network is grouped together in blocks, ‘time- stamped’, and encrypted with a hash function. (Image from Nakamoto: 2008: 2)
Every time a transaction takes place, information (a digital signature) is broadcast to the network stating that the balance of one user is lower, and the balance of another user is higher. This transaction information is then grouped together with other transaction information happening on the network around the same time (other digital signatures) and compressed into a hash. This hash includes a timestamp registering when the hashing 110
function took place. Hashes also include the hash of the previous grouping, or block, of transaction information. The resulting chain of encrypted information, ‘a chain of blocks’, thus acts as a ledger recording all transaction information, confirming the time of transactions and preventing the manipulation of accounts balances. As with Haber and Stornetta’s digital documents, the cryptographic hash function would allow users to check the information stored on the network, while at the same time preventing any modifications to it. It may be updated but not retrospectively altered – new digital signatures can be produced, but those confirmed to the ‘block chain’ may not be altered.
Figure 8 - BitcoinTalk Posts
The early discussion threads on BitcoinTalk.46
The chain of transaction history and account balances, the ledger, is accessible for all to see. Shortly after Nakamoto’s paper had been circulated on the Cryptography mailing list and the P2P Foundation forum, a new forum, BitcoinTalk, was set up as a space for people to collaborate on Bitcoin’s development. The early discussions oriented around one question: how to make Bitcoin anonymous.
As discussed earlier a key value of the Cypherpunks is the protection of personal privacy on computer networks. The visibility of the block chain is therefore problematic. Nakamoto sought to address this by ensuring that the ‘keys’ individual users used to make changes to their addresses were kept anonymous:
46 Archived at http://satoshi.nakamotoinstitute.org/posts/bitcointalk/ (accessed 08/05/2017) 111
The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. (2008: 6)
While information on the block chain is possible to see, the only means of updating account balances is through the use of encryption keys. A user of the Bitcoin network has two encryption keys that enable them to modify balance information on the parts of the block chain assigned to them. The first encryption key is the public key. This signifies the particular part of the block chain assigned to that user, their address. This address can be broadcast to other users that may wish to make a deposit there. The second key is the private key. This key is known only to the specific user, the ‘owner’ of the address. For a user to complete a transaction, the public key must be signed by the private key. This process forms a digital signature and the information is broadcast to the network so that it may be ‘hashed’ and written into the block chain, as described above.
This use of cryptographic keys allows users to maintain a fixed identity on the network (their address) without any necessary connection to an identity outside of the network (the actor using the cryptographic key). As Nakamoto concludes, “the public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone” (ibid: 8). Through the block chain, Nakamoto advances the Cypherpunk project of constructing a cryptosystem for electronic cash. The block chain solved the problem of double-spending within the acceptable parameters of action delimited by Cypherpunk values; of personal privacy, decentralised power, and individualised security measures.
This section has focused on the block chain as the central innovation in the design of Bitcoin. At the heart of this innovation is a program of action rooted in the aims and shared meanings of Cypherpunks. The cyber-libertarian worldview of these actors informed their efforts to construct and use encrypted digital cash systems. The design for Bitcoin responds to these goals and the problems identified by other actors by bringing together and modifying ideas and techniques from the network of Cryptography subscribers and beyond. 112
The block chain brings together technical elements of time-stamping, one-time digital signatures, hash functions, and cryptographic keys; with nontechnical elements of individual privacy concerns and imperatives for ‘decentralising’ finance by replacing institutions with algorithms. This culminates in a program of action to: (1) record transactions, (2) encrypt and time-stamp transactions, (3) broadcast them to the network, and (4) validate them by writing them into an unmodifiable ledger. These actions are delegated to an algorithm which is given the name Bitcoin and assigned a meaning which constitutes it as ‘electronic cash’. Bitcoin is designed to facilitate cyber-libertarian modes of association – private exchange – by continuously performing this program action. For this action to be sustained, the network required a continuously expanding number of users and this presented a further problem, which was solved with the ‘mining’ incentive structure.
4.3 Bitcoin Becomes an Actor: Enrolling ‘miners’ into the network
The steady addition of a constant amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended (Nakamoto, 2008: 4)
The functionality of the block chain rests on its constant maintenance. As described above, transactions must be grouped together in blocks and encrypted as a hash before they can be published to the block chain as confirmed transactions. The algorithm that performs this process is run on the hardware devices of users across the network. To encourage individual users to contribute their time and computational energy to the network’s maintenance, Bitcoin is designed with an incentive structure which rewards users in units of Bitcoin. This aspect of Bitcoin’s design plays three crucial roles in the expansion of Bitcoin as a sociotechnical network. Firstly, the incentive structure prescribes a program of action back onto human users, specifying a particular type of usage necessary for the network’s overall construction, maintenance, and growth. Secondly, this prescribed program of action is designed to be competitive, in such a way that it enrols a continuously expanding quantity 113
of human users and hardware devices. Put briefly, for Bitcoin to function the amount of computational power in the network must increase in proportion to the total number of transactions being made, and the incentive structure is designed to ensure this continuous growth. Thirdly, the mining incentive structure condenses technical elements with an ideological choice, consequently carrying that ideology to new users in a modified form: as a politically neutral, technical fact. This section focuses on the first and second functions of Bitcoin’s ‘mining’ process: how it prescribes a program of action and incentivises the enrolment of additional machines and actors to expand the network.
At the centre of the incentive structure proposed in Bitcoin’s design is Adam Back’s Hashcash model. As described above, Back had proposed a system in which sending data across a network was a costly process. For data to be confirmed on the network and sent, a cryptographic test had to be passed. A set of conditions were set in the Hashcash algorithm, and for data to be accepted, a hash must be generated by a user’s computer that met these conditions.
Generating a hash involved ‘brute computational force’ – a computer would generate thousands of alternative hashes until one was found that matched the conditions set in the algorithm, an arduous process of trial and error. The difficulty could be set in the core algorithm by making the conditions harder or easier to meet, calculated by the probable time it would take a computer to generate enough hashes. Back proposed to set this difficulty at a relatively low level to combat email spam. The hashing process would require a probable amount of processing time small enough to go by unnoticed by a node sending one email, yet large enough to obstruct a node attempting to send multiple emails at once. Back also proposed in his conclusion that this process could provide a ‘minting mechanism for Wei Dai’s b-money electronic cash proposal’. With multiple computers performing a more difficult hashing process, the successful hash could act as a trigger for a new unit of currency: ‘proof-of-work’ would be rewarded with electronic cash. Nakamoto applied this to the public ledger design.
To implement a distributed timestamp server on a peer-to-peer basis, we will need to use a proof-of-work system similar to Adam Back’s Hashcash… For our timestamp 114
network, we implement the proof-of-work by incrementing a nonce in the block until the value is found that gives the block’s hash the required zero bits (Nakamoto: 2008: 3)
The use of Back’s proof-of-work model allowed Nakamoto to set a particular value in the cryptographic hash function. Nodes in the network would hash the transaction information in blocks as described above. If their hash met the conditions set in the algorithm, it would be accepted. These conditions are set by the use of a nonce, an arbitrary number generated by the core algorithm. The successful hash would have to ‘find’ this nonce, through generating as many random numbers as possible.
Once achieved, a successful hash would be broadcast to the network whose nodes could check that the hash did indeed meet the conditions. Compressed into this successful hash would be transaction information, a hash of the previous block, a timestamp signalling when the conditions were successfully met, the correct nonce, and also all of the generated hashes representing the proof-of-work carried out. Nodes in the network confirm their acceptance of the block by incorporating this successful hash into their ongoing process. It would make up the first part of their search for the next successful block.
As with Back’s model, a token would be generated once the proof-of-work had been successfully carried out. This would take the form of a digital signature produced by the core algorithm representing value for the node that successfully hashed the block. The address of that node would be updated with a new balance.
As the confirmation of blocks is the only time a balance can be updated without a transaction between two nodes, this acts as a minting mechanism. New currency units come into the network. The incentive structure thus acts as the network’s monetary policy:
The first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them. The steady addition of a constant amount of new coins is 115
analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended. (ibid: 4)
The user is thus rewarded for maintaining the currency network in new units of the currency. This acts as a dual incentive for users to both serve the network and advance its value as currency more broadly. To the key technical innovation of Nakamoto’s paper, the block chain, is added an incentive structure for users to contribute to its development and expand the network with more computational power, and with more human users of the currency.
Figure 9 - The Mining Incentive Structure
Users of the Bitcoin network, ‘miners’, are encouraged to program their computers to generate hashes. The computer that generates a hash matching conditions set in the algorithm receives a reward in Bitcoins.
This aspect of Bitcoin prescribes a program of action back onto human users. For the network to function, a sufficient amount of individual users of Bitcoin must become competitive ‘miners’ who organise and manage hardware devices that continually run an 116
energy-intensive process of ‘hashing’: grouping data and generating hashes. In its early development, this task required a relatively small amount of energy as there was less data to be grouped together and processed. The BitcoinTalk archives illustrate how this process was initially undertaken by Bitcoin’s early developers and supporters, such as software coder Martti Malmi, and a group of libertarian enthusiasts named ‘New Liberty Standard’ which helped to test the software.47 The mining feature of Bitcoin however appeals beyond the voluntarism of cyber-libertarian actors and aims to provide a profit incentive for a broader range of actors to contribute their hardware to the network. Furthermore, this profit incentive is designed to secure the network:
The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. (ibid. 4)
The future security of the incentive structure is thus founded on the rational self-interest of profit-seeking users that will see more value in competing to mine a new block of Bitcoin than they will in augmenting their influence over the network itself. Mining therefore prescribes particular types of usage based on a particular logic. Namely, assembling hardware devices to continuously run the Bitcoin algorithm in order to make a profit. This prescribed usage is competitive, as the more hashing power a ‘miner’ possesses, the more chance they have of obtaining the reward. This entails that ‘miners’ are likely to seek out new ways of introducing more computational power in the network, a process which triggers continuous expansion, a practice which is further incentivised by predetermined increase in hashing difficulty.
The mining incentive structure is designed to increase with difficulty as the number of users in the network increases. The conditions set in the algorithm are programmed to increase in difficulty with each block that is hashed, entailing that the network requires more
47 See https://bitcointalk.org/index.php?topic=16.msg73#msg73 (accessed 27/08/17) 117
computational power as time goes on. This is intended to maintain a balance in the network, and avoid the type of problem envisaged in the quote above, as the increases required in computational power make it more difficult for a user to obtain enough hashing power to exert undue influence over the network. As blocks of transactions are confirmed when a majority of nodes in the network accept them, this means that a user, or group of users, with a majority of hashing power could theoretically confirm blocks of transactions that suit their interests, updating multiple balances during the same transaction (i.e. ‘double-spend’).48 The difficulty of hashing a block is therefore set to increase in tandem with the increase of computational power in the network.
A consequence of this design choice however is to ensure the continuous expansion of the network, and this happens in two ways. Firstly, ‘miners’ are incentivised to run the Bitcoin algorithm on their machines for a profit; yet their chances of obtaining the reward in Bitcoins are diminished unless they continuously increase their hashing power. Secondly, for Bitcoins to constitute value, more users must be attracted to the network, and this involves the expansion of Bitcoin’s meaning: more people must recognise the purpose of using Bitcoin. In these two senses, the program of action prescribed by Bitcoin’s design involves the continuous enrolment of further actors and/or machines into the network, by users. This prescribed activity is examined further in chapter six, with groups of libertarian users seeking to expand the network through various means. The immediate point here is that this logic was present in the design of Bitcoin. Bitcoin achieves the Cypherpunk aim of constructing a monetary cryptosystem by advancing previous attempts to delegate banking services to an algorithm, yet its design reveals that Bitcoin goes beyond this to prescribe a set of practices for human users that require the enrolment of further machines and actors. To continue with Latour’s vocabulary, an assessment of Bitcoin’s early development brings to light the action devised and constructed by Cypherpunks, now performed in part by an algorithm, Bitcoin, and a network of actors, ‘miners’, which make it possible for people to use Bitcoin as currency. Moreover, this action carries meanings from the site of its construction through to an expanding number of users. Here Bitcoin becomes an actor in a
48 This problem was widely discussed among developers on BitcoinTalk, who came to term it ‘the 51% attack’. See a discussion thread from 2011, https://bitcointalk.org/index.php?topic=12435.0 (accessed 27/08/17) 118
cyber-libertarian panorama: enrolling, convincing, enlisting actors into programs of action which involve a particular logic and worldview.
Latour’s concepts are helpful for identifying the activity that constructs, sustains, and expands Bitcoin as a set of practices and meanings. Bitcoin is an algorithm that has been constructed through the modification and development of technical and nontechnical elements that were circulating in a network of Cypherpunks. The action delegated to Bitcoin during its history of development continues to structure the action of many Bitcoin users, structuring practices which are examined in chapter six. What the history of Bitcoin’s design also reveals however, is the contingency of its development upon context. As outlined in earlier sections, the technical elements which were brought together as Bitcoin in the design process were demonstrative of interpretative flexibility: many were being developed differently to address different problems in designs for micropayments. As discussed above, the ‘block chain’ brings together many of these elements as a digitally-mediated means for private exchange to address the concerns of Cypherpunks. The mining incentive structure also demonstrates contingency, and reveals the influence of libertarian economic concepts traceable to hegemonic discourses of neoliberalism. This is the subject of the next section.
4.4 The Contingency of Mining: Neoliberal values condensed in design
I think the internet is going to be one of the major forces for reducing the role of government, and the one thing that’s missing, but will soon be developed, is a reliable e-cash: a method on the internet whereby you can transfer funds from A to B without A knowing B or B knowing A. (Milton Friedman, 1999a)
So far this chapter has examined the local context in which Bitcoin was constructed, focusing on how choices in design reflect the values of a relevant social group, Cypherpunks, and how these choices delegate particular forms of action, as well as prescribing types of action for future users. The beliefs shared in this local context, those circulated on 119
Cryptography and BitcoinTalk, are informed by broader discourses from which knowledge is derived. As one website popularised on the BitcoinTalk forum puts it when referring to a list of texts produced by libertarians, crypto-anarchists, and ‘Austrian economists’, “Bitcoin was not forged in a vacuum. These works serve to contextualise Bitcoin in the broader story of cryptography and freedom.”49 Informing those engaging with Bitcoin in its early stages were discourses which define money as a commodity, and something that should be freely traded outside of regulatory controls. In examining Bitcoin’s design, we see how these meanings are condensed with technical logic, with the mining structure simultaneously existing as a necessary functionality and an ideological choice. This is affirmed by subsequent adaptations of Bitcoin which have revealed the mining feature to be particularly flexible and contingent on the meanings of the social groups involved in its development. In this final section I draw on Feenberg’s critical constructionism to interpret Bitcoin’s incentive structure as neoliberal discourse expressed in technical form.
As described above, the mining process acts as a minting mechanism for the Bitcoin network. New Bitcoins are generated when a block of transactions is successfully hashed. The user that groups together all existing transaction information and meets the correct hashing criteria is rewarded with Bitcoins. This feature of the mining process is the only instance in which new units of currency are issued in the Bitcoin network. Additionally, the number of Bitcoins generated is this way is programmed to decrease over time, ultimately terminating entirely, at which point miners will be rewarded not with new Bitcoins but with transaction fees.
Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free (Nakamoto, 2008: 4)
This design choice, as well as incentivising miners, regulates and predetermines the number of Bitcoins in the network, and this is done, as Nakamoto states, as a deflationary measure.
49 Quote from the Satoshi Nakamoto Institute, which aims to promote Bitcoin through research, archiving, and advocacy: http://nakamotoinstitute.org/literature/ Popularised and discussed on BitcoinTalk here: https://bitcointalk.org/index.php?topic=606742.0 and here https://bitcointalk.org/index.php?topic=644169.0 (all accessed 20/06/2016) 120
The increasing difficulty of hashing a block ensures that the rate of Bitcoin creation is slower than the rate of user adoption. In the first three years that Bitcoin was operational, 2009- 2011, miners received 50 Bitcoins for successfully hashing a block, which many were able to do on personal computers.50 In 2012 the number of Bitcoins generated as rewards halved to 25, while the time and energy it took to hash a block continued to expand, along with the number of users making transactions.51 Demand has thus exceeded supply both intentionally and extensively, a deflationary measure that has created value through scarcity.
In subsequent adaptations of Bitcoin, the proof-of-work hashing program, on which Bitcoin mining is founded, has been redesigned. In Peercoin for example, a group of developers prioritising sustainability modify the hashing process, devising a ‘proof-of-stake’ system that validates transactions by verifying the records of randomly selected users. This is far less energy intensive as there is no competition between miners. The selected users, who contribute to maintaining the network by making their encrypted transaction history open for inspection, are rewarded with a 1% increase to their holdings. This entails that Peercoin’s version of mining, a process they call ‘minting’, is consistently inflationary.52 This does not constitute a problem for Peercoin’s developers, who prioritise ‘long term sustainability’ over deflation. In the words of one Peercoin developer, “’inflation’ is a dirty word in the Bitcoin community, who think that that Bitcoin’s deflationary aspects are revolutionary,” a post which differentiates between views of the Bitcoin and Peercoin ‘communities’.53 In another adaptation of Bitcoin, Faircoin, the proof-of-work hashing program is redesigned in a different way in order to make it accountable to its community of users. Faircoin’s developers call this ‘proof-of-cooperation’, as its users select ‘trusted’ members of a cooperative organisation to perform the hashing process, making it
50 See for example, this discussion thread between miners on BitcoinTalk https://bitcointalk.org/index.php?topic=99265.0 (accessed 20/06/2016) 51 See https://bitcointalk.org/index.php?topic=128312.0 (accessed 20/06/2016) 52 The Peercoin developers forum elaborates on these processes: https://talk.peercoin.net/c/general (accessed 28/08/17) 53 This quote is taken from a fascinating post by a Peercoin developer who addresses criticisms of Bitcoin made by economist Paul Krugman, and how they relate to Peercoin, in the process clearly differentiating the views of Peercoin developers from their Bitcoin counterparts. Available here: https://talk.peercoin.net/t/peercoin-vs-paul-krugmans-criticisms/1914 (accessed 28/08/17) 121
collaborative instead of competitive.54 Here too, a finite supply of ‘coins’ is not a priority and is actually seen as something that may encourage hoarding and speculation, and deter exchange. Faircoin developers therefore opted to incorporate and modify a minting mechanism similar to Peercoin. These examples illustrate the flexibility of Bitcoin’s design, and its contingency on the meanings shared by those developing it. As outlined in Bitcoin’s design, the network specifically targets a future state in which the electronic cash system is ‘completely inflation free’. This begs the question, why is ‘deflation’ and a finite supply prioritised in Bitcoin’s design?
In the cyber-libertarian texts shared on the Crytography, Cypherpunk, and BitcoinTalk forums, free markets are envisaged at the heart of ‘crypto-anarchy’, an ‘anarcho-capitalist’ future in which governments, as Wei Dai stated, are ‘permanently unnecessary’ as digital technologies make possible free and private exchange. In Langdon Winner’s analysis of cyber-libertarianism, he analysed the work of popular writers on digital culture in the 1980s and 90s, such as Alvin Toffler, Stewart Brand, and John Perry Barlow. He identified three elements of cyber-libertarianism as a political ideology.55 Firstly, the rapid development of digital technology is understood as the driving force of social change, often expressed as “a kind of evolution that can be explained in quasi-biological terms” (1997: 15). This technological determinism sees social deliberation on directions of technical development as something that can only be obstructive. Secondly, a radical individualism characterises this ideology. New digital technologies enable the full pursuit of rational self-interest without the burdens of cumbersome traditional social structures. Indeed, “because inherited structures of social, political, and economic organization pose barriers to the exercise of personal power and self-realization, they simply must be removed” (ibid). The final element identified by Winner was the concepts of free-market capitalism as reformulated by Milton Friedman. Winner notes that particular writers in the 1980s, such as George Gilder, helped bridge the utopian ideals of cyber-libertarians with the tenets of the Chicago school of economics, through works such as his 1989 book Microcosm.
54 See Faircoin case study, next chapter. 55 For further analysis of the ideology of these writers, see Turner, F. (2006) ‘From Counter Culture to Cyber Culture’ 122
In Gilder’s view, the wedding of free market economics with the overthrow of matter by digital technology is a development that will liberate humankind by generating unprecedented levels of wealth (Winner, 1997: 15).
These elements that together comprise the ideology of cyber-libertarianism offered a vision, Winner states, that many found coherent and appealing. The growth of this ideology spread the concepts and logic of free market capitalism to many technology enthusiasts who saw a compatibility between the decentralised architecture of computer networks, and the decentralising strategies of free market economics. A prominent example of this pertaining to crypto-currencies is seen in the work of Nick Szabo.
Nick Szabo is a cryptographer that writes frequently on decentralised digital currencies. In 1997 Szabo outlined first his own proposal for ‘BitGold’ which brought together the vision of David Chaum, Haber and Stornetta’s time-stamping function, and various aspects of B- money and HashCash. His proposal was thus remarkably similar to that of Nakamoto, leading to speculation on BitcoinTalk that Szabo is Nakamoto.56 In introducing his proposal, Szabo reiterated the Cypherpunk concern with powerful third parties in financial systems. In doing so however, Szabo focused on specific economic concerns with inflation:
The problem, in a nutshell, is that our money currently depends on trust in a third party for its value. As many inflationary and hyperinflationary episodes during the 20th Century demonstrated, this is not an ideal state of affairs (2005)
Szabo had previously analysed the protocols of Chaum and successors such as HashCash and attempted to advance elements of their respective protocols in which he focused solely on issues of mathematics (1996, 1997, 1999). Szabo had elsewhere discussed crypto-currency projects in the context of a history of cryptography (2002). In the above proposal for BitGold however, Szabo brings together a concatenation of these efforts with the concepts of free market economics. In particular, Szabo advanced the concept of gold as possessing intrinsic value, in part due to its ultimately finite supply.
56See https://bitcointalk.org/index.php?topic=8602.msg124970;topicseen#msg124970 (accessed 28/08/17) This opinion was also held by one of my interviewees, Suzanne Tarkowski Templehoff, founder of BitNation. 123
Gold, Szabo claimed, is scarce and has an unforgeable quality. As such, it carries intrinsic properties for dealing with issues of authenticity and stability, issues typically entrusted to a third party with government-authorised forms of money. Problems occur however, in assaying and transporting gold, which inevitably involve powerful third parties. BitGold was designed to address these issues, nominally offering a system for the trading of digital commodities that resemble the characteristics of precious metals.
Precious metals are understood in the monetary theory of Carl Menger to have emerged historically as the most suitable commodities to represent value. Due to their physical properties, individuals engaging in trade increasingly valued precious metals and this gave rise to their emergence as money. The process was thus “no accident, nor the consequence of state compulsion… it was the just apprehending of their [actors in the market] individual self-interest which brought it to pass, that all the more economically advanced nations accepted the precious metals as money” (Menger, 2009: 48-9). While the gold standard, the direct linking of currency to quantities of gold, fell out of favour in mainstream economics, as Nigel Dodd explains in The Social Life of Money (2014), Menger’s theory continued to resonate in circles committed to limiting the capacity of governments:
Menger’s theory is especially popular among libertarians, who believe that money is best organised by markets, not states. The argument that money began as an easily traded commodity offers persuasive support for the view that currencies should be linked to the value of a precious metal such as gold, which is naturally scarce (21)
The understanding that money is a commodity that’s value is best determined by the laws of the market was taken up in discussions of monetary policy by key figures of neoliberalism in the 1960s and 70s. In A Monetary History of the United States 1867-1960, Milton Friedman (1963) argues that inflation is the direct result of expansions to the money supply. If the money supply expands, the purchasing power of that currency decreases and prices are driven up. Control of the money supply thus bestows to central planners considerable leverage over an economy, without the same recourse to democratically accountable actions such as taxation. Friedman posits a fixed monetary policy – the ‘k-percent rule’ – in which the money supply would increase by set percentage each year, fixing and limiting 124
supply, like the gold standard. One of the effects this would have is to reduce the power of governments to direct or intervene in economies, actions which Friedman argues lay behind the collapse of global markets in the aftermath of the Wall Street Crash – an era he describes as ‘The Great Contraction’. The k-percent rule could be imposed by central banks such as the US Federal Reserve. Though Friedman recognises this as an imperfect solution due to the corruptibility of such organisations and their subjection to government influence, he nonetheless sees it as a realistic one. For Friedrich Hayek (1976), this is an unnecessary compromise on the part of Friedman: “The present political necessity ought to be no concern of the economic scientist,” Hayek states in The Denationalisation of Money, “His task ought to be, as I will not cease repeating, to make politically possible what today may be politically impossible.” Hayek continues,
I am in complete agreement with Professor Friedman on the inevitability of inflation under the existing political and financial institutions. But I believe it will lead to the destruction of our civilisation unless we change the political framework. In this sense I will admit that my radical proposal concerning money will probably be practicable only as part of a much more far-reaching change in our political institutions, but an essential part of such a reform which will be recognised as necessary before long. The two distinct reforms which I am proposing in the economic and the political order are indeed complimentary: the sort of monetary system I propose may be possible only under a limited government such as we do not have, and a limitation of government may require that it be deprived of the monopoly of issuing money. Indeed the latter should necessarily follow from the former (84)
For Hayek, a denationalised currency with a fixed supply was envisioned as the central technique of a political strategy to transform the capacities and responsibilities of governments. As he had argued emphatically in The Road to Serfdom (1944), in taking on the management of economies all world governments were preparing the way for totalitarianism. The only way centrally planned market sectors could function, he posited, would be to increasingly deprive people of choice. As more and more aspects of peoples’ lives were dependent on the economic activities of others, this removal of choice would inevitably penetrate every sphere of action. It was therefore possible for Hayek to state, in 125
concluding The Denationalisation of Money, that the development of competing denationalised currencies represents “the one way in which we may still hope to stop the continuous progress of all governments towards totalitarianism” (1976: 134). Hayek’s argument here is, along with those Menger and Friedman, implicit in the writings of Cypherpunks and Crypto-Anarchists, examined above, in which stateless currencies were envisioned to protect individuals from the overreaching power of nation states. Indeed, as Langdon Winner notes, the ideas and arguments of free market capitalism are a crucial component of cyber-libertarianism.
The decision in Bitcoin’s design to steadily reduce the reward for mining is, as stated, a deflationary measure aimed at creating value through scarcity. This intentionally imitates the finite supply of gold. As Nakamoto states, “the steady addition of a constant amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended” (Nakamoto, 2008: 4). Dodd documents the influence of Menger’s monetary philosophy on Bitcoin, yet points out that many ‘Austrian’ economists remain critical of Bitcoin because, “firstly, Bitcoins are not actually gold – indeed, according to this view, they have no intrinsic value; and second, because Bitcoins did not evolve as money because of their high use value, as Menger’s theory would suggest” (2014: 362). While these tensions exist with Menger’s theory proper, Nakamoto’s design choices reflect an influence of the free market monetary theory originating in Menger’s work and augmented by the later concepts of Friedman and Hayek. Indeed, the fixed rate of monetary expansion is better understood in terms of Friedman’s k-percent rule, which advocates stable expansion to control inflation.57 Discoveries of gold ensure its supply is not entirely stable; there is no possibility of a ‘gold rush’ equivalent in the Bitcoin network. Furthermore, the open source nature of Bitcoin and its proposal as one of many designs for encrypted payments discussed on the Cryptography and BitcoinTalk forums implies its competition with other alternative currencies. In this way, Bitcoin is a manifestation of Hayek’s proposal to Friedman. It maintains Friedman’s logic of fixed
57 Indeed, in a 1999(b) interview with the libertarian think tank the Cato Institute, Friedman states: “I have, for many years, been in favour of replacing the Fed with a computer… it would print out a specified number of paper dollars… Same number, month after month, week after week, year after year.” 126
monetary expansion yet opens currency to a “control of value by competition” (Hayek, 1976: 48).
In the critical constructionist approach of Feenberg, we see how values may be ‘condensed’ with technical logic in a ‘technical code’: a framework of meaning that defines technology (1999: 87-8). In the design of Bitcoin, we see a similar process. The mining incentive structure is a feature in Bitcoin that is due not to inherent features of the technical architecture but the influence of free market concepts. As stated above, adaptations of Bitcoin have come to show the range of alternatives in designing incentive structures and rates of coin creation. The choice to algorithmically predetermine the number of Bitcoins in the network and the rate of their creation follows the logic of a particular monetary philosophy in free market economics. The monetary theory underlying this choice thus plays a significant role in the social construction of Bitcoin. Moreover, as a key component of the hashing process that underpins the network, the mining function condenses these concepts within the technical logic of design.
The functionality of Bitcoin rests on an increasing amount of computational power to maintain the network. Users are incentivised to contribute this power through accepting digital signatures as ‘rewards’ that denote monetary value. As value is conceptualised within the free market concepts of supply-side economics – namely that money is a commodity and a fixed rate of supply is superior – users are introduced to these arguments on what constitutes monetary value in technical form. The functionality of the technology as outlined in design is therefore fundamentally linked to this economic doctrine. The meanings in neoliberal discourse are carried through widely circulated texts, modified in the writings and discussions of cyber-libertarians, condensed in the designs for Bitcoin, and presented to users in a technical form. This is not to say that Bitcoin’s libertarian influences are concealed to users, but that neoliberal meanings are transformed by this process. Where Hayek’s proposals existed as a theoretical argument, they now exist as a technique. Bitcoin, as a ‘mediator’ in Latour’s terms, has transformed the meanings from neoliberal discourse it was meant to carry. ‘Denationalised money’ is now an entity that is encountered by actors, something that prescribes to them certain practices which involve the enrolment of others, and not unimportantly, offers them a means of making profit. This 127
is a radically different form of neoliberalism, most closely aligned to the various techniques analysed by Dardot and Laval (2013). Such techniques, they observe, brought into existence via a pervasive discourse, subtly guide behaviour through “motivation, incentivization, and stimulation” (260). Significantly, Bitcoin illustrates the capacity for such techniques to emanate from the disparate activities of various actors, connecting meanings and technical elements in collaborative networks. The flexibility of these technical elements also reveals however, the capacity for ‘counter-conducts’ to emerge. As already stated, other actors that have encountered Bitcoin have done so in contexts that prioritise other meanings and have adapted Bitcoin accordingly, acting in what Feenberg terms ‘the margin of manoeuvre’. These actors constitute the other relevant social groups in Bitcoin’s development, and are examined in the next chapter.
Summary
This chapter has aimed to show the role of non-technical values in the construction of Bitcoin. Throughout the 1980s and 90s various innovations were made in the digitisation of communication, exchange, and the recording of documents. Many of these ideas were discussed and developed on the Cryptography mailing list, a forum for the discussion of cryptosystems and their social repercussions. In other contexts, such as commercial research into micropayment systems, these innovations were developed in different ways to suit the interests of various organisations. On the Cryptography mailing list however, as examined in section 4.1, the prevalence of cyber-libertarian meanings cast these innovations as tools for ‘decentralising’ banking by delegating the services financial institutions perform to a cryptosystem. Cypherpunks, Bitcoin’s first relevant social group, advanced developments in encryption technology as a means of achieving ‘crypto-anarchy’ – an ‘anarcho-capitalist’ system in which individuals were able to engage in digitally- mediated private exchange and communication, free from the ‘coercive’ power of nation states. At the heart of this utopia was a decentralised and encrypted payments system. In this context, Bitcoin was first proposed to the subscribers of the Cryptography and developed by users of the BitcoinTalk forum. Bitcoin outlined the design for a peer-to-peer 128
electronic cash system that required no ‘centralised’ organisation to function, and as such was defined in contrast to the ‘trust-based model’ of conventional commerce. This addressed key concerns of Cypherpunks and the problems they had encountered in their efforts to construct digital cash systems, most notably the ‘double-spending problem’. It purported to solve this problem by designing a public ledger that is encrypted and maintained by its users.
On examination of Bitcoin’s design, it is possible to trace the connections made between meanings and technical elements. In the first instance, this is observable in Bitcoin’s ‘block chain’ innovation. As discussed in section 4.2, the block chain brings together many technical elements that were circulated and frequently discussed on the Cryptography mailing list, to address the aims and concerns of Cypherpunks. Nakamoto’s paper proposes to delegate the services provided by banks to an algorithm which is run across many servers and maintained by a network of disparate users. To incentivise users to run this program, Bitcoin provides a reward system. As outlined in section 4.3, this reward system prescribes a type of usage based on a particular logic. Namely, the assembling and maintenance of hardware devices for a profit. This incentive structure is designed to be intensely competitive to ensure the expansion of the network, which encourages users to enrol additional machines and actors into the network. In section 4.4, we saw how this feature of Bitcoin also acts as a minting mechanism, issuing currency at a fixed rate. As subsequent designs have come to show, this feature of Bitcoin’s design was not an inherent feature of its technical architecture but contingent on the interests and beliefs shared by its developers. These beliefs are informed by broader neoliberal discourses and a ‘technical code analysis’ reveals how these meanings are condensed in design and transformed into a technique. For many, these meanings continue to shape how they encounter Bitcoin and prescribe how they use it. Others however, have interpreted Bitcoin in significantly different ways, challenging the ideas expressed in its design. It is to these latter groups analysis now turns.
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5. Adaptations
The Interpretative Flexibility of Bitcoin
Since Bitcoin’s emergence in 2008, hundreds of adaptations have emerged, giving rise to the terms ‘crypto-currency’ and ‘alt-coin’.58 The vast majority of these alternative crypto- currencies made very slight modifications to Bitcoin’s technical design, aiming to compete with Bitcoin and attract similar levels of investment and market valuation. Namecoin was the first of these ‘alt-coins’, developed in 2009 shortly after Bitcoin. What distinguishes Namecoin however, is that its developers sought to repurpose Bitcoin technology as a means of registering and storing data concerning internet domain names. While retaining the function of a crypto-currency, this adaptation to use Bitcoin for broader data processing purposes signalled a new range of functionalities for Bitcoin technology, becoming an important precursor to the now common discursive distinction between Bitcoin and ‘block chain technology’. For this reason Namecoin is a significant focus for analysis.
The first case study in this chapter centres around two analytical points. Firstly, the interests, beliefs and past practices of Namecoin’s developers reveal a commitment to ‘decentralising the internet’: using digital technologies to limit the extent to which large ‘centralised’ organisations may interfere with the flows of information between internet users. In this way, Bitcoin is understood by these actors as another technique that can ‘free’ information from institutional control. These values act as a driving force in the construction of Namecoin, which adapts the technical features outlined in Bitcoin’s design to serve a new purpose. The influence of these values in Namecoin’s technical development constitutes the second analytical focus in this case study. This ‘technical code analysis’ reveals that the choices made in the design process for Namecoin are contingent not on technical efficiency, but ideology. Namecoin’s developers endeavour to adapt Bitcoin’s block chain feature, despite noting various drawbacks in efficiency compared to technical alternatives, because it represents a decentralised means of recording and authenticating data. Bitcoin’s other major technical feature, the mining incentive structure, is retained in Namecoin’s design
58 One particular site that charts their trading volume lists 386 altcoins: http://www.cryptocoinrank.com/ (accessed 13/06/15) 130
through a process called ‘merged mining’. Again, this decision is revealed to be primarily driven by the values of the developers, yet in this case the interests of Bitcoin and Namecoin’s respective developers are both satisfied by the same technical element.
The second case study presented in this chapter is Faircoin. Faircoin emerged in 2014 among a wave of new crypto-currencies offering redesigned versions of Bitcoin with various rationales. Faircoin advanced a particular development called ‘minting’, an alternative to the Bitcoin’s ‘mining’ function that first appeared in a crypto-currency named Peercoin. Faircoin’s development, having stalled after its initial creator had left the project, was picked up by Enric Duran, a prominent activist in the Catalan anarchist movement. Faircoin was subsequently redeveloped by Duran and fellow developer Thomas König. Crucially, this development occurred within an open dialogue among members of a Catalan cooperative organisation, whose shared interests and beliefs led to a radically redesigned version of Bitcoin, a new crypto-currency the group positioned at the centre of a vision for an alternative economic system to capitalism. In presenting this study, I argue that the development of Faircoin reveals an instance of ‘creative appropriation’, supporting Feenberg’s thesis that actors can work within the ‘margin of manoeuvre’ to adapt technologies to serve their interests and in the process establish open up a new space of technical politics, in which social groups reflect on and participate in technical development.
This chapter then concludes with a summary and analysis of the two Bitcoin adaptations. While both cases illustrate the interpretative flexibility of Bitcoin, I argue that only Faircoin represents an instance that may be understood as a ‘democratic rationalisation’ of technology. To support this contention, I draw on the concepts of positive and negative freedom outlined in Isiah Berlin’s famous (1969) essay, Two Concepts of Liberty. While both groups understand technology as potentially emancipatory, and consequently adapt Bitcoin in their pursuits of ‘freedom’, the conception of freedom held by each group significantly determines the extent to which their actions open up technology to social deliberation and public participation. The developers of Namecoin express a predominantly ‘negative’ conception of freedom, seeking to limit the extent to which organisations may interfere in the activities of individuals. The developers of Faircoin however, aim to expand a network of actors capable of cooperative self-determination. While those of Namecoin seek freedom 131
from being governed, I argue that the developers of Faircoin seek the freedom to govern themselves, and recognise that this objective inevitably involves technical systems that reflect and respond to the varying conditions and interests of the group as a whole.
5.1 Namecoin: Adapting the Block Chain
Bitcoin frees money – Namecoin frees DNS, identities, and other technologies (Namecoin 2016a)
The emergence of Namecoin reveals the immediacy with which those discovering Bitcoin were adapting it to serve other purposes. Emerging shortly after Bitcoin itself, Namecoin was developed by a group of open source enthusiasts that had become interested in Bitcoin as a tool for limiting institutional power and started to frequent the BitcoinTalk forum.59 Namecoin remodels Bitcoin as a database for domain name registration, allowing internet users to register domain names on a block chain and circumvent established certification authorities. The rationale behind this is to improve ‘censorship resistance’ and thus ‘free’ internet users from the influence of large organisations. In this way, Namecoin’s developers argue it can ‘decentralise’ power on the internet as it offers a domain name system (DNS), as well as other potential systems, in which there is no central authority holding sway over the network. This case study examines the motivations of two Namecoin developers in relation to design choices made in the development of Namecoin. The first section, 5.1.1, shows how the interests and beliefs of these developers converge around an understanding of the internet as a force for emancipation, and how this stems in part from interactions with various technologies that enhance user privacy and thwart surveillance programs. For Namecoin’s developers, users of the internet are free when they are unimpeded by the interference of institutions and organisations. Correspondingly, many digital technologies are defined as a tools for limiting the power of ‘centralised’ organisations, and this equally applied to Bitcoin. In the second part of this case study, section 5.1.2, the design choices
59 Namecoin’s initial design was first posted to BitcoinTalk, original posting available here: https://bitcointalk.org/index.php?topic=6017.0 (accessed 12/04/17) 132
made in Namecoin’s development are analysed. This ‘technical code analysis’ reveals how Bitcoin was adapted to assist the goals of its developers, a process which reconstructed the block chain to serve as a decentralised database, impervious to government censorship. Other aspects of Bitcoin however, such as its ‘mining’ incentive structure, were retained in the development of Namecoin, and this was primarily because they were compatible with the ideological aims of Namecoin’s developers, and not for reasons of efficiency. Ultimately, I argue that Namecoin demonstrates the interpretative flexibility of Bitcoin and the crucial role played by values in its technical development.
5.1.1 Interests, Beliefs, and Practices
Namecoin’s lead developer, Jeremy Rand, is a software engineer based in Oklahoma and he contextualised his involvement with Namecoin by describing his longstanding interest in open source projects and the security of computer systems. Having tinkered with the software in his computer games as a child, as a teenager Rand encountered open source software as a means of pursuing this curiosity. Open source software appealed to Rand as it allowed him to ‘audit’ its levels of security, ‘to really know if it behaves as advertised’. Rand’s fellow Namecoin developer, Daniel Kraft, similarly championed open source software, having voluntarily worked on open source projects for some years before contributing to the development of Namecoin. Key to their motivations regarding open source was the idea that transparency fosters security. The possibility to inspect the technical architecture of a computer program is seen to preclude the need to trust in organisations to secure data. After expressing suspicions that Skype conceal programs for surveillance in their source code, Rand stated
If the source code is open, at least there is a possibility that it will get audited, and I think that’s a prerequisite to software that people can actually use with confidence.
For Rand, open source software reduces the reliance of individuals on legal frameworks and the security measures of organisations. Instead, individuals are able to take responsibility for security by ‘auditing’ its code themselves. This ethic of individual responsibility, and a 133
general distrust for centralised authority, was also evident in Rand and Kraft’s efforts to maintain internet privacy.
Internet privacy was a major priority for Rand. ‘Before I was involved in Bitcoin,’ Rand explained, ‘I was familiar with Tor. I had run a Tor bridge at my house for quite a while. During the Arab spring I was getting thirty or so Syrians using my Tor bridge every day’. Tor, an acronym for The Onion Router, is a free software service for anonymous web browsing. It achieves privacy for its users by directing internet traffic through a network of ‘volunteer- operated servers’ which act as a ‘series of virtual tunnels’, concealing a user’s location and usage (Tor Project, 2017). Rand was running Tor on his personal computer, volunteering his computational power to a network that spoke to his principles regarding privacy. Internet users should be free to communicate, Rand stated, without the interference of powerful organisations and nation states.
Daniel Kraft had also been using Tor prior to his discovery of Bitcoin, a practice he had long maintained out of a desire for private internet browsing:
In some sense I feel a little crypto-anarchistic. I’ve also been using Tor for most browsing since before Snowden came out, as well as email encryption and stuff like that […] I just enjoy trying to preserve my privacy as much as possible.
Motivated by this desire to preserve his privacy, Kraft discovered Bitcoin in its early stages and was ‘just fascinated by the prospects of Bitcoin, including the understanding of how the block chain worked’. What appealed to Kraft was the way in which Bitcoin allowed individuals to make transactions without any overseeing authority: ‘I got interested because of the “no central authority money” idea, which I liked’. Kraft was interested in the potential for a financial system to provide privacy, consistent with his interest in privacy-enhancing internet technologies more broadly. Without a central authority recording transactions, end-to-end encryption could provide a network for exchanging financial information privately. 134
Active engagement with privacy-enhancing computer programs also led Rand to Bitcoin. Rand had first learned of Bitcoin through a friend, who had piqued his interest by describing Bitcoin as an ‘anonymous currency’:
[A friend] sent me a link to Bitcoin.org and I thought this was a kind of cool concept, although as we later found out Bitcoin isn’t really anonymous but, you know. And basically, you know, banks have caused havoc in the economy around the world so the idea of a financial system that doesn’t need banks kind of appealed to me.
Rand was fascinated with the technical architecture of Bitcoin: an open source, ‘pseudonymous’ network, encapsulating his two chief concerns, online privacy and security, and articulating them in a way that spoke to his principles concerning the limiting of institutional power. While he saw the appeal in extending this logic to financial institutions, he emphasised that his motivations did not involve any particular economic concerns prior to his encounter with Bitcoin, and this acts as a key distinction between Rand and groups of Bitcoin enthusiasts chiefly motivated by constructing an electronic currency independent of nation states.
Before I got involved with Bitcoin I had never really given much thought to economics, it wasn’t really something I had much interest in. To some extent that is still the case, I wouldn’t say that I am knowledgeable about economics in any way, but I think the existence of Bitcoin has been useful for demonstrating that some of the economic principles that are often cited by people that, you know, want the banks to run everything for example, are not the only way to do things.
Engaging with Bitcoin introduced Rand to particular ways of understanding how economic systems function, demonstrating that financial institutions are not necessarily required, that many of their services may be replaced by ‘decentralised’ technologies such as Bitcoin. It is possible here to see the way in which Bitcoin can function as a mediator, a technology which carries and transforms particular meanings. As outlined in the previous chapter, challenging the authority of financial and state institutions was an ideological imperative that shaped Bitcoin’s construction and was subsequently ‘condensed’ with technical logic in design. For 135
Rand, Bitcoin as a technology demonstrated the viability of certain economic principles. The meanings assigned to Bitcoin in its construction are here presented back to a user in technical form. In a word, Bitcoin had demonstrated to Rand that stateless currencies work.
After his discovery of Bitcoin, Rand started to ‘mine’, setting his personal computer to the task of processing data on the Bitcoin block chain, earning Bitcoins he then used to purchase computer parts online.60 Encountering Bitcoin introduced Rand to a new way of exchanging value, and consequently a new way of thinking about economic systems. His main priorities however, remained privacy and the limiting of institutional power, and this was reflected in his engagement with the BitcoinTalk forum.
After discovering Bitcoin, both Rand and Kraft began to frequent the BitcoinTalk forum, where they came across Namecoin. Rand explained that discussions about how Bitcoin technology could be used to provide a system for registering domain names started among some of the first people to encounter Bitcoin, and included the pseudonymous author of Bitcoin’s initial white paper, Satoshi Nakamoto. A group of developers on BitcoinTalk, were interested in this potential for Bitcoin technology and started designing ‘BitDNS’,61 outlining a new purpose for Bitcoin technology that would result in a new block chain:
[Namecoin is] not using the Bitcoin block chain, this is mainly because when Namecoin was first proposed, at the time it was called BitDNS, Satoshi Nakamoto who founded Bitcoin basically said it doesn’t make sense to have this in the Bitcoin block chain because then basically, people who just wanted to do currency would then have to download all that extra data and people who just wanted to do Namecoin would have to download the currency data and that wouldn’t be good for scalability. And so basically Satoshi suggested that Namecoin use a separate block chain but with merged mining so that both of the block chains would benefit from the mining hash power.
60 As described in the previous chapter, Bitcoin mining requires increasing amounts of computational power as the block chain grows. In 2010, Rand was able to ‘mine’ using his personal computer as the amount of processing power necessary was still, in his words, ‘crazy low’. 61 These discussions are publicly available, archived at https://bitcointalk.org/index.php?topic=1790.0 136
On the advice of Nakamoto, Rand claims, those proposing BitDNS began working on their own block chain: a program for recording information exchanged via cryptographic keys, in which authentication of information is achieved by the aggregated efforts of independent nodes in the network, the process known as ‘mining’. Rand states those working on BitDNS were seeking to adapt Bitcoin to serve a new purpose: a block chain that would primarily record information concerning domain names. BitDNS was shortly renamed Namecoin by the lead developer at that time, ‘Vince’, a pseudonymous character that, like Nakamoto, disappeared without revealing his/her real-world identity.62 The subsequent development of Namecoin was taken up by enthusiasts such as Rand, for whom the necessity to register internet domain names with ‘centralised’ organisations was problematic.
Domain names were important to Rand as they denote authority on the internet, identifying an Internet Protocol (IP) address space with a particular name, and the administrative autonomy of whoever registered that name over that domain. Registering a domain name can be done through numerous registrar organisations, all of which are authorised by the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organisation that operates a ‘private-public partnership’ to promote ‘operational stability of the internet’ through ‘bottom up consensus-based processes’ (ICANN, 2017). This is problematic for developers of Namecoin, as ICANN represents a ‘centralised’ operation, requiring all domain name registration to go through one single organisation. This understanding of and distrust for ‘central authorities’ on the internet echoes the cyber-libertarian ideology of early Bitcoin enthusiasts, as outlined in the previous chapter. A proposal to use Bitcoin technology to further ‘decentralise’ the internet by making another ‘centralised’ organisation obsolete is therefore largely consistent with the original rationale for Bitcoin itself. This consistency is evident in the motives of Namecoin’s developers, and in their interactions with Bitcoin technology. However, there exist significant differences that underpin their commitment to adapting Bitcoin.
62 “Vince, like Satoshi, never revealed his real-world identity and disappeared around the same time, leaving Namecoin project wild in the open, to flourish only thanks to the help of enthusiasts in the FLOSS community.” https://namecoin.org/docs/faq/
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Both Rand and Kraft distinguished themselves and their interests from those using Bitcoin as currency, and distanced themselves from the more radical Cypherpunk aims of using technology to take down or replace nation states. Instead, Bitcoin was defined as one of many technologies that may limit the capacities of governmental power to acceptable levels:
I don’t identify as an anarchist or anything like that, I actually identify as a liberal, so I think that government has a role to play, I just don’t think that role should involve bailing out the banks who crash the economy and prosecuting Wikileaks and things like that, that are not in the interest of the public, and are instead only in the interest of the powerful (Jeremy Rand).
For Rand, digital technologies represent a means of reining in the excesses of state power by providing the public with tools to circumvent censorship and suppression. Where laws seemingly fail to protect the interests of the public, the public may turn to digital technologies. With reference to the economy, Bitcoin achieves this as it allows individuals the means for financial exchange outside of governmental restrictions. Rand expressed such instances in terms of ‘censorship resistance’: ‘I like Bitcoin because it is censorship resistant, no one can tell you you can’t send money to this undesirable person or something like that’. Similarly, Namecoin ‘frees’ individuals and technologies from governmental authority by providing a domain name system that, unlike ICANN, cannot be subjected to political pressure. As Rand stated,
I think that if systems like Bitcoin or Namecoin can basically act as a check on that capacity of government, sort of like how the courts are supposed to act as a check on the executive branch, I think that if the laws of math can act as a check on government power I think generally speaking that’s a good thing.
Rand here speaks neutrally of ‘the laws of math’ that govern Bitcoin and Namecoin, networks run on the same block chain based algorithm. As discussed in the previous chapter however, the functionality of this algorithm is ultimately founded on market rationality: for the network to function, an increasing quantity of profit-seeking individuals must compete 138
for rewards in Bitcoin, and this maintains the network. This rationality is here depoliticised and concealed within a neutral scientific discourse, affirming Bitcoin’s capacity as a mediator of neoliberal meanings. The chief concern for Rand however, remained censorship resistance, and this signifies the key distinction between his values and those of Bitcoin’s developers.
Daniel Kraft shared Rand’s commitment to censorship resistance as the key motivation for developing Namecoin, stating that Namecoin ‘enables organisations like Wikileaks to prevent seizure of their domains, like Bitcoin allowed them to circumvent the payments blockade’, referring to the action taken by prominent financial institutions in 2011, under pressure from the US government, to restrict donations to Wikileaks.63 Support for Wikileaks is significant here, with both developers citing it as a motivational factor for engaging with Namecoin and a prime example for its purpose. Wikileaks shares an ideological heritage with Bitcoin, part of a ‘movement’ that stretches back to ‘the cypherpunk drive to destroy institutional secrecy’ (Greenberg, 2012: 321) and achieve justice by minimising the power of governments to do things their citizens do not know of (Morazov, 2011). As Beyer (2013) notes, Wikileaks represents a strand of cyber- libertarianism which, along with the Pirate Party movement and groups of Anonymous hackers, focus primarily on ‘freeing’ information from institutional authority. This represents a bifurcation in cyber-libertarianism, with the practices of such groups distinguishable from the anarcho-capitalist goals of constructing and promoting stateless currencies. Alongside organisations such as Wikileaks, Namecoin forms part of this bifurcating strand of cyber- libertarian activity that focuses on diminishing the control of institutions over flows of information. This somewhat subtle difference in values and goals to those developing Bitcoin, as well as the consistencies, shaped the design and development of Namecoin.
5.1.2 Design and Development
So far this case study has focused on the interests, beliefs and technical practices of two Namecoin developers. This section outlines their involvement in Namecoin’s technical development, with particular focus on lead developer Jeremy Rand. The design of Namecoin
63 https://wikileaks.org/Banking-Blockade.html 139
is then interpreted with reference to the values and goals of its developers. What is revealed in this account of adapting Bitcoin technology, is that the values of its developers led them to reconstruct one aspect, the block chain, to further their goals of ‘freeing information’ by limiting the capacities of centralised organisations. Another technical feature however, the mining incentive structure, was maintained in the design for Namecoin, and again this is shown to have been a decision primarily driven by ideology.
When using Bitcoin in late 2010 and learning about its applications, Jeremy Rand discovered Namecoin and was immediately intrigued by the application of Bitcoin technology to serve another purpose.
When Namecoin came out – I heard about it roughly around the time it came out maybe a little bit afterward – I thought, this is kind of cool, it’s interesting that you can use the block chain for stuff other than financial stuff, but I didn’t get actively involved in Namecoin at that time […] I came back to Namecoin maybe a year or two later and I noticed that there was a disparity between the capabilities Namecoin could have based on its architecture, and the capabilities implemented for use by the masses.
Rand’s interest was in Namecoin’s stated potential to provide ‘decentralised’ domain name registration, ‘so you can have HTTPS without certification authorities’. Bitcoin had made ‘decentralisation’ possible via its block chain and mining functions, demonstrating the possibility for a monetary system without banks. Rand was interested in how Namecoin applied this logic to domain name systems. On inspecting its source code however, he noticed there were no implementations of this that most people could use.
There weren’t a lot of really good implementations of even the DNS that you could use in a trust-free way. A lot of people were using DNS servers run by third parties, which, if you’re going to be do that you might as well not be using Namecoin.
Rand echoes here the key claims made in the Bitcoin whitepaper: that the best way to secure a computer network is to replace ‘third party’ organisations with ‘decentralised consensus’, achievable via Bitcoin’s ‘trust-free’ mining process. 140
Seeking to maintain the trust-free, decentralised aspect of Bitcoin technology for Namecoin, Rand contributed to a ‘Bitcoin bounty’: an amount of Bitcoin promised to any developer that could implement the features that would allow Namecoin users to have HTTPS domains without requiring certification authorities. Ultimately, Rand found a solution to this himself, and wrote new lines of code for Namecoin:
And so I released an initial beta in June 2013 and I basically claimed the bounty that had been posted. So one of the Bitcoins was mine so I got two Bitcoins out of the three. But yeah, one of the guys who put up the money for the bounty basically told me it would be cool if you could stick around and keep developing stuff […] So yeah that’s what got me involved in Namecoin.
This was Rand’s first contribution to Namecoin, and he continued to contribute to its development, ultimately becoming its lead developer through the frequency of his contributions. Improving Namecoin as a ‘decentralised’ DNS was Rand’s chief motivation, and it is important to note that this often presented obstacles when attempting to make Namecoin more user-friendly.
As Rand explains in a report on the Namecoin website, ‘Namecoin makes a number of design tradeoffs in order to achieve decentralisation,’
Compared to [conventional] DNS, Namecoin has significantly worse security against run-of-the-mill malware, significantly worse privacy against your nosy friends/neighbours/employer, and significantly worse resistance to squatting and trademark infringement, to list just a few. (Namecoin 2016b)
These downsides, Rand explains, are considerable problems that need to be resolved, yet are worth solving in order to achieve a decentralised DNS. This commitment to the concept of decentralisation was the primary drive behind Rand’s design choices, and this was predominantly an ideological commitment.
In a technical sense, Namecoin achieves decentralisation in precisely the same way as Bitcoin. Decentralisation in this way means the removal of the necessity for central 141
authorities to process and store data. As outlined in the previous chapter, this is achieved in Bitcoin’s design via the ‘blockchain’ and ‘mining’ functionalities, in which data is encrypted, broadcast to the network, and then processed via the aggregated efforts of independent nodes in the network. The people running these nodes are incentivised to do so with the promise of a potential reward in Bitcoin, new units of which are released by a predetermined algorithm for this purpose. Bitcoin therefore offers a ‘decentralised’ monetary system, as there is no central authority processing financial information or regulating monetary policy. Namecoin retains these two principal aspects of Bitcoin’s design to achieve its own project for ‘decentralising’ domain name registration, changing very little of Bitcoin’s codebase:
The Namecoin codebase consists of the Bitcoin codebase with relatively minor changes (~400 lines)64 and additional functionality built on top on it. The mining procedure is identical but the block chain is separate, thus creating Namecoin. This approach was taken because Bitcoin developers wanted to focus almost exclusively on making Bitcoin a viable currency while the Namecoin developers were interested in building a naming system. Because of the different intended use cases between the two projects, consensus and protocol rules might make sense in one but not the other (Namecoin 2016c)
The relatively few changes made to Bitcoin’s codebase mean that Namecoin also functions as a crypto-currency, producing a steady but finite supply of tokens that are rewarded to ‘miners’ and can be traded among users. As with Bitcoin, the ‘trading’ of tokens actually denotes the broadcasting of new values assigned to the addresses (‘public keys’) of two users, information which is encrypted via a unique hashing process that makes it possible for the network to authenticate that it was indeed signed by both users involved; to record it on the network’s ledger (‘block chain’); and to ‘time-stamp’ the data with another hash function so it cannot be tampered with retrospectively.
The first significant difference with Namecoin is that there are ‘additional commands for special transactions containing names and data’ (Namecoin 2016c). This means that, while
64 The tilde symbol here means ‘approximately’. 142
users can continue with the currency-trading function offered by Bitcoin, the Namecoin network will also recognise a different type of transaction which denotes the ownership of names and the IP address spaces associated with them. For a user to register a domain name, they must obtain two addresses (public keys) and a ‘special’ coin in the network that is recognised for ‘namespace’ data. When they exchange this coin between their two addresses, the information it contains will be broadcast to the network, recorded and time- stamped.65
A key aspect of this design choice, as made clear in quotes above, is the conscious decision to create a new block chain for this data so as to not interfere with the design of Bitcoin. The added features designed for Namecoin could have been added onto Bitcoin itself, using the same block chain, challenging its purpose and primary functionality. However, there was dialogue and consensus among the developers of both Bitcoin and Namecoin that Bitcoin should persist as a currency system, offering users an alternative ‘decentralised’ form of money. This technical choice represents a distinction between the aims and activities of those developing Namecoin from those developing Bitcoin. This distinction is manifest in the construction of a separate block chain, yet the remaining values shared between the two groups is evident in the other major design choice, to construct ‘merged mining’.
In the Bitcoin network, data processing is done by independent nodes incentivised to offer their computational power to the network via rewards in Bitcoin. Namecoin operates in the same way, offering units of Namecoin as a reward for independent nodes. However, as Jeremy Rand stated, ‘we don’t encourage people to use Namecoin as a currency, we generally tell people they should have used Bitcoin or some other currency-aimed coin as currency’. Rand discourages the use of Namecoin as a currency to maintain its primary function as a domain name registration system. Coins on the Namecoin network should be primarily exchanged as a way of broadcasting domain name information. The reason Rand can advocate this without simultaneously discouraging nodes from contributing to the maintenance of the network, is due to Namecoin’s ‘merged mining’ function. As Rand explained,
65 For more technical detail on Namecoin’s design, see Kalodner et al (2015) 143
[Namecoin] is using a separate block chain, but it uses something called merged mining, which basically means that when someone is mining Bitcoins, they can use the same hash power that they are already expending, to also mine Namecoins in addition.
Rand explained how this feature of Namecoin ‘boosts the security of the system’ by connecting its hashing process to that of Bitcoin. This design choice reveals a consolidation of interests around the ‘decentralised’ features of Bitcoin’s functionality. As outlined in the previous chapter, built in to the mining incentive structure is a deflationary measure designed to generate value, following an understanding of money as a commodity, like gold, where value emerges due to the intrinsic features of an entity.66 These meanings assigned to Bitcoin are not shared by those developing Namecoin: the units of ‘crypto-currency’ generated in the Namecoin network are not designed for the purpose of creating value through scarcity. Instead, they are designed as tokens detailing the ownership or authorship of particular pieces of information. Nevertheless, as Namecoin’s developers share a similar concern to their Bitcoin counterparts regarding the ‘decentralisation’ of authority in computer networks, the incentive structure of Bitcoin represents a convenient means of ensuring the continual maintenance of the Namecoin network. In this way, the interests of both groups are satisfied by Bitcoin’s ‘mining’ feature, representing a stabilisation of meanings attached to the artefact among its early users.
5.1.3 Summary
The development of Namecoin illustrates the interpretative flexibility of Bitcoin, and how it may be adapted to serve interests beyond those outlined in its initial construction. Primarily motivated by aims to reduce the authority of powerful ‘centralised’ organisations over digitally-mediated communications, Namecoin’s developers constructed a new ‘block chain’ to record and authenticate the ownership of domain names on the internet. Jeremy Rand and Daniel Kraft had encountered Bitcoin and were introduced to its unique way of
66 For more detail on this monetary theory and how it sits alongside other, more established theories, see Dodd (2014). 144
authenticating and securing data. What intrigued both developers was the novel way in which security and privacy could be achieved without the need for an overseeing authority. The absence of such authorities was seen to provide freedom for internet users: freedom from organisations that monopolise information flows, freedom from surveillance, and freedom from censorship.
For Rand and Kraft, both Bitcoin and Namecoin advance the same goal for internet freedom, and in this way constitute emancipatory tools similar to those they had engaged with previously, such as Tor. Their interests and past experiences thus shaped their usage of Bitcoin and in the process this contributed to the development of a new variant, a new ‘block chain’ to record non-financial information, stored and secured on servers across a peer-to-peer network. An analysis of this development also reveals how the interests of Namecoin and Bitcoin developers converged around the ‘mining’ feature of Bitcoin. This feature of Bitcoin satisfied the goals of both groups to establish networks in which information was ‘free’ from the authority of centralised organisations. For Bitcoin developers, such organisations were financial and state institutions, for Namecoin developers, ICAAN and its model of authorising all internet domain names constituted the challenge to overcome.
5.2 Faircoin: Rejecting the Mining Incentive Structure
All current cryptocurrencies require you to buy the coins, either through mining or through exchanges. This gives the advantage to those who already have capital and mining equipment, and can afford risky investments. Faircoin is the first project where the coins are not bought but rather distributed equally between everyone who wants them regardless of their current financial status, and promotes equality (Fair-coin 2015) 145
FairCoop is a cooperative project which aims to address social inequalities through the construction of an alternative economic system founded on cooperation rather than competition. At the heart of this project is a radically redesigned version of Bitcoin. As proclaimed on its website, FairCoop is a global or ‘earth’ project, ‘self-organised via the Internet’ with the aim of ‘remaining outside nation-state control.’67 FairCoop does however have its roots in a particular social context. Founded by Enric Duran, a prominent activist in the Catalan anarchist movement, FairCoop was established as a new phase in the ‘integral revolution’ which was to demonstrate the possibility of prospering outside the capitalist system. In 2008, days after the Lehman Brothers bankruptcy, Duran had ‘expropriated’ hundreds of thousands of Euros from Spanish banks, taking out loans with no intention of repayment. Instead, Duran used the money to fund projects in the Catalan anarchist movement before absconding the country. One of these projects was Cooperativa Integral Catalana (CIC), of which Duran is a founder:
An Integral Cooperative is a tool to create a grassroots counter-power departing from self-management, self-organisation and direct democracy… It is a constructive proposal for disobedience and widespread self-management to rebuild our society in a bottom-up manner (in every field and in an integral way) and recover the affective human relationships of proximity based on trust. (CIC 2015)
This aim of building trust among networks and communities is shared by the many activists collaborating within CIC, and in the later project established by the same network of activists, FairCoop. As one activist, Juanito Piquete, explained, their activities continue the historical principles of the anarchist movement, those of ‘solidarity, self-management, and mutual support’. As outlined in the previous chapter, Bitcoin was primarily designed as a means of replacing the necessity to trust institutions. A computer program maintained by the efforts of its users would instead perform the functions of an idealised monetary system. For Bitcoin’s initial developers this ideal reflected principles of individualism and theories of self-regulating markets that inspired its early developers. Users of the Bitcoin network would be incentivised to contribute to its maintenance via rewards in its in-built currency. The use of Bitcoin technology by Enric Duran and the Catalan anarchists involved a
67 https://fair.coop/faircoop/ (accessed 15/09/17) 146
rejection of these principles, which in turn involved a ‘creative appropriation’ of its technical features. Bitcoin is redesigned as Faircoin, a crypto-currency technology with new technical features that reflect those of its developers: cooperation over competition.
The case study of Faircoin presented here starts first by contextualising actors involved in CIC and FairCoop. This involves an examination of the groups’ technical practices, as the group situate Faircoin within a broader range of experimentations with forms of money and technology, all aimed at constructing a fairer economic system. The second part of this case study draws out the particular technical features of Bitcoin that have been redesigned to align with the aims and interests of the activists. Drawing on Feenberg’s critical constructionist model, I argue that Faircoin illustrates a potentially counter-hegemonic appropriation of Bitcoin, predicated on social deliberation and cooperation among its users, thus radically subverting the neoliberal principles imprinted in its design.
5.2.2 Interests, Beliefs, and Practices
Juanito Piquete has been an activist within Catalan anarchist movements for decades. ‘I am an anarchist since I was 15 years old and I am 54 now’, Piquete explained, ‘I have been an employee exploited in the 70s and 80s, then I was a CNT [Confederacion Nacional de Trabajo] syndicalist and also of the anarcho-syndicalist movement’. The CNT symbolises both the endurance of anarcho-syndicalism in Catalan culture and the sense of ambition associated with anarchist projects. In 1936, the CNT successfully took control of factories, transport and land in Barcelona, signalling the start of a revolution that was to end with the Spanish Civil War (Ward, 2004: 21). Under Franco’s subsequent regime, the organisation was suppressed but continued to operate. After Franco’s death in 1975, the CNT re- emerged as a social movement and its numbers grew as workers such as Piquete were able to organise publicly. This history is an important contextualisation for the current activities of Catalan activists, a point Piquete was keen to stress from the outset: 147
I think it is not enough to talk about Faircoin only because we will only be talking about the coin and this interview would not be accurate as the coin is just the medium.
Piquete joined CIC when it was first founded in 2008. At that time, demonstrations were underway calling for sustainable social systems and economic models. Piquete termed this series of actions ‘the march for decreixement’, the Catalan faction of a new global social movement for ‘degrowth’. This movement drew the attention of social movement scholars, who identified ‘degrowth’ as a call for activists to work with scientists and practitioners toward new socio-environmental futures (Demaria et al, 2013), and the movement established itself in Southern Europe in the years following the financial crises (Muraca, 2013). In 2007 Catalan ‘degrowth’ activists had been working on projects for people to live independently of the capitalist system, a system Piquete asserted was destroying the planet it is insatiable pursuit of exponential growth. The subsequent march would draw attention to ‘alternatives that people build outside the state,’ Piquete explained, with ideas of sustainable ecosystems, of ‘permaculture and other techniques based on the use of land but from a non-exploited point of view.’ It was to such projects Enric Duran gave the money he had expropriated from banks, and CIC was founded as a result. Piquete described how this strengthened their focus on constructing tools for post-capitalist communities:
I am a guy who comes from the Catalan anarchist movement but then joined the CIC and started contacting Enric [Duran] when I knew about the expropriations he had done. From this point, I realised there is a need for practical tools among the Integral cooperatives. FairCoop flows from this experience.
Alternative currency initiatives were popular projects among the activists. The necessity to pay interest in dominant monetary systems was identified as a key driver of social inequality and unsustainable growth. FairCoop would come to represent an ambitious attempt to construct a range of economic tools, drawing on Bitcoin technology, which people around the world could use to opt out of capitalism. Prior to their discovery of Bitcoin, CIC activists had established a community exchange system (CES) among their social network. This 148
system was rooted in the local communities of Catalonia, and its success inspired the later development of FairCoop. A key proponent of CES was Stefan Blasel.
Unlike the majority of CIC activists, Blasel did not come from the Catalan anarchist movement. He was a student of environmental engineering when the 2008 financial crisis hit. This motivated him to learn more about economics:
After the crisis of 2008 and nine I was constantly investigating, where does the crisis come from? So I was reading lots of books, lots of articles on the Internet, and then I came across the money thing, and for me the way money is produced together with unequal distribution of properties – I think it’s like two percent of the population owns sixty percent [of private property] so it is very unequal – that was my motivation to get involved with the economy and to research a little bit about what is happening.
Blasel started to read about local currencies, and the differences between forms of money. What struck him was the lack of information available, ‘I don’t like these conspiracy theories, but there is something strange that so little information is done in our education system to teach how the money system is working’. The monetary system lay at the heart of social inequalities, Blasel explained. As more and more money is created as credit by financial institutions, the interest charged effectively transfers wealth from those with few assets that rely on credit, to those with the most assets who are in a position to profit from credit expansion. As the financial system is predicated on continuous growth, this process has persisted despite the problems it causes. The requirement to pay back more than is borrowed has, Blasel explained, turned money into a market which demands permanent growth. Money does not have to be like this, Blasel asserted, and local currencies, which allow members of a community to exchange goods and services without paying dues to financial institutions present a solution for those trapped in dominant monetary systems:
In the local currencies there is no interest. That’s one of the common points of all local currencies, there’s no interest. So whenever you buy something, there is no bank or banker who gets enriched. For me that is a basic thing because I think the interest, for me, is one of the basic things which encourages, which needs permanent growth. As I 149
see that the planet is limited, that resources are limited, for me permanent growth is impossible. So I am looking for a financial model which makes it possible to live well but which works without permanent growth and that is without any interest.
On discovering CES during his internet research, Blasel immediately got involved, becoming the eighteenth person to join the growing network. CES quickly became the most successful and widely used currency project among the increasing number of CIC activists. Blasel estimated that 2000 members across Catalonia were actively using the system. The central server is maintained, Blasel explained, by a software engineer and activist currently residing in South Africa, with another back-up server located in Australia should anything go wrong.68
Blasel travelled to Catalonia and began his interactions on CES as a regular user. ‘I offered certain services, so for example, I always offered translation services between English, Spanish and German.’ Before long, Blasel was offering his services as an educator on local currency systems. He established workshops where people could learn how CES works, what its benefits are, and of the flaws in dominant forms of currency. This appealed to many in post-crisis Catalonia, and Blasel explained why:
Every product which we buy in the normal economy we pay around 40% more just because of paying the interest and the compound interest in every product. And when people understand – [and] they have good motivation to start asking – they [become] clients to sell their services and products for Ecos. Because finally it should be cheaper, the prices in Ecos should be cheaper because there is no interest.
An ‘Eco’ is a unit of currency in the CES system, and recently, Blasel explained, Ecos are backed by food. ‘Since one year, more or less, we have sold on a list of food, like rice, like wine, like onions, oranges, mostly dry stuff, 100% for Ecos in order to back up the Eco’. While anything can be offered for exchange on the CES system, this reserve list of food means members are assured their Ecos will always be accepted as payment for a particular
68 Between the time of this interview (June 2015) and the time of writing (November 2016) Blasel has claimed that the majority of CES users have moved to a new version that has been specifically made for CIC, Integral CES. 150
range of foodstuffs. Established relations between agricultural workers within the CIC network make this possible. These relationships are founded on trust built over time, a point Blasel emphasised as crucial to the CES system when describing the content of his workshops.
Blasel explained that his workshops focus on the basics of using CES as a technical system. One of these basic requirements is for members to publish feedback each time they use the system. These references, Blasel explains, are the foundation of CES as a currency system as they build trust between users:
I just tell them the basics, what they really need. They need to create something, create an account – which is possible in Spanish and in Catalan now. They need to know how to charge when they have done a service, how to charge another account. They need to know how to evaluate the service they have received, whether it is good or bad because the feedback is a very basic feature in the CES. And for me talking about references – you surely know couch surfing? For me the referencing in couch surfing is a form of local currency, of a trust currency.
CES is a system founded on relations of trust among members. References allow members of CES to record their exchanges and establish a reputation among other users of the network. This underpins the value of Ecos. The more people use the system, the more trust grows between members, and the more valuable CES becomes. This defines CES as a form of money for Blasel:
All money is based on trust, no? Because all money is debt, so it’s always about whether I get my debt paid back one day.
Blasel described how the processes in which relations of trust are established between members of the network are far more important than any technical components. ‘The computer is not the most necessary thing,’ Blasel asserted. Building relationships and networks of trust is the purpose of the system, the other components are tools to facilitate these relationships: 151
For me the basic thing is not so much about the technology and how to open it and how to change it. For me, the basic thing is that people get to know [each other] and develop trust in local people in their barrio, in their neighbourhood, who offer and need services in Ecos.
Blasel’s workshops reflected this emphasis on trust building. After presenting the basic functionality and purpose of the CES, the main activities Blasel organised were to establish relations between attendees. ‘Apart from explaining what CES is, I spend a long time making a social dynamic, a group dynamic, where people say what they need and what they can offer.’ This practical part of the workshops, Blasel explained, is the part where participants truly learn how local currencies work. To be able to arrive at agreements over the exchange of services and goods is the fundamental purpose of the CES. If this group dynamic is achieved, ‘people can start exchanging directly, or with the help of the CES’. Blasel’s aim is to establish these interactions between members of a community. Whether they then use the CES or not is up to them. Building trust through social interaction is the key.
First you need to have trust with a person and then you have to have trust with a service or product. So trust to the person is the first step, and then the second step, you need to know, in order to buy, that trust, you need to know them. That’s why you need to have some meetings of the participants every now and then.
The relative successes of Blasel’s efforts in different contexts reflect his conviction in social interaction as a key component of any monetary technology. In areas with established lines of interaction within and between communities, people attending Blasel’s workshops took to the system of exchange fairly quickly. These areas were predominantly rural. In the urban areas of Barcelona however, Blasel found it more difficult to establish the ‘social and group dynamics’ necessary for promoting the use of the CES. Blasel claimed this contrast between urban and rural communities is a product of divergent lifestyles and levels of familiarity with processes of exchange:
In the cities people are [more atomised], in theory they know each other but then in the metro and in the bus they ignore the others because you would get overinvolved, 152
overwhelmed by the amount [of other people]. In the countryside there has always been that sense of cooperation, no? And farmers have always been using the exchange mechanism to exchange things in quantities too a lot, for other things they needed. So for them it is quite a natural thing. And if it’s not working with direct exchange and you have some currency that is not interest based, then even better, you know?
Blasel expanded on this point, describing the dependency of urban communities on financial institutions and supermarkets, the increasing individualisation of activities, and the declining role of community centres in urban life. These conditions, he said, have hindered his efforts to start local currency initiatives. Of the 2000 active CIC members using the CES, Blasel claimed only 500 were based in urban areas. Blasel was keen to point out this was not for a lack of interest, as alternative economic practices were gaining popularity in urban areas. Rather, it was a practical issue due to the routines of urban life.
After the financial crisis, the use of time banks increased in Barcelona, Blasel claimed. ‘The only difference with time banks is that you can only buy services whereas with local currencies you can buy products as well as services’. Furthermore, increasing levels of political activism had led to the election of Ada Colau as Mayor of Barcelona, a prominent activist in the Platform for People Affected by Mortgages, a movement that emerged after largescale housing evictions in the wake of the financial crisis. As Blasel explained, Colau channelled popular interest in economic alternatives during her election campaign:
One of her proposals actually was to create a local currency for Barcelona… Potentially, for the first time, in Spain at least, people might be able to pay part of their taxes in local currency. And [as] part of their social programs, people will be receiving part of their social help in local currency… That is the plan, let’s see.
The desire for alternative economic practices is a key political issue in Catalonia, transcending the anarchist movement. A study by Castells et al (2012) found that such practices, already frequent in ‘alternative economic cultures’ that preceded the financial 153
crisis, have intensified and increased across the region in the years following it.69 A key determining factor in the adoption of these practices, Castells found, is the existence of social support networks. In this finding Castells’ study provides some evidence for Blasel’s claim that trust is foundational to engaging with local currencies: ‘Trust is essential to those engaging in alternative economic practices, and trust is built by social support and personal contact with networks of people with whom practice can be shared’ (2012: 229). The increases in political activism across Spain in the wake of the financial crisis have given rise to many new social support networks, and Castells’ conclusive remarks draw an affinity between the rise in alternative economic practices and that of the Indignados movement for this reason (ibid, 245). The founding of CIC by Catalan activists in the wake of the 2008 financial crisis, and the broadening of their interests in alternative economic practices, mirrors this pattern. Having started with CES, the CIC activists soon began working on a broader range of alternative economic practices they hoped would become the foundation of an entirely new economic system, existing in opposition to capitalism. These efforts were brought together as the ‘FairCoop’ project.
5.2.2 Design and Development
FairCoop is the result of activists associated with CIC encountering Bitcoin and endeavouring to redevelop it as the basis for an alternative economic system founded on the principles of the ‘degrowth’ movement. These principles, preceding their engagement with Bitcoin technology, had guided their use of the Community Exchange System. Correspondingly, the CES had demonstrated to the activists the potential for economic practices based on trust, cooperation, social interaction and sustainability. Furthermore, it demonstrated that such practices could function smoothly outside of state regulation and without financial incentives such as interest payments. These imperatives underpinned their efforts with the CES, mark out their activities within the broader context of economic activism in Catalonia, and were instrumental in how they understood and adapted Bitcoin. This section focuses on
69 Crypto-currencies are absent from Castells’ study. This is most likely due to the fact that data was collected between 2008 and 2011, Bitcoin emerged during this time and its use was largely limited to small groups of internet users (see previous chapter) 154
this latter process, tracing the development of Faircoin, from an initial encounter with Bitcoin, through to a technical code analysis of Faircoin’s design.
Emerging from the degrowth movement, FairCoop focuses on improving social relations within and between communities as the basis for sustainable economic practices. As Piquete stated,
It would be great if we can talk about the currency of a neighbourhood, or a small city or village because it generates support, common identity, collective empowerment, and the fact of being part of something that makes you proud because it is for the common good.
The key problem with local currencies for Piquete however, was that, in spite of efforts to use foodstuffs as a reference of value for the CES, its users ultimately measured its value against the value of the Euro. This left local currencies vulnerable to same fluctuations of the capitalist economy from which they were trying to escape. What was needed was a stable source of value which could act as a reserve currency for local and social currencies, independent of nation states and central banks, yet also open to direct management by all the members of the cooperative. On encountering Bitcoin, Enric Duran and fellow activists saw the opportunity to develop a crypto-currency for this purpose. ‘Faircoin aims to be a different reference,’ Piquete stated, meaning an alternative reference for determining value, ‘we know that this is a very audacious aim.’
Duran introduced Bitcoin to the CIC activists having met prominent Bitcoin developer Amir Taaki, and having worked with members of the P2P Foundation, a non-profit organisation dedicated to developing peer-to-peer technologies as a route to a ‘commons-based society’ (P2P Foundation, 2017). As Piquete explained, FairCoop started as a result of this collaboration,
FairCoop is an initiative of Enric Duran, Amir Taaki that comes from DarkWallet Collective, and the P2P Foundation. These are the three persons or organisations that converge in FairCoop and what they are trying to achieve is an economic system based in cooperation. 155
Bitcoin appealed to Duran and those at CIC as it appeared to demonstrate how value could be generated and stored independently of governments and financial institutions. Bitcoin technology, it was hoped, could provide an alternative reference of value to state-issued, or ‘fiat’, currencies. However, Duran and his fellow developers had noticed how Bitcoin replicated problems they perceived with dominant forms of currency.
As explained on the FairCoop site, ‘currency has different functions, among the best known are: medium of exchange of goods and services; value storage; [and] reference value (price system)’ (FairCoop, 2014). Local currencies separate these functions. The CES for example, offers a medium of exchange but no value storage or price reference. As stated by FairCoop, dominant forms of currency condense these functions, which can be problematic as money itself becomes a market, encouraging speculative foreign exchange trading that destabilises the value of currencies. This can hugely benefit the speculators involved, but often at the expense of poorer, less powerful people whose savings are devalued, and price references rendered too volatile. For those at FairCoop, Bitcoin also fails to separate these functions of currency, resulting in similar speculative trends. Furthermore, it is being increasingly incorporated into the dominant economic system:
The case of Bitcoin, because it is a cryptocurrency must be followed closely as it evolves. So far it has shown great success as a store of value over the long term, despite fluctuations in the short and medium term, and it is growing rapidly as a means of exchange. Still, certain contradictions between both functions have been spotted as its growing acceptance by businesses that turn it directly into fiat currency has put a significant selling pressure on the money market. With FairCoop we plan to build an autonomous economic system over the current system, and for that we picture a set of free economic tools to use in order to generate new social dynamics. We’re building a series of coins and resources that play complimentary roles, instead of trying to get a single currency to fit all needs at once. (ibid)
The goal of FairCoop therefore, is to use Bitcoin technology as one particular element in a broader range of economic practices that comprise an entirely independent and alternative economic system. This new system would be founded not on capitalist principles of 156
competition, but on principles of communitarian cooperation. The role of Bitcoin technology in this would be to store value. Yet Bitcoin itself could not be used for this purpose. Firstly, as stated above, this is because Bitcoin is increasingly being used by speculators and developed for this purpose which renders its market value too volatile. Two further reasons concern Bitcoin’s ‘mining’ functionality: it was considered environmentally unsustainable; and economically too ‘capitalistic’. For these reasons, which are elaborated below, an alternative crypto-currency was sought.
Faircoin existed prior to FairCoop, as one of the many alternative crypto-currencies that had emerged after Bitcoin. As with Bitcoin and Namecoin, Faircoin had been initially created by an anonymous developer who then left without a trace (P2P Foundation, 2015). Duran and fellow developer Thomas König came across Faircoin and subsequently took up its development. They chose Faircoin as it was a crypto-currency that had been designed to overcome the problems caused by Bitcoin’s mining function, which requires an increasing amount of computational power to process the network’s data:
As the [Bitcoin] system has grown, along with the number of transactions, it is increasingly difficult to mine a block and it requires more and more computing power, therefore becoming an ecological and economic issue (FairCoop 2014b)
As outlined in the previous chapter, Bitcoin’s functionality rests on a program called ‘proof- of-work’ derived from Adam Back’s designs for ‘HashCash’. This part of Bitcoin’s design calls on an expanding number of independent users in the network to process (‘mine’) data in the hope of obtaining rewards in Bitcoin. This process is predetermined to require more computational power as time goes on, a feature designed to prevent a user obtaining enough power to exert undue influence over the network.70 This feature of Bitcoin is incompatible with the ecological principles of FairCoop, which is founded on an ambition to create a sustainable alternative to the permanent growth of the capitalist system. In the initial design for Faircoin, an alternative data processing system was put forward, not one of ‘mining’ but one of ‘minting’.
70 See Chapter 4, section 4.3 157
Faircoin’s design builds on a process called ‘minting’ which unlike ‘mining’ can be done on a standard personal computer, requiring less energy.71 The minting process is referred to as ‘proof-of-stake’ rather than the Hashcash-inspired ‘proof-of-work’. With proof-of-work, computers are programmed to continually generate hashes until one matches a hash generated by the core algorithm. The user that generates this successful hash verifies and securely records the latest information broadcast on the block chain, and for having done so receives a reward in Bitcoin. With proof-of-stake, users in the Faircoin network send a certain amount of ‘coins’ (digital signatures) to the network to be verified. From among these users, the core algorithm selects one node to verify and securely record the latest transaction information. Unlike Bitcoin, all users that commit this energy to the network (via broadcasting their ‘coins’ for verification) are rewarded with a 1% increase to their holdings of Faircoin. This is the key adaptation of Bitcoin made in the initial design for Faircoin, and it also changes the implicit monetary policy written into the software. Whereas Bitcoin is programmed to limit the total amount of Bitcoins created as rewards, Faircoin’s minting system offers its 1% rewards as continuous ‘interest’ for those contributing to the network, with no predetermined end to the supply of coins.
The ‘minting’ aspect of Faircoin’s design diminishes the advantage held by those in the Bitcoin network that can afford to invest in all the hardware necessary for ‘mining’. Alongside its lower energy demands, this gave Faircoin an added appeal for Duran and his fellow activists. However, on presenting Faircoin as a potential economic tool to those at CIC and FairCoop, Faircoin was deemed not to challenge the capitalistic aspects of Bitcoin enough, and this led to the redesigning of Faircoin by Duran and König. As Blasel explained:
They [Duran and König] made some changes to eradicate the possibility of accumulating capital. That means to gain something with interest, because many people in the cooperative at the beginning were not very happy with FairCoin, for them it was too capitalistic, too similar to Bitcoin, and they wanted to have something which is more like local currency.
71 The ‘minting’ function was first devised by the developers of Peercoin, information available here: https://peercoin.net/ (accessed 27/04/17) 158
Although the initial version of Faircoin was much more acceptable to the activists at CIC and FairCoop than Bitcoin, its ‘proof-of-stake’ system still rewarded users on the basis of assets owned. Only those with a sufficient number of coins (a ‘stake’) can contribute to the minting process, meaning rewards (new units of currency) remain unequally distributed. For this reason, Duran and König designed ‘Faircoin V2’ with a new feature they called ‘proof-of- cooperation’.
This adaptation of Bitcoin’s ‘mining’ incentive structure can be interpreted with reference to Feenberg’s theory as a ‘creative appropriation’: an instance in which users have innovated a new function for a technology that opens up new possibilities for both technical and social change. Feenberg’s work demonstrates the capacity for technological rationality to reproduce social hierarchies via the exclusion of public interests from influencing the design of technologies, and this serves to reproduce power as it maintains the privileged position of those that can direct technical development. This technocratic power, concealed by a veil of scientific neutrality, privileges capitalist imperatives for control and efficiency. Acting within what Feenberg terms the ‘margin of manoeuvre’, creative appropriations of new technologies can challenge this hegemony by opening technology to critique, allowing new interests and meanings to influence technology design. In the design for ‘Faircoin V2’, Duran and König outline a model for keeping the technology open for ongoing procedures of democratic deliberation and modification. This egalitarian imperative written into the design for Faircoin V2 thus stands in contrast to technocratic power, which acts to suppress deliberations and limit modifications.
Duran and König open their white paper for Faircoin V2 by explaining the drawbacks of its initial design, namely that minting, like mining, distributes value unequally:
Neither mining nor minting can truly be considered fair, because both confer an advantage on the already rich. Therefore we decided to create a new version of Faircoin which corrects these issues (Duran and König, 2016: 1)
Faircoin, they stated, would be designed around principles of ‘cooperation, not competition’. Their solution to the competitive and unequal aspects of previous crypto- 159
currencies is a proposed system for ‘proof-of-cooperation’, as opposed to Bitcoin’s ‘proof- of-work’ and Faircoin’s initial ‘proof-of-stake’ system. At the heart of this proposal is an idea to maintain a trusted group of reliable users referred to as ‘certified validation nodes’ (CVNs). These CVNs are ‘trusted nodes’, users of the network whose usage has demonstrated their continued commitment to the network, and therefore reliability to verify and record a block of transactions.
As opposed to Bitcoin and the previous version of Faircoin, in which the user selected to validate network data is done so by the algorithm itself having met certain criteria, in Faircoin V2 the CVN that validates one block of data then chooses the next one. They make this choice based on the past data usage of other available CVNs, a decision which is broadcast to the rest of the network for approval. The digital signatures of approving nodes are then collected by the chosen CVN, who inserts them into the new block of data they are validating. Once this is done, that CVN then chooses the next CVN, and so the cycle continues.
The most significant departure from Bitcoin in the designs for Faircoin V2 is the authority invested to administrators and crucially, the answerability of these administrators to the cooperative. While Bitcoin is predicated on the replacement of human-run organisations with algorithms, Faircoin demonstrates its commitment to the communitarian values of the group it is designed for, by allowing for ‘chain administrators’, members of the FairCoop cooperative that hold the responsibility of maintaining the network. As Duran and König explain, these administrators are selected by the cooperative, to which they are ultimately answerable:
To manage the block chain there are chain administrators who sign new instruction data for the block chain. These administrators act as spokesperson for the FairCoop assembly and are publicly appointed (ibid: 6)
Issues such as the environmental impact of the technology, and the economic assumptions built into its architecture, here become issues that can be discussed by the ‘FairCoop 160
assembly’: members of the cooperative that use the technology, and come together to discuss its development.
CVNs
FairCoop Administrators Assembly
Figure 10 - FairCoop's 'Web of Trust'
It is in this sense that Faircoin V2 most radically challenges the process whereby political and economic assumptions can be concealed within technical discourse, and condensed within technology design. Design is instead open to critique, and this critique is made fundamental to the design process, in a continual cycle of social deliberation and technology design.
While the proposals put forward here for FairCoop’s alternative economic system remain in an embryonic stage, the design for Faircoin V2 evidences the potential for its design process centred on reflection, critique, and collective accountability. Indeed, the emergence of FairCoop itself is testament to productive communication lines between members of a community and developers of technology. This case of ‘creative appropriation’ of Bitcoin technology can be understood in terms of Feenberg’s conceptualisation of social groups challenging technocratic power via new technical practices. Faircoin’s adaptation of Bitcoin’s initial design further illustrates the interpretative flexibility of Bitcoin, evidencing the capacity of social groups to creatively appropriate the technology. Most significantly, Faircoin illustrates the capacity of actors working within the ‘margin of manoeuvre’, the spaces new technologies open for tactical adaptations and interpretations, to establish a 161
process of ‘democratic rationalisation’: constructing technologies around principles of inclusive and ongoing social deliberation.
5.2.3 Summary
The case study of Faircoin revealed a process in which a social network committed to advancing new techniques for sustainable and egalitarian living were able to adapt Bitcoin and construct a new crypto-currency technology. Identifying themselves as part of broader traditions and movements that stand in opposition to capitalism and state authoritarianism, the activists of CIC and FairCoop had engaged in various experimentations with forms of money and technology prior to their discovery of Bitcoin. These past practices, and the principles that guided them, shaped their understanding of Bitcoin and their consequent adaptation of it.
A ‘technical code analysis’ of Faircoin’s design, drawing on concepts from Feenberg’s critical constructionist approach, reveals the contingency of the choices made during its development on the values held by the social group. This is particularly evident in the construction of Faircoin V2, which is developed by Enric Duran and Thomas König in direct response to the concerns of the FairCoop community. Interestingly, the analysis reveals that specific efforts were made to solidify these processes of dialogue between developers and users during Faircoin V2’s design. This supports Feenberg’s concept of democratic rationalisation, which clarifies ways in which social groups are able to ‘creatively appropriate’ technologies and in the process, establish ongoing procedures for social deliberation and modification that open new technical and social possibilities. Ultimately, by imprinting these values of openness into the design for Faircoin V2, those at FairCoop demonstrate the capacity for marginal groups to establish new ‘technical codes’: definitions of technology that contain specific social meanings. As these meanings enter into design processes, they are ‘condensed’ with technical logic and begin to undermine technocratic power processes. Or in Latour’s terms, these meanings are made more durable as they are delegated to a nonhuman. As a result, the values of a group like FairCoop may appear back 162
to them as ‘natural’ or ‘self-evident’ aims in technical development. In a word, just as Bitcoin demonstrated to its early users and developers the ‘technical’ superiority of neoliberal monetary theory by generating value independently of nation states and banks, Faircoin, should it continue to expand, may correspondingly demonstrate the ‘technical’ superiority of cooperation and social deliberation.
5.3 Interpreting ‘Freedom’ in Adaptation
If negative freedom is freedom from being governed by others, positive freedom is ‘freedom to’ govern – a freedom that must logically define what it is to be self- governing, which must give freedom a content, a character, and make it a determinate activity rather than simply the opportunity to act – Finn Bowring (2014: 157)
This chapter has presented two case studies in which groups of actors were able to adapt Bitcoin to serve their particular interests. What characterises these cases is an interpretation of technology as an emancipatory tool among the actors in question. These conscious, tactical uses of technology as a form means for liberation largely serve to support Feenberg’s model, which equally defines technology as emancipatory and outline ways in which social groups may locate this largely suppressed but inherent potential. Both groups discussed in this chapter recognise this potential and work within the ‘margin of manoeuvre’ to innovate new functionalities in the technologies they encounter. What distinguishes the groups presented here however, are the conceptions of freedom they hold. In concluding this chapter, I argue that only Faircoin demonstrates democratic rationalisation and that this is due to the ‘positive’ conception of freedom held by the social group driving its development.
In Two Conceptions of Liberty (1969), Isiah Berlin differentiates between ‘negative freedom’ which broadly corresponds to the degree to which individuals are free from obstruction by 163
others, and ‘positive freedom’, which ‘consists in being one’s own master’ (23), the capacity to impose one’s own mode of being in the world. As neatly summarised by Bowring in the epigraph, the key distinction between these conceptions of freedom consists of a ‘content’, as positive freedom requires determinate activity, involving a substantive conception of what self-determination actually constitutes beyond the removal of constraints. In regards to adaptations of technology, the two cases in this chapter suggest that ‘positive’ conceptions of freedom attached to artefacts are more likely to open technology to social deliberation and participation, a process Feenberg terms a democratic rationalisation of technology.
In the first case, we see Namecoin’s developers outline a commitment to decentralisation that follows the logic of negative freedom. Primarily motivated by developing digital technologies as a means of ‘freeing’ information from institutional control, Jeremy Rand and Daniel Kraft adapted Bitcoin technology to limit the capacities of centralised organisations, such as ICAAN, to exert influence over the flows of information between internet users. For Rand and Kraft, both Bitcoin and Namecoin constitute emancipatory tools similar to those they had engaged with previously, such as Tor. In all cases, the meaning attached to technology is a tool for ‘negative’ freedom: freedom from being governed. As with similar agents in the ‘freedom of information movement’72 such as Anonymous, the Pirate Party and Wikileaks, with whom Namecoin’s developers identify shared goals, freedom is defined as the absence of supervision and central authority. As such, the meanings assigned to technology focus primarily on disruption and evasion. The absence of any ‘positive’ freedom is encapsulated in the cyber-libertarian conviction that technologies can of themselves redress power imbalances. As Rand stated, his hopes for Namecoin lay in the notion that through its decentralised architecture, ‘the laws of math can act as a check on government power’. Social deliberation and participation in technical development are therefore less important than the architecture of technology. Such adaptations, while potentially disruptive, ultimately fail to challenge technocratic power as they do little to demystify its social contingency.
72 This collective term for Wikileaks, Anonymous, and the Pirate Party movement is borrowed from Beyer, 2013. 164
In the second case, we see how the group of activists involved in Faircoin’s development express an entirely different conception of freedom, and this shapes how they engage with technologies they encounter. For activists such as Piquete, freedom lies in ‘solidarity, self- management, and mutual support’. While this conception of freedom necessitates freedom from capitalism and centralised government, it centres on a communitarian vision for small self-governing communities that cooperate on developing sustainable living. For those at CIC, establishing strong social ties, procedures of open dialogue, and networks of trust are therefore determinate activities. Consequently, adaptations of technology involve an opening of technology for social deliberation and participation, as evidence in the development of Faircoin V2 and its ‘proof-of-cooperation’ architecture.
Feenberg’s approach provides an insightful means of assessing the political implications of social constructionism, throwing light on how the absence of democratic participation in technical development acts to reproduce social inequalities, and how social groups may open technology to democratic participation through creatively appropriating the technologies they encounter. However, what the case studies of Namecoin and Faircoin indicate is that such appropriations of technology are not of themselves ‘democratic’. Even in cases where social groups consciously adapt technology in the pursuit of emancipation, the degree to which this opens technical development to social deliberation is largely determined by the conception of freedom active in that context.
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6. Networks
As stated in chapter one, the number of active users of crypto-currencies as of 2017 is estimated to be 4.3 million, having increased steadily year-on-year (Hileman & Rauchs, 2017: 27). This process has inherently been social as well as technical, with networks of enthusiasts establishing spaces for interaction, both online and offline. Of the latter category, ‘meet-up’ groups represent an important case in point. At the time of writing there exist 70 Bitcoin-related meet-up groups in London alone, with the largest, ‘Coinscrum’, claiming to have over four thousand members.73 Meet-up groups derive their name from the social networking site predominantly used to organise events among Bitcoin enthusiasts, Meetup, and represent significant spaces in which enthusiasts meet to discuss the latest developments in Bitcoin. Meet-ups also constitute important sources of information for people eager to learn about Bitcoin, therefore acting as centres of knowledge diffusion. This chapter draws from data primarily gathered via Bitcoin meet-ups to interpret the emergence of sociotechnical networks that have formed around the technology. The chapter presents two points of analysis: how Bitcoin constitutes an agent in the co-production of networks characterised by libertarian beliefs; and how strategies emanating from centres of financial power are coopting Bitcoin technology by influencing development.
As outlined in chapter four, libertarian ideology played an important role in the initial construction of Bitcoin. Electronic currencies with a decentralised architecture were perceived among Cypherpunks as a key means of limiting the capacities of nation states. As a consequence, individuals would be ‘liberated’ from hierarchies of power and control. Scholars such as David Golumbia (2015) have argued that this ideology has come to permeate the networks of Bitcoin users, to such an extent that Bitcoin should be understood primarily as a political phenomenon: ‘Bitcoin is politics masquerading as
73 Figures from the social networking site meetup.com, available here: https://www.meetup.com/topics/bitcoin/gb/17/london/?_cookie-check=0WLhghuGctyxt1QL (accessed 18/09/17) 166
technology, or technology soliciting and promoting a very specific politics’, a fusion of ‘right- wing, libertarian anti-government politics’ with ‘a conspiratorial anti-Central Bank rhetoric propagated by the extremist right in the U.S.’ (119). This argument raises significant questions: how exactly may Bitcoin function as a vehicle of ideology? And what are the specific relationships between technical practices and political beliefs? In the first section of this chapter, 6.1, data gathered from research participants associated with two organisations are discussed, the ‘Institute of Crypto-Anarchy’ and ‘Bitcoin Manchester’. The findings largely substantiate Golumbia’s argument, demonstrating how interactions with Bitcoin often involve an engagement with libertarian ideology. More than this however, the findings throw light on how Bitcoin acts as an agent in the production of sociotechnical networks characterised by libertarian ideology. The findings reveal an interdependent relationship between particular technical practices and a subjective disposition, a relationship in which using Bitcoin and holding libertarian beliefs become mutually reinforcing. To clarify these arguments, I draw primarily on the concepts of Latour to argue that in these contexts Bitcoin constitutes a ‘nonhuman actor’ in the production of sociotechnical networks, carrying and ‘translating’ meanings from the site of its construction to further contexts, where it ‘prescribes’ particular practices.
In the second part of this chapter, section 6.2, the activities of Bitcoin enthusiasts across the UK are analysed. This analysis reveals three major shifts in the character of sociotechnical networks to have emerged around Bitcoin. Firstly, the evidence indicates that Bitcoin meet- ups across the UK began to attract more commercially-minded participants during the period of fieldwork in this thesis, 2014-15. This demographic change led to the increasing prevalence of entrepreneurial interests within the networks of Bitcoin enthusiasts. Adding to this was an attitudinal shift among Bitcoin enthusiasts, as some came to prioritise emerging commercial opportunities ahead of ideological commitments. This constitutes the second observable change in the character of UK Bitcoin networks. Finally, data gathered concerning the formation of organisations such as the UK Digital Currency Association and Ethereum suggests that the demographic and attitudinal changes observed have been influenced by a state-led strategy to foster innovation in the finance sector. Here the strategic interests of state actors and financial institutions are found to be informing and 167
incentivising the development of Bitcoin technology in a particular direction. This, I argue, represents a process of cooptation in which Bitcoin technology and many of its users are enrolled into energising dominant networks of power, the very same networks that Bitcoin was originally designed to undermine.
6.1 Co-production in Libertarian Networks
It kind of goes around in circles: the libertarians, the Bitcoins, and the Austrian school economists and so on. It’s a really interesting avenue to go down because Bitcoin makes you re- evaluate money, and then when you start understanding how economics works, it questions a lot about the way a whole society and politics are structured as well. – Ash Moran
This section examines the beliefs and practices of Bitcoin enthusiasts associated with two organisations, the ‘Institute of Crypto-Anarchy’ and ‘Bitcoin Manchester’. The former is a hacker-space in Prague where weekly public events are held in which invited speakers give talks about Bitcoin, followed by group discussions. The latter is a meet-up group that arrange monthly events in Manchester to share knowledge and educate new users regarding Bitcoin-related practices. In both cases, a specific pattern emerged regarding the relationships between forms of knowledge and technical practices. For these actors, the use of Bitcoin and a conviction in libertarianism had grown concurrently in a mutually reinforcing process. To interpret this process, I draw on the concepts of Bruno Latour and argue that Bitcoin represents an agent, or ‘nonhuman actor’, in the production of sociotechnical networks characterised by libertarian ideology. Firstly, interviews with the chief organiser of Bitcoin events at the Institute of Crypto-Anarchy are discussed, interspersed with observations and documentary material from web sources. An analysis of Bitcoin Manchester then follows, similarly drawing on in-depth interviews with the chief organisers as well as regular attendees and documentary material, before a summary of the key findings in the relationship between actors, meanings, and technologies. 168
6.1.1 Paralelni Polis
At the Institute of Crypto-Anarchy (ICA) in Prague, Martin Sip runs weekly Bitcoin events open to the public. Part of a project named Paralelni Polis, ICA was established by ‘guerrilla art’ group Ztohoven as a hacker-space aiming to ‘make available tools for unlimited dissemination of information on the Internet and encouraging a parallel decentralised economy, crypto currencies and other conditions for the development of a free society in the 21st century’.74 Paralelni Polis is an envisioned ‘parallel society’, free from the state, in which the social contract is written not in legislation but in the design of new networked technologies. Those at ICA thus advance the libertarian principles and tradition of the Cypherpunks as outlined in chapter four, through the founding of a space dedicated to the construction of cryptosystems that ‘liberate’ people from the authority of ‘centralised’ institutions, thus prefiguring a state of ‘crypto-anarchy’. The key distinction between the Cypherpunks and those at ICA is the establishment of a real-world space for interaction.
ICA is situated in a three-storey building in a central district of Prague. On the ground floor is a café, where Bitcoin is the only currency accepted. Sip explained,
We use Bitcoin here, and the reason is that it is a technology that will enable independence from governments, because money has been seized by governments for a hundred years now, and this technology takes this power over monetary systems from governments and gives it back to the people
To facilitate this aim, a range of devices were installed at ICA so that visitors could use Bitcoin instead of ‘government controlled’ currencies. Just inside the entrance, a ‘Bitcoin ATM’ hardware device allows users to purchase Bitcoin with cash. For users with ‘digital wallets’ – software programs that allow users to operate their address on the Bitcoin network with handheld devices – the Bitcoin ATM can credit accounts in exchange for cash, in this case Czech Koruna. Significantly, for those that do not possess such software, the Bitcoin ATM is able to print ‘paper wallets’, pieces of paper the size of ordinary till receipts with a string of code denoting an ‘address’ on the Bitcoin block chain, as well as the ‘private
74 https://www.paralelnipolis.cz/koncepty/cryptoanarchy-institute/ (accessed 13/10/16) 169
key’ for authorising changes to the recognised value of this address. This data is also compressed into a quick response (QR) code that may be scanned by other devices. Such a device was present at the till in the café: a specialised Bitcoin point-of-sale machine that could scan QR codes on either digital or paper wallets as a form of payment. These technical devices within the café demonstrate the commitment of those at ICA to advance the use of Bitcoin and construct a public space in which its use as currency is normalised.
For Sip, the use of Bitcoin in such everyday tasks is transgressive as it allows users to ‘opt out’ of the ‘state-controlled economy’: ‘Bitcoin is the way out. It is something the government doesn’t control, can’t stop, and actually nobody can stop it. Not any individual.’ This conviction is founded on a belief that the technology underlying Bitcoin is transformative and, to borrow a term from Lawrence Lessig, unregulable.75 As data processed on the Bitcoin block chain is done so by independent nodes across various servers, for Sip this entailed that there was no discernible centre that may be placed under the control of governments. This technical feature, he believed, meant that the expansion of the Bitcoin network could not be stopped.
In the basement of ICA was a ‘mining rig’, a specialised hardware machine which ran the Bitcoin core software, continually ‘hashing’ transaction data to maintain the network. Showing me the machine, Sip reiterated his deterministic conviction, asserting ‘the technology is unstoppable’. Yet he then went on to say, ‘Bitcoin may die but it is like a proof-of-concept, that this decentralised consensus works and can replace the state.’ Bitcoin is in this way also transformative on a conceptual level for Sip. While he was certain that Bitcoin would succeed technically, even if it somehow failed, it had demonstrated how nation states may be replaced with computer networks, implying some form of Bitcoin will inevitably succeed. Here Sip echoes the technological determinism of the Cypherpunks outlined in chapter four and highlighted by Winner as a key component of cyber-
75 Indeed, Lessig makes use of this term when debunking precisely the same cyber-libertarian fallacy expressed by Sip but applied in that case to cyberspace, deemed ‘innately unregulable’ by many due to its technical architecture (2006: 31). Lessig highlights how commerce on the internet has made it more regulable via the implementation of technical architecture that guides behaviour, famously arguing ‘code is law’. 170
libertarianism.76 Nation states, Sip believed, were soon to be replaced by ‘decentralised’ technologies.
Replacing nation states was the principal purpose of using Bitcoin for Sip. Using Bitcoin he said, would ‘starve the beast’, by which he meant depriving governments of the capacity to issue money and set monetary policy which would ultimately occasion their downfall. Bitcoin could replace the role played by the state in monetary systems, Sip believed. In this envisioned future, monetary policy would be set not by a particular group in control of a centralised institution, but through the ‘decentralised consensus’ of all those using the monetary system. ‘Decentralised consensus’ in this context refers to the way in which the aggregate choices of Bitcoin users determine changes in the network. For Sip and other Bitcoin enthusiasts,77 this entails that the core algorithm automatically favours the will of the majority in the network. In practice, the algorithm responds only to the automated activities of machines that have been programmed to ‘mine’ Bitcoin, such as the ‘mining rig’ described above. To say the majority is favoured in this context means only that the majority of hashing power in the network is required for any changes to the core algorithm to be accepted. That is to say, if the machines that collectively generate 50% of the network’s computational power accept a change, the change will be made. At the time of writing there are no official figures for the number of people operating such mining devices, but it has been found that 50% of the total computational power on the network is operated by only three professional ‘mining’ companies.78 ‘Decentralised consensus’ as defined by Sip attributes a ‘democratic’ meaning to Bitcoin, perceiving that its architecture ensures a distribution of power by requiring more than half of its users to accept any proposed changes. In reality, only three businesses need to cooperate for such a process to occur. For Sip however, Bitcoin has proven that a computer network can effectively react to the will of the majority, and this contains exciting possibilities for post-state politics.
76 ‘Enormous feats of quick adaptation are required of all of us just to respond to the requirements new technology casts upon us each day. In the writings of cyber-libertarians those able to rise to the challenge are champions of the coming millennium. The rest are fated to languish in the dust’ (1997: 15) 77 See below, section 6.1.2 78 This figure is taken from Hileman & Rauchs (2017: 90). 171
Another feature that enhances this ‘democratic’ potential for Bitcoin, is its open source code.
With the Bitcoin network, Sip explained, people are able to scrutinise the functioning of the system, and are free to choose between changes to the system and alternatives to it. ‘Bitcoin is about transparency and control, or check, by the public,’ Sip said, ‘anybody can check.’ This is made possible through the availability of Bitcoin’s source code. As the protocol is open source, people can study it, propose changes, and construct alternative versions. Implicit in this logic is that the continued use of Bitcoin in its dominant form represents an ongoing consensus among users. As the number of Bitcoin users grows, its open source aspect in this way appears to validate Bitcoin’s current technical form. For Sip, this includes its in-built monetary policy.
As Sip described Bitcoin, he outlined a synthesis of technical and economic components:
Bitcoin is actually a system from different crucial parts: it is open source, cryptography, public ledger, and it is monetary theory, hard money theory – inflationary, but with a limited supply at the end.
The continued use of Bitcoin in its dominant form demonstrates an ongoing justification for its current functionality, including its ‘hard money’ component. This is the first sense in which Bitcoin acts to reinforce particular beliefs. The functionality of Bitcoin and its increasing use across various contexts transform the meaning of hard money theory for Sip. Bitcoin’s functionality reflects this theory back to Sip in technical form, consequently taking on the authority and political neutrality of scientific discourse. To borrow from Latour’s vocabulary, Bitcoin here becomes a mediator, transforming the meanings it was meant to carry between agents. Sip’s experiences with Bitcoin exhibit this process.
Sip’s initial interest in Bitcoin had stemmed from his engagement with ‘hard money theory’, an interest he described was initially an intellectual pursuit, but one that has come to define his understanding of economic systems: 172
I felt that when the state has power over money, the state uses this power to screw the economy. You know the path, the government is taking a lot of debt, creating a lot of inflation, banks and big financial institutions are feeding on this inflation, and it really screws the economy… The plain is not level: banks are in the surplus and everyone else is in the deficit, each year. So first it is sucking the purchasing power from the common people, and the second thing it is creating these bubbles and long term collapses.
This system, Sip asserted, is evil. ‘The monetary system is evil because this is its long term dynamic. I don’t really care that they are taking two or three percent from me, but the consequences long term are really serious.’ Economic crises were understood by Sip as the result of governments manipulating markets. Such activity is inevitable within the current economic system, Sip believed, as governments are able to influence monetary policy via central banks. ‘Hard money theory’ presents a solution to this process by advocating a hard limit to the amount of money that can be created in a given economic system. This research into monetary theory, Sip explained, gave him the necessary grounding to properly appreciate Bitcoin when it emerged:
I got interested in money, in monetary systems, in the beginning in speculation. Then I discovered how the system works, the monetary system and the central banks and banks and these things, then I discovered the Austrian school. Then I discovered gold, because before I didn't get why gold is so special, and when I understood gold, and Bitcoin came along, I had a lot of theoretical knowledge to understand why it is a breakthrough.
Gold was enlightening for Sip as it represented the most successful example of hard money theory. As he explained, gold derives its value from the market, independently from governments. In a gold standard system, all money would be directly convertible to gold. As there is a limited supply of gold in the world, governments would then be unable to create new money or initiate inflationary spirals. However, Sip saw that certain features of gold mean it is unsuitable as a ‘hard reserve’ in an age of electronic commerce: 173
I had been thinking about gold, very hard, why it is a really good thing, good money, but I also felt that it was very hard to make transactions with it because we live now in a global, digital, online world, and anything physical, any physical money, cannot be brought around really fast.
Sip saw in Bitcoin the properties that made gold effective as a form of money, primarily its ability to maintain value independently from governments. Its ability to do so was understood in comparison to gold, as there is a limited supply of Bitcoins just as there is a finite quantity of gold in the world. Bitcoin’s limited supply feature is written into its core algorithm and, due to its supposed ‘decentralised consensus’ feature, Sip understands, this cannot be changed to suit the interests of an elite minority. The scarcity and independent value of Bitcoins are therefore considered digital assets, comparable to a new form of gold suitable to modern digitally-powered markets. The Bitcoin network across which these assets are exchanged consequently represents more than a currency, it constitutes an alternative monetary system. In this alternative system, all money would be linked to value not determined by the actions of nation states but by Bitcoin’s ‘intrinsic’ qualities.
For Sip and others at ICA, Bitcoin represents a new era in economic systems due to its innovative features. Firstly, its peer-to-peer structure makes Bitcoin ‘unstoppable’, as servers around the world maintain it and there is, supposedly, no single centre of power.79 Secondly, its ‘decentralised consensus’ feature is understood to make Bitcoin answerable to its users rather than the interests of a privileged elite. Thirdly, Bitcoin’s finite supply feature is understood to ensure that it cannot lead to damaging cycles of inflation and devaluation. Finally, its open source protocol ensures Bitcoin is subject to the competitive forces of a free market in which users are free to choose between proposed changes to Bitcoin, and alternative crypto-currency projects. These characteristics signal to Sip that Bitcoin is set to become a new gold standard, a new global reserve currency:
Bitcoin is a proof-of-concept that actually works, and it is very successful, and if nothing bad happens then the Bitcoins will be the reserve currency which will replace
79 It is worth noting here that Hileman & Rauchs’ study also found that 58% of major mining businesses are based in China (2017: 93). This de facto places the majority of hashing power in the Bitcoin network within the regulatory domain of a nominally communist regime. 174
the dollar. And these [alternative crypto-currency] projects are actually experimentations, trying to make new features, and we really need this. When any new technology appears, you really need to prove that the first solution is the good solution, or the only solution, or a good enough solution. So that’s why I think Bitcoin is here to stay.
Here Sip illustrates how the expanding use of Bitcoin serves to reinforce his conviction in libertarian ideology. Bitcoin demonstrates to Sip that the libertarian principles of ‘Austrian School’ economics work. The idea that money is a commodity that derives its value from the market, requiring no state regulation, is a theory that Sip encountered and continued to study during his interactions with Bitcoin. In Bitcoin this theory takes on a new technical form. Bitcoin becomes ‘a proof-of-concept’, strengthening Sip’s conviction in the validity of libertarian monetary theory.80 This is the sense in which Bitcoin acts as a mediator. Sip’s engagement with libertarian monetary theory was initially an intellectual pursuit in which he engaged with ideas via intermediaries such as texts and devices. Bitcoin also carried these meanings yet had also transformed and modified them, presenting them to Sip in a tangible, technical form.
In addition to the transformation of libertarian theory into a technical phenomenon, the expanding network of Bitcoin users also strengthened Sip’s convictions in libertarianism. The growth of Bitcoin’s network of users is interpreted as a verification of its core features: it is implied that users are turning to Bitcoin rather than other crypto-currencies because it is technically superior. As discussed above, these features are a manifestation of ‘hard money theory’ for Sip, and so this theory is also shown to be superior in the process.
Sip’s experiences with Bitcoin influenced him to learn more about the ‘hard money theory’ that it appeared to verify. Conversely, a grounding in free market economics was initially necessary for Sip to understand the functionality and purpose of Bitcoin. For Sip personally, the limited supply function of Bitcoin was understood through the prism of hard money theory; and the open source aspect of Bitcoin understood through the logic of free market competition. These experiences led Sip to recognise that certain forms of knowledge were
80 For a detailed account of libertarian monetary theory, see Dodd (2014: 17-23). 175
necessary for people to understand and use Bitcoin. For this reason, he organised weekly public events at ICA.
Sip’s weekly Bitcoin events at ICA aim to provide a space for people to regularly learn and engage with Bitcoin. Sip’s objective is to promote the use of Bitcoin by providing a ‘lighthouse’ for those interested in it:
I call it a lighthouse because it attracts people and it’s seen from far and gains a lot of attention from the media, that’s why I call it a lighthouse, and anybody who has already heard about Bitcoin and wants to know more about Bitcoin will naturally come here.
Sip contacts people from across Europe to lead discussions on Bitcoin at ICA. These take place in a conference hall on the third floor of the building. These events are important, Sip said, not only to share knowledge about recent developments in Bitcoin, but to make them accessible to Czech people. On the internet, he explained, most information regarding Bitcoin is in English. This makes it hard for people who cannot read English or listen to it directly. Furthermore, Sip complained that the Czech media don’t report on Bitcoin. ‘We don’t have Coindesk here,’ Sip explained, referring to a popular news site for Bitcoin enthusiasts, ‘or Bloomberg, or CNN.’ Sip engages with these media stations and shares their stories with the regular attendees at his events. Sip also runs a Facebook group to share information on Bitcoin, yet stressed the importance of face-to-face meetings. It was important to build a ‘community’ that could help each other, and introduce new people to Bitcoin. For this reason, after each weekly presentation, the group have follow-up discussions on the ground floor.
We come down and have decentralised discussions here, in ad-hoc groups as I call it. It’s nothing special, but the community is slowly building up. It’s good that it’s regular because people can get used to that every Tuesday, they can learn something new, and they can discuss what they were thinking during the week or if they had a problem implementing Bitcoin and so on. 176
Sharing technical knowledge was an important feature of the weekly meetings. With a corresponding use of social media, Sip aimed at building a social network of capable Bitcoin users. Describing himself as a ‘fanatic’, Sip placed himself at the ideological end of a spectrum within the ‘Bitcoin community’, someone that engages with the broader questions regarding economics and theories of how societies evolve. Sip described this as part of his role at ICA. Most people, he explained, do not have the time or the inclination to study Bitcoin so intensely. Their interests are more immediate and practical, Sip said, primarily concerned with how to make money, and how to use Bitcoin.
So it’s really a spectrum of people that is really wide and I think I am a fanatic, in the sense I think now about Bitcoins and a lot of things about society and life and monetary theory and economics, I have been thinking now for four years, since 2011, and every day I am trying to find something new that will push me further. I’m giving a lot of energy to this so I think a lot of people can’t make such an effort as I do.
Sip held a respected position within the social network he had cultivated. As the organiser of events he coordinated the structure and content of the weekly activities, and became recognised as an authority on Bitcoin. On attending one of the meetings, I asked the group about the issue of trust when using Bitcoin. ‘Most people trust Bitcoin because they understand it [technically]’, said one attendee, ‘I trust Martin!’ While this was little more than a friendly acknowledgement of Sip’s contribution to the group, it underlined the observable position Sip held as a source of knowledge. Sip was keen to stress that this did not give him a privileged position. ICA was a space for ‘building bridges’ he asserted, not ‘pushing forward your theories’. Crypto-anarchy, he explained, was not a political ideology but a practice-oriented strategy to help liberate people from various kinds of oppression through equipping them with new tools. For some at ICA, he said, the ‘starting point’ is 3D printing. In the basement, across from the Bitcoin mining rig was a 3D printer, with various printed objects scattered around it. For others, the starting point was alternative cinema, or artistic projects constructed from recycled material. Posters relating to both of these activities decorated the walls of ICA. In each case, emphasis was placed on the sharing of knowledge between individuals that carry a variety of interests and motives. Reflective of the peer-to-peer technologies they advocate, those at ICA perceive it as a ‘platform’ for new 177
technical practices to develop outside the purview and control of nation states. The emphasis placed on diversity here appeared to underlie Sip’s claim that ICA was not a space characterised by a particular political ideology. The anti-state position of ICA unified all these practices however, and this was rigidly adhered to. This politics was particularly clear in the Bitcoin workshops.
A tension emerged in a Bitcoin workshop which appeared to denote boundaries of acceptable Bitcoin usage. I had raised the possibility of governments or political parties using Bitcoin technology to establish a crypto-currency as a form of national currency, an idea that had been floated by the then finance minister of Greece, Yanis Varoufakis, as a means of alleviating austerity.81 ‘Bullshit,’ Sip responded. The rest of the group agreed. ‘Bitcoin and block chain technology are about decentralisation’ Sip affirmed, and this apparently was deemed incompatible with governments of any kind. ‘Decentralisation’ in this context thus signified both the technical architecture of Bitcoin and the ideological imperative to ‘liberate’ individuals from nation states. The same hostility was not directed toward businesses. ICA itself was privately funded, due to the anti-government ethic of its founders, as Sip explained,
They are private sponsors because Ztohoven said they don’t want to take any money from the government and since they are not rich, they needed to persuade individual people, entrepreneurs, to donate regularly to this project.
The sources of funding were obscure, beyond this assertion. What was clear was the imperative to construct a space free from the authority of the state: a ‘parallel society’, or Paralelni Polis in which Bitcoin played a fundamental role. Each practice and device at ICA contributes to this aim: the Bitcoin ATM allowing people to exchange their cash for Bitcoins via various ‘wallet’ technologies; the point-of-sale machines allowing them to spend Bitcoins as money; the mining rig servicing the Bitcoin network; the events educating people on ways to use Bitcoin; the development of a social network of capable Bitcoin users, and the use of social media to facilitate this. These activities bring together technical practices with
81 Varoufakis’ proposal available here: https://yanisvaroufakis.eu/2014/02/15/bitcoin-a-flawed- currency-blueprint-with-a-potentially-useful-application-for-the-eurozone/ (accessed 13/10/16) 178
libertarian ideology and, as Sip’s experiences suggest, these can be mutually reinforcing. In this way Bitcoin acts as an agent in the cyber-libertarian network being constructed at ICA. Actors such as Sip attach meanings to Bitcoin, yet Bitcoin correspondingly carries and transforms meanings for actors, inducing a process in which technical practices and specific forms of knowledge generation motivate one another. This process was also observed among those at Bitcoin Manchester.
6.1.2 Bitcoin Manchester
Bitcoin Manchester (BM) is a group of Bitcoin enthusiasts that meet monthly to share knowledge and educate new users regarding Bitcoin-related practices. As with Martin Sip, many at BM share an understanding that Bitcoin will ultimately become a new global reserve currency. Their experiences also demonstrate a similar learning process, bringing together technical knowledge and libertarian theory and stimulated by grievances with the existing economic system. Once more, Bitcoin can be seen as mediator and a nonhuman actor, transporting and transforming meanings in the co-production of sociotechnical networks.
Ash Moran is the co-founder of the BM meet-up group. Grievances Moran held with the financial system inspired him to learn more about the way it works, and this led to his initial discovery of Bitcoin. YouTube videos, such as ‘Money is Debt’ by Paul Grignon, and those of libertarian US politician Ron Paul, led him to the works of key figures in ‘Austrian School’ economics, such as Carl Menger and Murray Rothbard. Learning ‘why the monetary system is so broken and fraudulent’ clarified matters for Moran, but left him feeling despondent. ‘I actually got depressed, the weight of realising just how fucked up the financial system is’ Moran said, ‘it was a real blow to me because I didn’t realise just how badly people suffer from having wealth extracted out into, basically, bankers pockets’. This process, he argued, was occasioned any time a bank issued more credit than it held in reserve. This is known as fractional reserve banking and, Moran explained, it lies at the heart of economic injustice. Moran provided a comprehensive account of this process, detailing how it effectively allows 179
banks to issue money, reducing the purchasing power of existing money and creating economic bubbles. When one of his friends, a fellow software developer, told Moran of Bitcoin, it fascinated him as it appeared to provide the answers he had been looking for.
When I realised that Bitcoin actually solves the problem of fractional reserve fraud, my eyes just went wide open. For the simple reason that it changes the way money is created. I was instantly convinced. I mean, I basically had to demonstrate that it was going to work, but for me it didn’t need anything else because that was the most important thing in the way the world works.
Frustrated with his friend for not telling him sooner, Bitcoin addressed Moran’s grievances as it presented a new monetary system in which the rate of money issued was finite and controlled by the system itself. This was important for him as it minimised peoples’ dependence on financial institutions, institutions which had in recent years become increasingly irresponsible and corrupt. The 2008 financial crisis had demonstrated this for Moran, yet he described how banks had long abused the trust placed in them, making such crises endemic to the contemporary structure of the financial system. To explain this, Moran spoke at length on the historical evolution of money.
The way the current banking system works is based on trust. In the past, a long time ago, there was, like there is now, small scale private debt. Well, we had barter, and then, once you go beyond immediate transaction of goods, then you can have small scale private debt. So you could say, OK I will give you ten bushels of wheat now if you give me two goats next month and there was a debt there. That's quite small scale. Then when it finally started working on a larger scale, gold and silver started to emerge as the two main commodities used as currency.
Here, Moran was expressing Carl Menger’s (1892) account of the origin of money, which makes the decisive assumption that money originated as a commodity in the market. The theory is based on a philosophical inquiry into why individuals would value a commodity that has little use value. The argument put forward by Menger starts from the supposition that barter is the most primitive form of exchange. In such situations of barter, Menger 180
claims, there would inevitably be a problematic ‘double coincidence of wants’ as Moran describes, where one individual would not want to directly or immediately exchange his possessions for those of another individual. Consequently, particular commodities emerged containing properties that made them suitable to stand in as a medium of exchange. As Moran went on to explain, gold is a very dense metal that is incredibly difficult to forge. It’s also fungible, one piece of gold is exactly the same as any other piece of gold given the same weight. And, Moran explained, it can also be divided fairly easily, and is particularly scarce. In this way, gold is perceived as possessing intrinsic value as money. Gold thus ‘evolved’ as money through these historical processes of individual choice. Moran went on to describe how banks emerged as secure organisations for the storage of gold, and as people began to exchange cheques that represented gold, rather than the gold itself, trust was increasingly shifted from gold to banks themselves:
And this is where it all went really really wrong, because instead of governments clamping down and saying 'we want to strictly enforce that every claim cheque is matched with the gold that it's supposed to redeem' it was effectively legalised that banks could issue more of these claim cheques than the gold that they had. It became institutionalised. It's the way the financial system started to work. And this trust is embedded deeply in the way it works. So it's impossible with the current system of trust to know effectively how much real wealth there is backing the actual loans that are out there.
Moran’s understanding of the financial system thus echoed that of Martin Sip, one informed by the libertarian theory of Austrian School economists such as Carl Menger. Moran understood the financial system to be predicated on the exponential expansion of credit, yet this credit must be backed by precious metals with historically justified value. Currently, Moran stressed, it is backed by a legal framework that can, and often is, manipulated to suit the interests of elites. Were a gold standard to replace this legal structure, it would reinstate 181
a reserve currency system of ‘hard money’. This would ensure each loan and bond issued by banks was backed by ‘true value’.82
Like Sip, Moran described the functionality of Bitcoin in terms analogous to gold. Bitcoin’s finite supply function and independence from financial institutions meant it represented a new technological opportunity to reinstate a monetary system based on the logic of limited supply. Moran’s shared the same grievances as Sip, as well as identifying the same solution: an economic system based on a new global reserve currency of limited supply. It was understood that this would prevent the exponential amounts of debt creation in societies across the world. This concern also was shared by other attendees of the BM group.
José Roco had first encountered Bitcoin as a means to donate to Wikileaks. Having been concerned by the Edward Snowden revelations, he found that people were able to support both Wikileaks and Snowden using Bitcoin. ‘Then I got in love with the idea of a technology that could eventually replace the financial system that is failing in what it should do,’ Roco said. The white paper outlining the initial design for Bitcoin is readily available at multiple sites on the internet, and it was in reading this text that Roco first understood the purpose and potential for Bitcoin. While stating that he did not always fully understand the mathematical aspects of the text, the idea of a new monetary system without banks appealed, and he sought support for understanding its technical aspects from friends whose knowledge of maths he respected. The purpose outlined in the white paper appealed to Roco, as it appeared to offer an alternative to the existing financial system:
At the moment with the financial system you have no control, it’s a centralised system that is not allowing you to participate, and anyone, good or bad, can participate in Bitcoin and will be accepted by the Bitcoin network. But the way the financial system is designed, it’s just like, you have a centralised power that regulates and then you have concentric circles and the closer you are to the core of these circles, to the
82 For a debunking of this libertarian theory of ‘commodity money’, see Pettifor (2017: 15-39). For a specific debunking of Carl Menger’s origin myth of money, see Dodd (2014: 17-23), and Graeber (2012). Dodd, Graeber, and Pettifor argue that money exists as a ‘social relationship’ ultimately founded on trust and the capacity of nation states to enforce law. As Pettifor states, money is a measure of trust in an economy, ‘not the thing for which we exchange goods and services but by which we undertake this exchange… Money is not, and never has been, a commodity’ (2017: 19) 182
centre, the more powerful you are, the more wrongdoing you can do, and the more abuse you can do. And that’s what happens really, you know? And you see how the regulator protects those financial institutions by giving them money when they go completely bankrupt, saving them and rescuing them, and allowing them to keep doing what they are doing. Like, I don’t think anybody could say that what happened in 2008 won’t happen again, because nothing has changed.
The design for Bitcoin answered José’s concerns with a financial system that had ‘failed in its social role’. Roco identified a concentration of power among banks and governments which had caused the financial crisis, allowing ‘elites’ to profit immensely at the expense of the people. Pushing more and more people into debt, Roco explained, banks profited while at the same time creating the conditions for financial collapse. Bitcoin presented an alternative to the structure of this financial system, one of ‘decentralised’ power. Crucially, Roco said, it presented a system in which debt was entirely controlled, written into the technical architecture of the system itself:
With Bitcoin you cannot create debt like you can now… there are a limited amount of Bitcoins. You cannot create Bitcoins, once they have solved all the mathematical equations you will have a limited amount of Bitcoins… This is kind of like going back to gold coins, you know? There’s [only] a certain amount of gold in the world.
This particular concern and interpretation of debt creation was echoed by the four other BM research participants in the opening stages of their interviews. In each case, participants expressed how these concerns had coincided with their discovery of Bitcoin. Motivated to learn more about the injustices of the financial system, their findings helped them to appreciate Bitcoin. In turn, their discovery of Bitcoin motivated them to learn more about monetary systems. Each participant also used the analogy of gold to explain Bitcoin’s principal function of limited supply. As with Martin Sip, they identified Bitcoin as a significant upgrade on gold as it exists within a globally connected computer network.
The technical features of Bitcoin were significant for Roco. The financial system was deemed to be ‘closed’ and ‘centralised’, whereas Bitcoin was explained in terms of its openness. As 183
an open source technology, the technical architecture of Bitcoin was seen to be open to scrutiny, and run by a ‘community’ of volunteers. Roco compared Bitcoin to the open source operating system Linux in this way, stating ‘[Linux] supports the commons, supports the people, so it’s quite empowering.’ Roco explained how Linux is run by a ‘community, which is a minority, very active, who put it to the test, they examine, they read.’
You can actually see what’s going on in your machine. If you want to learn, you know, you could actually open it and see what is going on. And be very proactive. And I think Bitcoin is linked to that, you know, kind of people, to that community.
Interpreting both the financial system and Bitcoin in technical terms, Roco explained that Bitcoin is more open as each aspect of its functionality is accessible to users. The open source aspect of Bitcoin places it in opposition to conventional ‘closed’ systems. It presents an open technology that it can be run by a ‘community’, owned by a ‘commons’, and representative of ‘the people’.
The open source aspect of Bitcoin is understood by those at BM to significantly decrease the necessity to trust financial institutions while also empowering individuals by allowing them to assess and participate in the running of the system themselves. Max Flores, who co- founded the Bitcoin Manchester group with Ash Moran, explained how the open source aspect of Bitcoin made it feel more secure to him than using banks:
I feel more secure with [Bitcoin] than I do with somebody logging on to my account remotely. Not everyone might feel the same way, but I have more faith in it because I know the math behind it, I’ve seen the security behind it.
Max echoes here the central claim of the Nakamoto white paper: the superiority of cryptography over ‘trust-based’ systems. In this context open source represents a ‘decentralisation of trust’ as it allows individuals to examine the security measures for themselves. Open source was in this way explained in terms of transparency. While many people may not fully understand the functionality of Bitcoin, the very fact that its functionality is open to scrutiny is held to entail that the kinds of corruption observed 184
among financial institutions will be deterred and, should it arise, punished by market forces as individuals turn to alternatives en masse.
Bitcoin’s openness to market forces was a key feature of the technology for those at BM. As the technical systems employed by financial institutions are ‘closed’ systems, they are perceived to be less likely to be driven by competition. Jon Harrison, a Bitcoin entrepreneur and attendee of the BM group, expressed this clearly when discussing ‘altcoins’ – adaptations of Bitcoin that modify the source code to offer alternative ‘crypto-currencies’:
As a lot of Bitcoiners are libertarians, or they believe in capitalism, like true capitalism, they believe in the free market and they think, you know, if someone can create something better then, you know, let all the altcoins fight it out and if someone makes an improved version, it deserves to do well and beat Bitcoin eventually.
Such adaptations can thus strengthen the conviction that Bitcoin in its original form is the most effective, suitable, and necessary of many newly emerging monetary systems. The increasing range of altcoins and other adaptations of the technology act in this way to vindicate the superiority of Bitcoin, given its continuing dominance over other altcoins in terms of usage and market price. This also advances the perception that Bitcoin is ‘evolving’ as money via the same historical processes that led to the emergence of gold as a valuable commodity. As with precious metals, more individuals in the market are choosing to use Bitcoin as money instead of the various alternatives because of its intrinsic features.
Bitcoin is described by those at BM as ushering in a new stage in economic history. Moran put this succinctly, stating “we had trust in people, then trust in metals, then trust in banks, which is the one that’s clearly proven not to work, but now we have trust in cryptography”. Although those at BM did not use the term, this new era is essentially the cyber-libertarian vision of ‘crypto-anarchy’: overbearing political institutions become less and less relevant as free individuals interact through decentralised computer networks. Due to the concatenation of its various technical features, Bitcoin represents this historical breakthrough. As Harrison stated: 185
They had Hashcash and stuff like DigiGold (or something like that) where they try and make a digital version of gold but it has never been possible because they've never been able to decentralise it. So yeah, Bitcoin turns up and it's fungible, divisible, kind of anonymous, limited in supply, and very easy to transfer, and there's no limits, and it's decentralised, there's no single point of attack. So it just hit everything, it nails everything.
Harrison articulated how Bitcoin realises the libertarian desire for a truly free market. Various other forms of money require large institutions which inevitably lead to concentrations of power with the potential to distort markets. Bitcoin provides a non- institutional form of money. No banks are required, and no governments can intervene:
You could be in North Korea. You could be a little girl in North Korea, and you could wire five million pounds to someone in Iran and no one could stop you. So if you believe in free trade, Bitcoin is the purest form of free trade that has ever existed.
For these research participants, the functionality of Bitcoin forms a particular relationship with libertarian ideology. That Bitcoin represents a new digitised version of gold for some libertarian social groups is something that has been found in various studies.83 As a meaning attached to Bitcoin in a process of social construction, the understanding of Bitcoin as ‘digital gold’ draws on a specific strand of libertarian theory and ideology. While research participants often struggled to recall whether their interest in ‘monetary theory’ preceded or followed their discovery of Bitcoin, it was evident that in each case the two pursuits informed and motivated one another. Knowledge of libertarian monetary theory allowed these Bitcoin users to appreciate and understand the technology, and at the same time, knowledge of technology allowed them to appreciate the pertinence of libertarian ideas.
When reflecting on the social impact of Bitcoin as a ‘decentralised technology’, Max Flores articulated a sense that libertarian ideas and values were increasing in relevance. In societies dominated by centralised and closed systems, Flores stated, libertarian ideas, while
83 See Dodd (2014: 362-72); Owen (2015: 67-97); Golumbia (2016: 14-26). Most non-academic publications also define Bitcoin as ‘digital gold’ (Popper, 2015; Vigna & Casey, 2015), some uncritically reiterating libertarian arguments (e.g. Frisby, 2014). 186
exposing flaws in conventional systems, were easily dismissed. The rise of decentralised technologies changes this however, as they demonstrate the effectiveness of systems based on individual responsibility:
I would say a lot of people are tempted to laugh at libertarian viewpoints and stuff like that, when it comes to speaking to a lot of the community you can see why! Sometimes it is a little bit ‘oh wow’, it’s pretty hard to identify with people when there’s so many strange people in all these different groups. But there’s weirdos everywhere. I’d say now we’ve seen this technology, I think a lot of it before had these far out ideas but none of them worked, but what we have now in these kinds of systems, we can actually decentralise more and more, and that wasn’t possible before. So it might actually, some of the really far out ideas of people with these views might actually work better than expected because of decentralised technology.
Like those at ICA, for those at BM Bitcoin is the mainspring of a shift toward decentralised technologies, demonstrating the effectiveness of networks that function without central servers, allowing individuals to interact freely without the coercive presence of institutional authority. Bitcoin’s functionality as money demonstrates in this way that libertarian monetary theory works. Libertarian ideas are perceived as more suited to, and thus justified by, new technical practices. In this reading of technological change we again see a technology/ideology relationship, in which each informs and vindicates the other. This is further evidenced in the practices of the BM group.
Research participants in Manchester shared a common understanding of Bitcoin as a superior form of money and their practices reflected this. Responding to the question, ‘do you remember the first time you used Bitcoin?’, Ash Moran spoke of how he had first spent Bitcoins, at a Bitcoin conference in London to purchase a Bitcoin magazine and two Casascius physical Bitcoins, metal coins inscribed with a private key.84 From then on, whenever the option was available, Moran paid for goods and services online using Bitcoin to advance its use as a monetary system. Answering the same question, Max Flores
84 Casascius coins function in much the same way as the ‘paper wallets’ described above, in section 6.1.1. A Bitcoin ‘address’ and ‘private key’ are imprinted onto the physical coin and this data can then be used to make transactions on the Bitcoin network. 187
explained how he used Bitcoin to store and transfer value: ‘Yeah just to send money to friends across borders and stuff like that usually. Also, it’s a store of value, I put my wages into Bitcoin.’ Max explained that while Bitcoin’s market price may currently be volatile, its technical features make it suitable as a store of value long-term,
At one point, I was just going to buy myself loads of gold but then Bitcoin came along and I thought, ah, that works as well… It’s not doing very well right now but overall it’s one of the best solutions to store value. The longer it stays around as a system the more faith people will have in it as a store of value. And it’s not going to disappear overnight.
Due to its limited supply feature and decentralised architecture, Max explained, Bitcoin is more secure than banks as a store of value. Like Martin Sip, Flores envisaged ‘the digitisation of national currencies onto the block chain,’ a possible future in which Bitcoin becomes a global reserve currency, a new gold standard. Describing a network effect, Max described how the value of Bitcoin will increase the more people use it as a medium of exchange and store of value. By putting his wages into Bitcoin, Max was risking short term price fluctuations to contribute to this long term development of Bitcoin as a stable monetary system. In a word, his conviction in this future overcame the risks of the present.
José Roco’s practices also demonstrated his conviction in Bitcoin’s future as a global monetary system. As more people use Bitcoin, Roco explained, it will overtake other forms of currency. Accordingly, Roco uses Bitcoin to send money to his relatives in Spain and to purchase goods online. ‘I’m not investing, I’m just using it’, he explained, ‘I’m not investing massive amounts of money, I don’t have massive amounts of money. It’s a way to pay for things.’ Retailers online that accept Bitcoin are mostly those selling computers and gadgets, Roco said, but more businesses will start to accept Bitcoin as it grows. In this way, Roco believes that Bitcoin is in an early stage of development comparable to email in the early 1990s: ‘in 1994 they will say, who the hell needs an email? And now everything is done by email.’ Not many people understand Bitcoin currently, but Roco stated that when they do, more people will use it and Bitcoin will change the financial system. 188
To keep up to date with new developments, Roco attends the BM meet-ups in Manchester. For Roco, this is an important space for learning the new technical practices continually emerging around Bitcoin. Wallet technologies are key in this respect, as they allow users to send, receive and store Bitcoins without downloading a full node.85 For this reason, they can be downloaded onto small devices such as mobile phones. José explained the role Moran and Flores played in informing him of new developments in wallet technologies:
Well, the way I use it is that, I used to use Blockchain [a Bitcoin wallet] until last Monday when they told me Blockchain is not safe anymore! So now there is this new app, Green Address.
On attending one of the meet-ups, Moran and Flores also helped me to set up a Green Address wallet. Such assistance with basic Bitcoin practices is an important part of the BM meet-ups and, as Moran explained, was one of the primary reasons for initially establishing the group. The use of Bitcoin as money involves considerable risks due to its price volatility and the devices available for storing value. These risks are weighed against speculations on Bitcoin’s future value, and at BM meet-ups a frequent line of advice for newcomers was to not invest more than you can afford to lose. Moran and Flores however expressed an understanding of Bitcoin’s technical architecture, and its in-built monetary policy, which dispelled any short-term concerns in Bitcoin’s development.
When Moran first started to use Bitcoin there were many difficulties. Obtaining Bitcoins involved online exchange services that required a certain degree of familiarity with software interfaces and currency trading:
It’s been hard to actually get hold of Bitcoins, so there have been exchanges, Mt Gox in its day was quite easy to use, if you were comfortable using a financial trading platform, which for most people is a completely novel concept, and well, it was for me!
85 A ‘full node’ program downloads the entire block chain public ledger, contributing to the validation of transaction data. In Bitcoin’s original design all users were envisaged to use full nodes as ‘wallets’, ensuring all users contribute to, and share a stake in, the network as a whole (see chapter four). Many ‘wallet’ devices have since emerged that function as a means of storing, sending, and receiving Bitcoins without downloading the full node program. 189
Over time, more interfaces for using Bitcoins have been developed by entrepreneurs. An interface for accessing Bitcoin constitutes any mediating software program that allows users of the Bitcoin network to operate their ‘addresses’ and ‘private keys’ without downloading a ‘full node’. As outlined in chapter four, the original design for Bitcoin proposed a network in which each user would operate a full node, downloading the Bitcoin core algorithm, simultaneously becoming a user and a ‘miner’. Bitcoin as a program would then be operated on the personal hardware devices of users across the network, making each user an equal participant in the network’s maintenance and development. As the ‘block chain’ has grown in size however, downloading a full node onto personal hardware devices has become increasingly unfeasible for most users. Interfaces, such as digital wallets, have therefore been designed to allow users the partial access they need to operate their accounts. The rise of these interfaces, as well as the concentration of mining devices within mining companies noted above, are increasingly placing Bitcoin’s ‘decentralised’ purpose at odds with its actual use by clustering the number of ‘full nodes’ within particular groups and locations.
While many interfaces continue to emerge, their successes vary and many still require certain levels of familiarity with technical and financial practices. For this reason, Bitcoin events were particularly important spaces for learning the practices necessary for using Bitcoin. Moran and Flores had themselves met at a Bitcoin conference in London and, on seeing each other by chance at a later date in Manchester, discussed the idea of creating a space for similar events there. As Flores explained, the practice of interacting with Bitcoin devices around fellow enthusiasts was key to fostering the skills necessary to use Bitcoin effectively:
You can sit down all day and talk to people but until they actually see it being used in a real world situation it’s just all nonsense essentially… The best way to describe it to someone is to show them funds getting sent from one wallet to another or something. And people are like, ‘is that it?’ and that’s the kind of response you’re looking for, you know?
The subject of BM meet-ups reflected this aim to help inform enthusiasts on the basic practices for engaging with the technology. Early meet-ups oriented around explaining the 190
functionality of the Bitcoin network and the various devices with which to use it. Each meet- up included complimentary pizza, which Moran and Flores purchased online on the night from a vendor that accepted payments in Bitcoin. Further goals of BM were to promote Bitcoin and educate various interested parties on its benefits and risks.86 Communicating the purpose of Bitcoin was an integral part of this aim.
Figure 11 - Activism in the Digital Age
Ash Moran of Bitcoin Manchester speaking at ‘Activism in the Digital Age’. [Image credit: Politika at Upper Space]87
To promote the use of Bitcoin, Moran and Flores took part in an event called Activism in the Digital Age, part of a series of workshops and exhibitions aimed at questioning the role of
86 These goals are stated on BM’s website, available at http://www.bitcoinmanchester.org.uk/about/ (accessed 13/10/16) 87 Available at http://upper-space.org/politika-activism-digital-age/bitcoin_2/ (accessed 13/10/16) 191
art and citizenship in consumer society. Moran’s presentation focused on conveying the purpose of Bitcoin. Moran defined Bitcoin in opposition to ‘fiat money’, money issued by governments. He described the social impact of fiat money and how it serves a financial system committed to debt-creation which is not backed by ‘true value’. As outlined above, this knowledge informed Moran’s understanding of Bitcoin. Libertarian monetary theory was in this way an integral part of explaining Bitcoin to new users as it gave meaning to Bitcoin’s functionality.
As with Sip, Moran’s personal commitment to libertarianism and use of Bitcoin had grown as part of the same learning process. As Moran stated, ‘Bitcoin makes you re-evaluate money, and then when you start understanding how economics works, it questions a lot about the way a whole society and politics are structured as well.’ For Moran, using Bitcoin involved knowledge of technical and social systems and this was reflected in the way he communicated the purpose of Bitcoin to new audiences. As the lead organiser of BM, communicating the purpose of Bitcoin was a key responsibility that extended beyond the meet-ups.
Moran frequently sought out business owners who had indicated a potential interest in promoting or accepting Bitcoin as currency. On one occasion, I joined a visit to a local shop owner that had expressed an interest in Bitcoin. Jon Harrison was a friend of Moran and ran Satoshi Point, a company operating Bitcoin ATMs. The shop owner was already quite knowledgeable of Bitcoin, and quickly agreed in principle to install one of Harrison’s Bitcoin ATMs. Moran later said that such occasions did not usually go as smoothly. ‘Despite our best efforts. We’ve had a few people show some interest but it has kind of fizzled out. We believe there might be a chip shop in Chorlton that accepts Bitcoins that we haven’t spoken to yet. There might be a sushi place as well.’ The problem, Moran explained, was that business owners rarely understood the purpose of Bitcoin and its potential as a new monetary system.
Unless the business owner himself has got an interest in Bitcoin then their efforts to implement Bitcoin won’t be that effective. Because right now you have to be using Bitcoin some way in a speculative sense, or in a sense or belief that this is what we 192
want the future to be so we will do it, whereas if you have any particular interest or understanding of Bitcoin or why it’s important then it will be like, ‘well what does it benefit the business right now’ and the short term benefits are relatively small.
Due to the limited advantages Bitcoin presents as a form of currency for business owners in Manchester, communicating the purpose and potential of Bitcoin was primarily an ideological effort. For those interested in Bitcoin as a new currency, it was necessary for Moran to explain the ways in which Bitcoin’s technical architecture and built-in monetary policy ensure its future success. In these instances, the diffusion of Bitcoin involves knowledge that is both technical and ideological.
The diffusion of Bitcoin-related practices through BM was, as with ICA, a process in which libertarian ideology and technical practices were inseparable. In both cases, actors sought to expand the Bitcoin network and this involved communicating the meaning and purpose of the technology. This extended a learning process that had been undertaken by the actors themselves, a process in which understandings of libertarian monetary theory and Bitcoin were interdependent parts. As we have seen in this section, libertarian ideology gives meaning to each technical aspect of Bitcoin. Bitcoin’s technical elements were understood as its ‘intrinsic qualities’ that made it valuable, in the way libertarian monetary theory interprets the intrinsic qualities of gold. The predetermined number of Bitcoins written into its core algorithm was thus understood as ‘finite supply’, a monetary policy that prevents debt and inflation. The open source aspect of Bitcoin was considered to be a quality that kept it to competition with other crypto-currencies; and its peer-to-peer architecture was understood to prevent manipulation by central authorities. Both of these features are revered as they ensure Bitcoin’s value is determined by markets.
As outlined in chapter four, libertarian theory was instrumental in shaping Bitcoin’s design. This section has shown how these social meanings are carried by the technology from the site of its construction to further contexts of interaction. Borrowing from Latour’s terminology, Bitcoin’s technical elements provides a script for libertarian action, prescribing a certain type of usage based on particular meanings. As outlined in the previous chapter, actors may ultimately choose to act differently, yet for those discussed in this section 193
Bitcoin presented particular meanings that corresponded with their interests and offered them a new means of acting on these interests. Moreover, these interests were strengthened in the process of engaging with Bitcoin. In this way, Bitcoin served as more than an intermediary that carried meanings between actors, it acted as a mediator, ‘transforming’ social meanings into a technical form, and ‘translating’ libertarian monetary theory into a technical discourse of ‘decentralisation’ and mathematical encryption. Bitcoin provided, in Martin Sip’s words, a ‘proof-of-concept’. This is further analysed as this chapter reaches its conclusion. Before this, we must return to the activities of those at BM, activities which increasingly took the form of ‘micropolitics’, as their efforts to communicate Bitcoin’s purpose came into contact with broader networks seeking to incorporate Bitcoin as ‘Fin Tech’.
6.2 The Enrolment of Bitcoin into Strategies of Power
I think some of it comes down to the ideology behind what you are trying to do, what the point is: are we trying to replicate the existing financial system in a much more efficient way? Or are we going for the decentralisation of everything? – Dug Campbell
So far this chapter has focused on immediate interactions within networks of Bitcoin users that advocated use of the technology as a stateless currency to challenge governments and financial institutions and transform economic systems. During the course of this thesis, the activities of these actors increasingly involved new interested parties. Many attracted to Bitcoin meet-ups were initially drawn to the technology’s perceived potential to occasion libertarian social change, yet over time more were attracted by other potential applications. In constructionist terminology this may be explained as the beginnings of ‘micropolitics’, in which other ‘relevant social groups’ emerged whose interests in the technology contrasted with those of the libertarians. This is certainly the case with entrepreneurs, whose commercial interests in Bitcoin have steadily increased, sometimes creating tensions with 194
the ideological objectives of libertarians. However, the interests increasingly reshaping the social networks around Bitcoin discussed in this section represent a conglomerate of institutions and organisations which are better understood as a network characterised by a particular strategy. This network defines Bitcoin as ‘block chain technology’, a disruptive innovation in financial technology, or ‘Fin Tech’. This section discusses how a state-led strategy to foster innovation in the UK finance sector appears to be coopting Bitcoin, enrolling the technology and particular actors into developing Bitcoin in ways that increase the efficiency of financial institutions.
As the community of enthusiasts attending BM meet-ups grew, new issues emerged. While a focus remained on assisting people with technical devices and practices related to Bitcoin, later meet-ups began to address legal and commercial issues, involving guest talks from solicitors, entrepreneurs, academics, and local campaigners. The nature of these events introduced new concerns and debates regarding the purpose of Bitcoin, and the direction in which it may develop. While Moran and Flores continued to draw on libertarian monetary theory when expressing the purpose of Bitcoin, their conviction that technical developments could provide solutions to all future obstacles was beginning to be questioned by some attendees. Legal frameworks and corporate investment were identified by some as increasingly necessary to ensure Bitcoin’s ongoing success. This occasioned a shift in attitudes which was most clearly observable at a BM event Moran and Max scheduled in response to a government call for information on ‘digital currencies’.
In August 2014 the UK Chancellor of the Exchequer, George Osborne, announced that £200 million of public funding would be made available for financial technology companies (‘Fin Tech’) for the development of new and innovative forms of finance, aiming to ‘make London the Fin Tech capital of the world.’88 As part of this initiative, Andrea Leadsom MP subsequently launched a ‘government call for information’ regarding ‘digital currencies’ in November that year. ‘The government is now considering the benefits offered by digital currencies and the technology that underpins them,’ Leadsom wrote, ‘and whether it should
88 https://www.gov.uk/government/speeches/chancellor-on-developing-fintech (accessed 13/10/16) 195
take action to support innovation in this area.’89 Moran and Flores put together a paper responding to questions asked in the call, and scheduled a meeting to invite further comment from BM attendees. The meet-up was held on the 1st of December, two days before the deadline for submitting responses.
As attendees of BM arrived and waited for Moran and Flores to start the discussion, conversations arose expressing a suspicion of the government’s motives and the action it would likely take. ‘They will bring in regulation’ said one man, ‘they will bugger it up’. ‘London will go against it [Bitcoin]’ said another, ‘they will regulate and highly restrict it because of the City’. As the discussion got underway, another attendee stated that responding to the government call for information was of itself a tacit compliance with future regulation and restriction. Expressing a desire for a ‘true free market’, one man explained that new developments, ‘multi-signature transactions and voting pools’ will ‘regulate Bitcoin technologically, with no need for government regulation.’ Other attendees focused on the positive potential of government attention. The group spoke of wanting the government to back Bitcoin start-up companies, and to challenge the ‘horror stories’ about Bitcoin being used to support terrorism and drugs markets. This discussion led to an implied consensus that the positives of Bitcoin must be laid out in their written response.
When discussing the benefits of Bitcoin, all attendees agreed that it opens up an understanding of monetary systems, and how money is created. Moreover, it provides a practical alternative. In the final written report the phrasing of this was slightly different:
Bitcoin educates the population on trading and finance. The UK has a long history of providing financial services, and Bitcoin has gained the attention of new groups of people who can contribute to novel services.
The final written response reflected a conscious effort among the BM attendees to present the aspects of Bitcoin that they considered the government would deem positive. This entailed less discussion of technical developments that allowed self-regulation in the Bitcoin economy. Instead, emphasis was maintained on the commercial opportunities for Bitcoin,
89 https://www.gov.uk/government/consultations/digital-currencies-call-for-information (accessed 13/10/16) 196
possible applications of the technology that could make governmental systems function more efficiently, at one point stating how Bitcoin may increase the power of governments:
Mayer Amschel Rothschild famously said, “Give me control of a nation's money supply and I care not who makes the laws”. The current situation then, is that the banking sector holds significant political power by its ability to control interest rates. While strongly enforcing the money supply policy in a cryptographic protocol may reduce the ability to change monetary policy, it may as a result also mean that the elected government regains significant political power as it reduces the control of private interests in the financial sector.
For Moran, Flores, and many of the BM attendees, the purpose of Bitcoin was to supplant the technologies underpinning the financial system, establishing a new reserve currency regulated not by legislation but by a computer network. While an outspoken anti-state position such as that expressed at ICA had not been expressed by attendees of the BM group, the purpose of Bitcoin was nonetheless to limit the capacity of the state in financial systems. Indeed, Bitcoin was defined in opposition to ‘fiat’ money on many occasions. In their letter written to the UK government however, these radical implications of Bitcoin were played down. This was in part due to the discussions of the BM group, where some had highlighted the commercial benefits of state involvement. It was also due to a degree of technological determinism on the part of Moran and Flores, who like Martin Sip believed that the technology was innately ‘decentralising’, and would thus diminish institutional power regardless of governmental policy. The most significant point to stress here however is that this correspondence with the UK government evidences the impact of strategic interests emerging in Bitcoin. Unlike those at ICA, those at BM were increasingly aware of interests in Bitcoin emanating from centres of financial and state power. This began to filter into their conversations and activities, and subtly influence their interactions.
The UK government’s expressed interest in ‘digital currencies’ altered the context in which Bitcoin users in the UK such as the BM group found themselves. If the government was to act on Bitcoin, it followed that the BM group should exercise any influence they were offered to guide government policy in a direction they approved of. Consequently, the BM 197
group took the opportunity of the government call for information to advocate government support for Bitcoin start-up companies, and called on the state to ensure Bitcoin related crime is treated fairly. The prospect of regulation caused discord among the BM attendees, yet the possibility of directing government towards more acceptable forms of policy-making was seen as a clear opportunity. Less clear was the converse influence the government call for information was having on the interests and practices of the group. The call had introduced new concerns and issues that questioned the future direction of Bitcoin. The meeting itself represented an attitudinal shift, as government policy-making was previously shown to be of almost no consequence to a technological system that was ‘self-regulating’ and ‘unstoppable’. This was reflective of broader shifts occurring around the UK in which tensions were emerging between libertarian interests and those of financial and state institutions.
In November 2014 Moran and Flores organised a launch party to celebrate the arrival of Manchester’s first two-way Bitcoin ATM, allowing users to exchange cash for Bitcoins and vice-versa. The ATM in question was run by Jon Harrison’s company, Satoshi Point, and Harrison had agreed to give away free Bitcoins to attendees to promote the event. Unfortunately however, Harrison had been in a dispute with the operators of the software that ran on his Bitcoin ATMs. The source of the conflict had been a principled stance Harrison had taken over decisions made by the company running the software, Robocoin. Robocoin had made a strategic decision that all users of their software must sign up to their particular digital wallet service, in which they would store the Bitcoins of their clients. As Moran explained, it provided an insight into the values of Bitcoin entrepreneurs:
Robocoin basically shut down while they were trying to push everyone onto their centralised wallet service. It was quite interesting because Jonny insisted that [his] machine wasn’t going to work without them having the previous version of the software on it… This was against what Bitcoin should be doing because it’s further centralising things and generally anything in Bitcoin that’s accepted as good is decentralised. 198
The previous software had allowed for users to choose their own wallet technologies. For Harrison, this freedom of choice was fundamental to the purpose of Bitcoin. Bitcoin was distinct from other currencies as it enabled users to store their value across a decentralised network rather than in centralised institution. Robocoin’s decision forced users of their software to store their Bitcoins with them. For Harrison this was illustrative of the same corruptible form of power exerted by banks.
Harrison’s ATM remained offline during the conflict, and eventually he decided to change operators. ‘We fell out with Robocoin,’ he explained, ‘we had to stop using their software, and we imported some open source software from a rival ATM manufacturer and put that on our machines.’ Harrison switched to Lamassu, a rival company building their own hardware and software for Bitcoin ATMs. The people running Lamassu, Harrison explained, were much more aligned with the ethics of decentralisation:
The guys behind [Lamassu] they're very libertarian, very, erm, free market guys, really nice guys, they've got the right mentality. Whereas Robocoin is more like corporate business. But yeah, the guys at Lamassu, all the software they develop for their machine is open source, and it's one of the most open licenses of all, meaning anyone can take the code, do whatever they want with it, and there's no royalties to pay, there's no copyright on the code, which is great.
For Harrison, the libertarian purpose of Bitcoin was more important than short-term commercial interests. Bitcoin, he asserted, is fundamentally about opening people to free trade, and decentralised technologies were key to this aim. His conflict with Robocoin however, illustrates the fact that not all Bitcoin entrepreneurs shared this ideological stance. During the time taken to conduct this research, the total market value of Bitcoins circulated in the network has fluctuated between $2.5billion and $25billion.90 Commercial interest in Bitcoin has correspondingly seen a huge rise.91 Among the social groups of
90 Data available at https://blockchain.info/charts/market-cap?timespan=all (accessed 25/09/17) Also see Hileman & Rauchs for a discussion of ‘market capitalisation’ in crypto-currencies (2017: 16) 91 Venture investment in ‘block chain innovations’ was noted to have ‘entered the top strategic priorities of the CEOs of the Fortune 1000’ companies in 2016, with investment levels in block chain 199
Bitcoin enthusiasts in the UK, the influx of commercial interests has been observed keenly, and in some cases, as with Harrison, these interests have presented tensions with libertarian ideology.
Organisers of meet-ups across the UK have noted a shift in personnel, from tech-savvy libertarians to investment-savvy entrepreneurs. This demographic change constitutes the first source of evidence for the emergence of ‘micropolitics’ between ‘relevant social groups’. Many research participants spoke of a shift from libertarian to entrepreneurial interests in Bitcoin. However, this did not always refer to the arrival of new people. Many of those initially interested in Bitcoin for its radical potential to revolutionise the financial system have expressed a shift in their own attitudes to libertarianism, in which they have come to prioritise business interests over social change. This attitudinal change represents a second source of evidence for the emergence of micropolitics. While these two findings primarily revealed tensions between libertarian and entrepreneurial interests, they also began to denote the influence of strategic interests emanating from institutions and organisations.
Dug Campbell founded a Bitcoin meet-up group in Edinburgh in January 2014. Initially, the group was set up to educate beginners on the basics of Bitcoin.
The whole thing with meet-ups is that it’s inclusive and it’s for beginners… if this as a currency is going to take over and I’m not sure that it will but something like it I’m pretty sure will, everybody needs to understand it. It needs to be user friendly.
The early meet-ups were the best attended, Campbell explained, and people from various backgrounds came along. Many attendees expressed opposing views, and this sometimes led to heated discussions. Campbell identified two ‘camps’ attendees often fell into: libertarians and entrepreneurs. While libertarians were seeking ways of using Bitcoin to replace institutions with decentralised technologies, entrepreneurs were focused on finding innovations that would improve the financial system, working with banks rather than against them. These opposing positions held by attendees at early meet-ups sparked much related projects having risen from $1billion in 2015 to $10billion the following year. (Shrier et al, 2016: 3) 200
debate over the purpose of Bitcoin. At later meetings however, numbers began to decline and many of the regular attendees showed increasing interest in the commercial potential of Bitcoin. The libertarian arguments, Campbell stated, had subsided having met resistance from others:
The classic libertarian: decentralise everything, we don’t need a role for the state; there will be less people standing up for that. I think that people who have come from more traditional backgrounds, occasionally the economists or the few folk that have come from banks and everything else, will, when there has been debates over these things say, well no, your sense of inflation is entirely flawed because of X, Y and Z and that can be a bit of an uneven debate because you have a lot of Bitcoin folk who, put bluntly, live in the echo chamber of Reddit and Bitcoin Talk [forums].
Campbell used a term used for those that believe Bitcoin in its current form is its best form, ‘Bitcoin Maximalists’. These advocates of Bitcoin, he explained, were dismissive of alternative ways in which Bitcoin could be developed. Bitcoin Maximalists were often those that had been involved in Bitcoin from its early stages and were committed to its initial project to replace the banks. To clarify, Campbell described a timeline of social groups that have been involved with Bitcoin. The early days, he said, were populated by the ‘techie, cypherpunk, disintermediate everything’ group that ‘wanted to use cryptography to change the world’. Then the libertarians started to engage with Bitcoin, as it represented ‘exactly what they had been looking for’. Campbell then spoke of Bitcoin’s ‘vice phase’, in which nefarious actors moved in to use Bitcoin for drugs markets and money laundering. Finally, Campbell claimed, came the ‘investment community’ led by Wall Street and the banking industry. With them came entrepreneurs and necessary regulation:
And I think that’s what we are seeing, there is definitely, every time an additional trench of people comes in it’s a bigger one than the last. So you will always have people who have been in it from very early on who are hugely passionate about keeping it decentralised and destroying all the banks and I don’t think that will ever go away, and there will always be an element which looks like that, but I think we have tipped quite significantly over that, significantly in the last twelve months. 201
Campbell spoke of this timeline of various interests as characteristic of the Bitcoin scene on a global scale, yet he affirmed that his experiences at conferences in the UK, including the Edinburgh meet-ups, followed the same pattern. The early Edinburgh meet-ups, he explained, were ‘a mix of idealists and everything else, and then certainly after a few months, probably after the conference actually, there was a few more people coming along from Tesco bank, Virgin, and stuff like that’. This shift in the personnel attending meet-ups signified an increasing prioritisation of developing Bitcoin commercially, marginalising those that saw Bitcoin as a tool to destroy and replace the banking system. This experience was shared by the organiser of a weekly London Bitcoin meet-up group, Hugh Halford- Thompson.
Halford-Thompson had studied computer science at Exeter University and was attracted to Bitcoin by its distinct technical architecture which allowed for ‘unique tokens online’. ‘The idea that it was money was interesting but it wasn’t and still isn’t the most relevant thing necessarily’. Halford-Thompson had mined Bitcoin in its early days and was intrigued by its commercial potential. Seeing Bitcoin’s market value increase considerably led him and his brother to start a company which would exchange money for Bitcoins:
In March 2013, just before the $250 spike, we looked at it and it was going up from like $10 at the start of the year and there were market places starting to appear in the UK and people accepting it, not just for drugs anymore. So we thought, yeah, let’s get into it.
Struggling to set up a bank account for the business, Halford-Thompson claimed he met with representatives of thirty different banks. At first, he explained, banks were suspicious of Bitcoin and this presented an obstacle. Over time however, this position changed and he was able to set up a business account and start promoting his exchange service across Reddit forums. Establishing a trustworthy reputation online was initially tricky but his business began to turn a profit and, coupled with the rise in Bitcoin’s market valuation, Hugh was able to buy five Bitcoin ATMs from Robocoin: 202
In April our ATM finally arrived in London and we started the meet-up events immediately from there. So every Tuesday we did beginner workshops, and at the time they were beginner workshops. You’d have one or two people turn up with wallets knowing what they’re doing, the other 90% would, you know, get their smartphones out and we’d give them all a wallet, give everyone a pound or two, show them how to trade, teach people how the mining process works.
Meet-ups were a way of promoting Bitcoin commercially for Halford-Thompson. Having started a Bitcoin business, he needed to maximise the ways in which he could attract customers. While early attendees expressed a range of interests and motives for engaging with Bitcoin, Halford-Thompson ensured the focus of meet-ups remained with basic technical practices for trading and spending Bitcoins.
I guess if you had come a year ago nobody would be in a suit. It was all techies, anarchists, libertarians, and it was a very different topic of conversation. It was very much ‘the banks have screwed us’, ‘how do we do anonymous stuff?’ ‘How do you hide what you’re doing?’ Although personally I like what a lot of that stands for, as a business I’m always trying to stay away from it, to try and keep it legit.
Halford-Thompson explained how he had built the trustworthy reputation of his business by maintaining transparency about his identity among clients. It was in his interests as an entrepreneur to encourage legitimate uses of Bitcoin, and distance himself from any practices that may be interpreted otherwise. Occasionally, he received emails from those looking for drugs markets online and had to report them to the police. Since consulting a solicitor about the best business practices for working in a new industry such as this, he always kept records to demonstrate his company’s legitimacy. Over time, Halford- Thompson developed closer ties to the finance industry, by arranging events and making contacts. His meet-ups began to reflect this, as the people attending changed, with the majority now having backgrounds in finance.
[The meet-up group] has changed as the type of people that turn up have changed, as those who are interested in Bitcoin have changed. So I have done events, I have been 203
invited to events with some of the main consultancies in London - the big four consultancies. There have been events with the Bank of England, there's one tomorrow, there's events at the core financial firms. And the same thing is reflected in the meet-ups, I've had people who run hedge funds, who are working in the City, they won't necessarily tell me where they are working but they're investigating it either personally or as a company. If it's the company they don't generally tell me where they work. But that whole wave, you've got the whole City, the whole financial sector has been starting to research it. So now, you've still got the early adopters who are still very libertarian. You've got that group, but they're kind of starting to be eclipsed, and I think moving forward, there is going to be a big shift.
As entrepreneurial interests became more prevalent in the social networks around Bitcoin, entrepreneurs looked for ways of consolidating their resources. This resulted in the formation of the UK Digital Currency Association (UKDCA), of which Halford-Thompson was a founding member. Hundreds of people were attending the Bitcoin conferences, Halford- Thompson explained, and some wanted to create a space that would be more exclusive:
Within that [conference] I felt there was a group who were trying to put together an invite only event for people who are useful to the industry, who are running businesses, who are investing, who are politically connected, anything.
Along with thirty others, Halford-Thompson formed a group and started organising invite- only conferences. Within a year, he explained, half of the members had been able to quit their jobs and work full time on their Bitcoin businesses. At the time of this interview (May 2015), Halford-Thompson claimed the UKDCA had developed many contacts with government officials and regulators and the majority of its members were working full time in Bitcoin:
Two years on now, I think there are a few people still working in their day jobs but the whole industry has evolved. We’ve [the UKDCA] got companies in London, you’ve got, Elliptic were there, you’ve got Bittylicious, Quickbitcoin, you had all the people with political connections… I’ve got a long list somewhere. 204
The UKDCA fostered a network of successful Bitcoin entrepreneurs. Through lobbying, engaging with the media and with government, the UKDCA aimed to make the UK the
world’s pre-eminent location for the development of businesses and services built upon Digital Currency (also known as cryptocurrency) technologies, enhanced by a regulatory framework that encourages innovation whilst protecting the interests of commercial and consumer end-users.92
Unlike other countries, Halford-Thompson explained, the UK government were working effectively with Bitcoin entrepreneurs. They were wary of Bitcoin, he said, but they have ‘looked into it properly and understand what it is’. This wariness appeared to explain the shift in terminology from Bitcoin or cryptocurrency to ‘digital currencies’. Bitcoin carried a number of connotations which were anti-state and criminal. The UKDCA works against these uses of Bitcoin, promoting the ‘development and dissemination of best-practices by digital currency businesses and works to counter illegitimate uses of the technology’. Furthermore, as Halford-Thompson explained, the technology ‘underlying’ Bitcoin provided many more potential use cases besides money. Digital currencies, he claims, carry the potential for various innovations in the finance industry.
92 https://www.ukdca.org/index.php/about-the-ukdca/our-vision-mission (accessed 13/10/16) 205
Figure 12 - Innovate Finance
George Osborne and Hugh Halford-Thompson at Innovate Finance [Image credit: Innovate Finance93]
As part of the government initiative to innovative financial technology described above, events were organised to promote new innovations and build connections between industry and government. As Chancellor of the Exchequer, George Osborne had formed the initiative and took part in one of the ‘Fin Tech’ events:
So Mr Osborne came around for an event, we moved it [Bitcoin ATM] to Canary Wharf for an Innovate Finance event and he was launching Innovate Finance as an industry body, to promote Fin Tech again. As part of that he invited I think four or five start-up
93 https://twitter.com/innfin/status/496936705820467201 (accessed 13/10/16) 206
companies – alongside Visa, HSBC, all the big ones – of which there were at least three Bitcoin related.
Interest in Bitcoin was proliferating within financial institutions. Halford-Thompson spoke of the increasing number of meet-up attendees that worked for large finance firms. Indeed, the meet-up space outside which we were conducting the interview was itself sponsored by Barclays bank. The demographic changes in the social networks which had emerged in London around Bitcoin were stimulating the development of Bitcoin technology as an innovation that could streamline financial institutions. The future of digital currencies, Halford-Thompson claimed, involved the development of trading platforms regulated and backed by the security and authority of large financial institutions.
When you make it [Bitcoin] backed by HSBC or backed by UBS suddenly you’ve got a platform that the whole of the City’s traders can use. So you can start putting share trading on there, you can start putting more regulated markets on there. And you can lower the cost of regulation and the costs of the back office, you can automate loads of stuff that requires trust wither within or outside an organisation. There’s a lot to be built.
The range of commercial opportunities for entrepreneurs knowledgeable about Bitcoin technology was expanding rapidly. As a ‘unique token’, a Bitcoin on the Bitcoin network could feasibly represent any asset or document and store its information across a network that automated the processes of verification and security. Money may have been Bitcoin’s first ‘use case’, but opportunities were expanding for those that could develop others. This attracted many new entrepreneurs to Bitcoin, while also affecting the priorities and attitudes of those already involved with Bitcoin.
Ken Kappler exemplifies this attitudinal change concerning Bitcoin. Kappler had worked in the finance sector when he first heard about Bitcoin. He and his colleagues had grown disillusioned with the government’s monetary policies:
Me and my friends were talking about stuff like quantitative easing and how the steam was being let out of the housing market without actually allowing house prices 207
to fall and how it was affecting savers. Most of us were saving to buy houses, so we were all sitting around thinking ‘OK it’s sort of devaluing our savings to do this’.
Bitcoin then became an obsession for Kappler. What immediately attracted him, he explained, were Bitcoin’s deflationary properties. ‘So the fact that there was fixed supply. That was eye-catching, and the idea that they had figured a way to do it on the internet without having central controls.’ As money, Bitcoin appealed because it presented a deflationary, stateless currency. As Ken began to research more about Bitcoin however, he realised it was much more than a new form of money:
I kind of realised it wasn’t what I thought it was, it was more of a technology than it was an ideological currency. It was all about allowing people to interact with one another without having any third party talking to them. So when I learnt about Ethereum, which is possibly the most advanced crypto-economic project that’s currently out there, I got very obsessed very quickly. I quit my job and decided I wanted to come and start working for them, teaching people about Ethereum and how you can build on the platform and how you can use it.
Ethereum is a project oriented around providing a decentralised platform for various applications. Having constructed their own block chain network, Ethereum replaces Bitcoins with ‘ether’, which acts as a reward mechanism for those maintaining the network. Unlike Bitcoins however, ether can represent any form of valued information. While Ethereum maintains the basic technical architecture of Bitcoin, it facilitates the development of various applications ‘on top of’ its block chain network.94 Kappler explained:
Bitcoin is the reward system for maintaining the Bitcoin network, and it’s also the purpose of the network. With Ethereum, ether is the reward mechanism for maintaining the network, but the purpose can be a hundred thousand different things. You can use it as a domain name registration system, you can build crowd-funding apps on top of it, you can do all sorts of things, but the network needs to be incentivised in order for it to work.
94 For a general overview of Ethereum, including the various block chain adaptations undertaken by them, see Triantafyllidis & Deventer (2016) 208
Ethereum maintains the finite supply feature of Bitcoin to incentivise nodes in the network to maintain the system, as well as attracting investment. Ethereum raised considerable amounts of money through an ‘ether sale’, in which interested parties could invest in its version of crypto-currency as a share in the organisation.95 Ken insists this function is different to Bitcoin’s currency of finite supply as ether does not represent money. ‘For us,’ Ken explained, ‘it’s a boot-strapping mechanism, a mechanism to get everyone involved and to reward early adopters, rather than a political choice’. This remodelling of Bitcoin technology is largely consistent with interests of large financial firms and institutions attracted to the innovative and commercial potential of ‘block chain technology’. Ethereum offers to turn block chain technology into an open source platform on top of which enterprises may construct services or financial products.
The information stored on Ethereum’s block chain network, Kappler explained, could involve anything from property deeds to futures contracts. All such information could be stored securely without the need for ‘middle men’ third parties. Changes to the information stored on the Ethereum network, such as ownership details, could be programmed to change automatically at a specified time. This latter functionality makes possible ‘smart contracts’, contracts written into computer protocols that automate contractual clauses, requiring no third party verification.
Ethereum’s block chain network reflects how strategic interests are influencing the development of Bitcoin as a technology. Ethereum brings together developers to work with government and industry to innovate new functionalities for block chain technology. Kappler described how Ethereum took part in the government call for information on digital currencies, as part of the UKDCA. Governments could benefit considerably from using Ethereum, he affirmed. ‘I would love to see them [government] become consumers of the product. I mean, it has so many applications for improving transparency in governance.’ Kappler described instances in which governments could run decentralised systems in place
95 Ethereum claimed to generate $15.5million in the first two weeks of their first ‘ether sale’ in August 2014. This investment was raised in Bitcoins and other cryptocurrency. See https://blog.ethereum.org/2014/08/08/ether-sale-a-statistical-overview/ (accessed 25/09/17) Triantafyllidis & Deventer (2016) note the final figure from this investment scheme as 31.529 Bitcoins, worth at that time $18,439,000. 209
of centralised bureaucracies, saving considerable amounts of money, increasing transparency, and minimising the margin of human error. The same applications of block chain could also benefit financial institutions:
We talk to banks about how they can use the block chain, from know-your-customer [verification processes] to money laundering, which is one of their biggest expenses in terms of compliance with regulation, and using it [block chain] to essentially create a platform where you can, where one bank can do this for everyone, and they can create a market for performing this regulatory compliance rather than having every bank do it for the government.
Such applications of block chain technology would streamline financial institutions, making them more efficient and autonomous. This is a considerable reimagining of Bitcoin’s purpose, which among many users centres on destroying and replacing banks. Such libertarian interests are however becoming less prominent in many UK social groups, as Dug Campbell and Hugh Halford-Thompson explained respectively. This has happened as a result of demographic and attitudinal changes in the social networks of Bitcoin users, as more commercially-minded actors enter the milieu.
The formation of new projects and associations such as the UKDCA and Ethereum accumulate forms of social and material capital within the social networks that have emerged around Bitcoin, incentivising the development of Bitcoin technology in new ways consistent with the strategic interests of powerful organisations. In these social networks, particular agents emerge that redefine the technology, incorporate and transform it into forms consistent with the ‘Fin Tech’ strategy for innovating the finance sector. The strategic interests of state actors and financial institutions do not impose new definitions and functionalities, they induce them by informing the broader directions in which the technology ought to be developed, while providing for the generation of various forms of capital to assist in this process. The emergence of social networks around Bitcoin are in this way coopted into strategies of power: both the technology and many users are enrolled into energising dominant networks of financial power. 210
6.3 The Irony of Cooptation
This chapter has presented data gathered primarily via Bitcoin meet-ups across the UK to analyse the emergence of sociotechnical networks around Bitcoin. Section 6.1 outlined how actors associated with two organisations, Bitcoin Manchester and the Institute of Crypto- Anarchy, draw extensively on libertarian monetary theory in their understanding of Bitcoin. For these actors, libertarian ideology gives meaning to each technical aspect of Bitcoin: its predetermined rate of Bitcoin creation is understood as a monetary policy that prevents debt and inflation; the open source aspect of Bitcoin is considered to be a quality that exposes it in competition with other crypto-currencies in a free market; and its peer-to-peer architecture is understood to prevent manipulation by central authorities. These understandings form part of a libertarian meaning assigned to Bitcoin that defines the technology as a gold-standard monetary system for the digital age.
As outlined in chapter four, this convergence of technical arrangements and libertarian social meanings began in Bitcoin’s construction. Libertarian ideology had shaped the design for Bitcoin, bringing together technical elements in ways that helped to achieve the cyber- libertarian goal of constructing an electronic currency in which payments between users could be made directly, without going through a financial institution. Bitcoin’s purpose was from the outset a stateless currency to challenge the power of governments and financial institutions. Bitcoin’s construction as a technology recasts this culturally contingent meaning into technical form. In this sense Feenberg’s concepts are instructive in interpreting the relationship between ideology and technology exhibited by the actors in section 6.1. In each case, libertarian convictions were strengthened by an engagement with technology. For these actors Bitcoin represented a breakthrough innovation, a development which changed the technological landscape around them. In this new world of ‘decentralised technologies’, nation states and financial institutions were primarily understood as anachronistic. Whether banks and governments were desirable was less important than the observable truth that new developments in technology would, at some stage, make them redundant. Bitcoin thus demonstrated the validity and pertinence of libertarian ideas, which were more suited to an age in which humans were mediated by decentralised computer networks. In Feenberg’s terms, the social meanings acquired by Bitcoin had been ‘condensed’ with technical logic, 211
and as a consequence these meanings now took on the authority and political neutrality of scientific discourse.
The learning process of actors engaging with Bitcoin in this section also reveals Bitcoin’s capacity to function as an agent. For Latour, humans and nonhumans alike demonstrate agency when they act as mediators.96 While many objects and people ‘carry’ meanings, it is only when they ‘modify, translate, or transform’ meanings that they can be said to be acting upon the world. For the research participants discussed in this section, Bitcoin clearly functioned as an intermediary, an object that carried meanings from the site of its construction through to actors in different contexts. In the process however, these meanings were transformed into a new technical form, as stated above, translated into scientific discourse. In this way Bitcoin acted as a mediator, impressing on its users a new understanding of technology and economics. It is important to note here that this does not constitute determinism, but structuration. The technical elements that comprise Bitcoin do not determine the thoughts and actions of users. Indeed, this is clearly shown in chapter five.97 The technical elements do however form a structure that has been tailored for a particular type of usage and a particular interpretive process. To explain this concept of structuration, Latour describes how the structure of a lecture hall is tailored for a particular type of use, and in the absence of those that constructed it for this purpose, its various material and technical elements continue to perform the action of its designers, structuring specific types of activity (2005: 195). Bitcoin too performs this action, providing a structure for putting libertarian theory into practice. From its finite supply function to its independence from state authorities, Bitcoin provides what Latour terms the script for a scene of libertarian activity, prescribing certain ideas and practices. In this sense, Bitcoin represents an agent in the co-production of libertarian sociotechnical networks in the UK,
96 See chapter two, section 2.3. 97 While both groups discussed in chapter five ultimately rejected and adapted aspects of Bitcoin’s functionality, each demonstrated an engagement with libertarian theory. For Namecoin’s developers, Bitcoin’s potential as a stateless currency was of interest, yet their existing interests led them to prioritise the construction of a decentralised domain name system. Likewise, those at Faircoin engaged with libertarian theory before rejecting it, along with Bitcoin’s corresponding technical elements, as ‘too capitalistic’. In these cases then, Bitcoin also presented a libertarian script, yet the respective actors chose to rewrite it. 212
prescribing certain practices and translating certain meanings. However, as this network has emerged, it has increasingly come into contact with larger, more dominant networks.
Section 6.2 presented data from Bitcoin meet-ups across the UK to highlight how the sociotechnical networks emerging around Bitcoin are being gradually transformed and coopted by strategies of power emanating from financial and state authorities. Constructionism helps in interpreting how groups of entrepreneurs and libertarians engage in ‘micropolitics’ by seeking to extend their definitions of technology to further users. This can be seen both in the activities of libertarians such as Ash Moran who organise events in which they present the ideological case for using Bitcoin; and in those of entrepreneurs such as Hugh Halford-Thompson who organise events for extending their networks of customers and contacts. These micropolitical activities both take place however, within the broader context of neoliberal governmentality. In the ‘Fin Tech’ initiative established by the UK government, we see the workings of a state-led strategy which, together with financial institutions and commercial enterprises, begins to subtly alter the character of interactions taking place around Bitcoin. Particular types of entrepreneurial action are incentivised, and this in turn influences the technical form of Bitcoin. The emergence of Ethereum represents this process mostly clearly, attracting actors with knowledge of Bitcoin to construct a platform that will provide innovations for enterprise. In the meet-ups across the UK, this specific entrepreneurial logic is becoming more prevalent. In this process, libertarian interests are either marginalised or coopted into dominant networks. In de Certeau’s terms, as drawn on effectively by Feenberg to interpret technological hegemony, the transformations observed in the sociotechnical networks emerging around Bitcoin in the UK represent a growth of strategic power. Strategic power emanates from centres of authority, defining objects, incentivising types of behaviour, producing knowledge, developing a discourse, and becoming normative and dominant. In an ironic twist, such strategies are emanating from financial and state institutions to direct the development of Bitcoin technology as a means of increasing their autonomy and efficiency, a process which appears to be incentivising libertarians to actively undermine Bitcoin’s original purpose.
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7. Conclusion
The central finding of this thesis is that Bitcoin has been socially constructed in different contexts and largely remains in a stage of interpretative flexibility. From the initial proposal of its design on the Cryptography mailing list through to the various ‘block chain’ innovations energising the finance sector, the emergence of Bitcoin has been as much a social phenomenon as it has a technical one. Each instance of development and use presented in this thesis is characterised by collaboration among groups of individuals motivated by shared understandings of technology and society. This appears most clearly in Bitcoin’s initial design process, where actors brought together by shared libertarian values collaborated on the construction of a cryptosystem that could function as an electronic currency independently of nation states and financial institutions. These values were ‘condensed’ with technical logic in Bitcoin’s design, and Bitcoin subsequently recast libertarian monetary theory in a new technical form. This served to structure the activities of subsequent groups of Bitcoin users, providing a ‘script’ for engaging in libertarian practices and interpreting its functionality by engaging with libertarian theory. Bitcoin’s functionality as a stateless currency with a predetermined rate of coin generation prescribes these activities for users. In social contexts where these prescribed activities coincided with the interests of actors, such as certain groups in the UK, Bitcoin served to considerably strengthen their convictions and stimulate activities in which technical practices and libertarian ideology were interdependent parts of a singular process, a process that often involved actively extending this meaning to further actors, resulting in an expanding network of libertarian Bitcoin users.
In other social contexts however, the forms of usage Bitcoin prescribes were rejected and the technology was adapted to serve new purposes that fit with the interests and beliefs of the actors involved. These groups found ways of reconstructing Bitcoin so that it provided a structure for different activities based on social meanings they shared. The activities emerging around Bitcoin examined in this thesis are thus illustrative of ‘co-production’, with artefacts and agents influencing the actions of one another in processes that result in the 214
growth of various sociotechnical networks. This is perhaps clarified most effectively by the theory of Bruno Latour, whose arguments present a model for understanding society as the interplay of ‘momentary associations’: a myriad of fluid sociotechnical networks growing, declining, clashing, and merging. In such networks, Bitcoin and the various devices on which it operates, serve both as ‘intermediaries’, connecting actors and carrying meanings between them; and as ‘mediating agents’, transforming meanings and performing a key role in the ‘enrolment’ of people and machines into programs of action. However, it is clear from the cases presented in this thesis that these networks of activity emerge within broader contexts of meaning and power, and for this reason, Andrew Feenberg’s chief argument that technology serves to reproduce dominant forms of meaning and power (and thus holds the potential to transform them) remains a vital consideration. In concluding this thesis, I review the key findings to address the question raised in chapter two: which of the networks emerging around Bitcoin are sustaining and energising dominant networks, and which are transforming them in ways that weaken their control?
7.1 Strategies of Cooptation and Tactics of Counter-Conduct
Agents of social change often find, to their chagrin, that they have made history, but not according to their original vision. Rather than achieving a full victory, they usually become caught up in a more complex dance of partial success and cooptation – David J. Hess (2007: 236)
The principal aim of this thesis was to investigate how Bitcoin is being used and constructed in social settings. While Bitcoin-related practices have increasingly diffused throughout many social contexts, these contexts all bear the influence of broad socioeconomic changes. As outlined in chapter one, global transformations in technology and the economic policies of nation states created the conditions that underlie Bitcoin’s development. New information technologies emerging in the 1970s allowed for rapid innovation that gave rise 215
to a new ‘technological paradigm’ characterised by unprecedented flows of information between computer-mediated networks. At the same time, new ideas concerning the organisation of economies via the deregulation of markets were beginning to take hold in nation states across the world. Together, these developments facilitated a process of global financialisation as record levels of capital began to flow through digitally-empowered networks of deregulated financial entities. This context allowed for increasingly precarious levels of speculation that ultimately culminated in the 2008 financial crisis. By this time however, neoliberal doctrines that regarded the maximisation of individuals expressing their material interests in free markets as the most effective means for satisfying human aspirations had reached hegemonic status, and governments primarily responded to the crisis by continuing their role as the cultivators of free trade. A succession of state-led strategies thus reinvigorated the global finance sector, which persisted as a dominant force of the ‘information age’. In concluding this thesis, I argue that such a strategy is now giving rise to a particular ‘technological frame’ that defines Bitcoin as an innovation in financial technology and that, while Bitcoin remains in a stage of interpretative flexibility, this frame increasingly constitutes Bitcoin’s most dominant form.
Smaller sociotechnical networks to those of global finance also emerged in the context of the ‘information technology revolution’. Many of these ‘virtual communities’ were characterised by shared values, and their activities in turn influenced the development of the internet. This process was augmented by the rise of open source technologies, in which disparate internet users voluntarily collaborated on the construction of software programs. Bitcoin was to emerge in such a context, as a virtual community of ‘cyber-libertarians’ endeavoured to develop a form of electronic currency. Bitcoin soon spread through various social groups and, as it entered into new sociotechnical networks, it gave rise to new technical forms. How to interpret this diffusion of Bitcoin was the aim of chapter two. The different meanings assigned to Bitcoin by various social groups indicated the value of employing a constructionist approach to understand the technology. Chapter two analysed three prominent constructionist models, social constructionism, critical constructionism, and actor-network theory. The first of these models highlighted the importance of examining different ‘variants’ of Bitcoin that were emerging in different contexts and the meanings 216
attached to them by ‘relevant social groups’. The social constructionist model also provided key concepts such as ‘interpretative flexibility’, which denotes a period in technical development in which one artefact gives rise to many ‘variants’, each constituted by particular social meanings. The principal proponent of this approach, Wiebe Bijker, argues that interpretative flexibility comes to an end when one artefact emerges that satisfies the interests of multiple groups, or when one meaning becomes dominant and others are marginalised. This latter process Bijker described as the emergence of a ‘technological frame’, a definition for a technical artefact that reaches a fixed and reified state. The processes which give rise to such dominant meanings Bijker claims are ‘micropolitical’, drawing on Foucault’s work to outline how social groups act to extend their particular meanings at the expense of others. In reflecting on the findings of this thesis, Bijker’s work thus raises the question of whether a particular ‘technological frame’ is emerging around Bitcoin, a specific meaning approaching reified status. To understand how this may be occurring requires a discussion of Feenberg’s work.
As outlined in section 2.2 of chapter two, Feenberg highlights the ways in which meanings attached to technology are often a product of the broader context of power within which technical development takes place. Under capitalism, Feenberg argues, a hegemonic rationality has arisen that prioritises imperatives for control and efficiency. These imperatives are ‘condensed’ with technical logic in design processes, making them appear natural and obvious aspects of technical development. The social interests active in technology design are thus concealed within a politically neutral discourse of ‘instrumental reason’. This serves to reproduce power structures as it limits public participation in technical development. For Feenberg, the emergence of ‘technological frames’ must therefore contend with hegemonic norms, and much of his work accordingly focuses on ways in which social groups may be able to subvert these norms by opening technical development to social deliberation and participation. Feenberg argues this may occur with internet technologies when groups ‘creatively appropriate’ software programs or hardware devices, adapting them in ways that serve their particular interests. Ultimately, such ‘tactical’ adaptations may transform technology at a ‘strategic level’, leading to a 217
‘democratic rationalisation’ of technology, where ethical codes such as public participation are prioritised. As Iain Thomson (2000) summarises,
Feenberg’s hope is that the proliferation of situated micro-struggles will eventually lead to a convergence… [forming] a ‘counter-hegemony’ capable of permanently democratising technological design and so gaining some control over the historical impact of technology (2000: 212,213).
While Feenberg’s model performs the vital task of throwing light on the role of social power in technical development, his hope that micro-struggles may converge into a new overarching rationality suffers from criticisms regarding the nature and form of social power. Bruno Latour’s work highlights the empirical difficulties of locating social forces as conceived of in what he terms ‘critical’ sociology. Latour argues that social power is not a force that exists on an ideological level, but in the intense activities of ‘enrolling’ undertaken in large sociotechnical networks. Such networks sustain themselves by enrolling machines and humans into performing programs of action. Machines, Latour argues, may exhibit ‘agency’ when they, alongside their human counterparts, transform the meanings assigned to them or ‘prescribe’ certain practices. By carrying meanings and prescribing practices, machines constitute ‘nonhuman actors’ by sustaining and expanding the sociotechnical networks of which society is comprised. Latour does not speak of hegemonic norms therefore, but the continuous activities performed by humans and machines that sustain the dominance of large sociotechnical networks. To identify a ‘technological frame’ emerging around Bitcoin this action must be brought to light.
In concluding chapter two, I drew on Dardot and Laval’s analysis of neoliberal governmentality to assess the merits of Feenberg and Latour’s contrasting accounts of social power. I argued that the strategies of power which characterise neoliberalism are more effectively interpreted via Latour’s concept of ‘enrolment’, as such strategies are founded on ‘subtle techniques of motivation, incentivisation, and stimulation’ that guide the conduct of subjects (Dardot and Laval, 2013: 260). However, I also argued that Feenberg’s efforts to highlight the reproduction of power in technical development remain instructive. This is principally because meanings lie at the heart of social action, directing and giving purpose to 218
technical practices. While there may be empirical difficulties in proving the influence of hegemonic norms in technical development, certain discourses are demonstrably perpetuated in the activities of powerful networks and these discourses extend into various areas of social life. As extensively detailed by Dardot and Laval, neoliberal discourse has increasingly permeated social networks across the world. It is quite possible therefore to speak of neoliberal ‘hegemony’ without invoking what Latour terms a ‘magical ghost’. Any attempts by social groups to develop technology in ways that foster social deliberation and participation must contend with the strategies that sustain neoliberal power, strategies which act ceaselessly to guide the conduct of individuals through a combination of discourses and techniques centred on entrepreneurial productivity. Feenberg’s work addresses the problematic aspects of Bijker’s relativist model by directing our attention to forces that transcend particular social contexts, and in spite of Latour’s valid critique of such ‘critical sociology’, our attention must remain fixed in this direction. Feenberg’s diagnosis of ‘hegemonic technological rationality’ as the key affliction of modernity may be flawed in its totalising scope, but he is right to pinpoint the processes in which dominant discourses shape technology design. The micropolitical activities of social groups engaging with technology inevitably come into contact with the forces that sustain neoliberal power. Sociological studies of technology must investigate how this unfolds, how technical development is brought into the reproduction of dominant systems and how certain cases may present alternatives potentialities. This involves establishing how certain meanings, or ‘technological frames’, may emerge that provide alternative purposes for technical action, and define technology in ways that facilitate new forms of conduct.
In this thesis I attempted to apply this approach to understand Bitcoin. As outlined in chapter three, this involved an analytical focus on (1) the meanings that social groups attach to Bitcoin, (2) the design processes in which meanings may be condensed with technical logic, and (3) the ways in which Bitcoin may be connecting actors by carrying meanings and prescribing certain practices. It was hoped that by investigating the role of social meanings in the production of new technical practices, connections may be illuminated between the social groups constructing Bitcoin, as well as their connections to broader networks of power. The focus on meanings was drawn primarily from Bijiker’s work and followed his 219
‘heuristic’ strategy for interviewing actors engaging with technology. This strategy used the interview process not only as a method for accessing meanings, but also to ‘roll a snowball’ and generate an understanding of the contexts within which research participants act. As such, opportunities for further interviews and observations were sought from interviewees, as well as texts that they had produced or circulated within their respective group. Following Feenberg’s arguments, texts archiving the design process of Bitcoin variants were also sought out. These texts formed the basis for a ‘technical code analysis’ which focused on the intersections between social elements (shared meanings and procedures that define use) and technical elements (techniques and devices) that are brought together in design processes. A hermeneutic analysis of the relationships between meanings, contexts, and design was outlined as a means of revealing how social meanings may be condensed with technical logic in design. Overall, the approach was characterised by Latour’s emphasis on ‘following the actors’ that engage with technology and tracing their connections with technologies, other actors, and texts.
The constructionist approach taken in the thesis produced a variety of data sets. Section 3.2 of chapter three outlines how data collection started within a local group of Bitcoin enthusiasts and sprawled out as connections between actors, texts and technologies spread across national boundaries and involved various technologies. This brought to light a number of contexts in which Bitcoin was being used and developed in various ways. In the latter phases of research, some emerging contexts were pursued while others were not, and this was largely a matter of pragmatic considerations, as specified in section 3.2.3 of chapter three. While these potential avenues are left unexplored in the thesis, they contributed to an understanding of the character of the various networks emerging around Bitcoin. A key difference observed that divided all the groups encountered was whether the technology was designed to run a community, or whether it was designed for a community to run. This contributed to the selection of the two adaptations discussed in chapter five, Faircoin and Namecoin, which illustrated this distinction. Networks of libertarians in the UK were also selected for primarily pragmatic reasons, as well as the opportunities they presented to explore the formation of connections over time, and how these connections change in the face of different social interests. The first case studied, the original design and development 220
of Bitcoin, was prioritised because of the importance of understanding Bitcoin’s construction, and this was presented in chapter four.
An analysis of the small network of cyber-libertarians that initially constructed Bitcoin revealed the extent to which social meanings from dominant discourses can influence the technical practices of social groups. Borrowing from Latour’s terminology, the ‘cypherpunks’ that designed Bitcoin illustrate how meanings may be ‘modified, translated, and transformed’ by actors in particular networks. Concepts from neoliberal economic theory were subtly altered by these actors as they were incorporated into practices oriented around encryption technology. As documented by Winner (1997), cyber-libertarian writers had in the 1980s and 90s wedded free market economics and technological determinism to form a particular utopian vision for computer-mediated societies, and these ideas continued to circulate in many virtual communities, as evidenced in the forum archives drawn on in chapter four. This mutated strand of neoliberal discourse permeated the online spaces frequented by the cryptography enthusiasts discussed here and informed their attempts to construct cryptosystems, as well as their political discussions. Various attempts were made to develop a form of digital cash that would challenge the perceived tyranny of state power and allow individuals to engage in entirely unregulated markets, the realities of which are now becoming clear with the rise of criminal ‘crypto-markets’.98 The ‘technological frame’ produced by cyber-libertarians was thus from the outset informed by neoliberal discourse, and this was evident in the design choices made in Bitcoin’s initial development, as detailed in sections 4.2 and 4.3 of chapter four. These sections drew on Latour’s concepts of ‘delegation’ and ‘enrolment’ to show how these actors sought to extend their cyber- libertarian network. Cypherpunks delegated a program of action to an algorithm that they believed could run economies more effectively than state and financial institutions. Bitcoin, rather than governments and central banks, would determine monetary policy and maintain economic stability. For this network to grow to such an extent, it would incentivise users to supply an ever-increasing quantity of computational power and all the infrastructure and
98 See Martin (2014): “Many of the concerns regarding cryptomarkets are well founded: they directly facilitate drug-related crime, particularly retailing and manufacturing; they are accessible to anyone with an internet-enabled computer, a bank account and a minimal level of technical proficiency, including children; and have also been implicated in the deaths of drug users around the world, particularly young people.” (p3,4) Also see Dion (2013). 221
activity that requires. Bitcoin was thus designed to ‘enrol’ actors into providing this energy by offering rewards, thus prescribing competitive activities to ensure the continuous expansion of a new sociotechnical network.
While the cyber-libertarian program of action performed by Bitcoin enrolled some actors, others found ways of appropriating it to serve new programs. The two cases discussed in chapter five highlighted the interpretative flexibility of Bitcoin, revealing how the interests of different social groups are leading to new Bitcoin ‘variants’. Primarily motivated by aims to reduce the authority of powerful ‘centralised’ organisations over digitally-mediated communications, Namecoin’s developers constructed a new ‘block chain’ to record and authenticate the ownership of domain names on the internet. What intrigued these actors about Bitcoin was the novel way in which security and privacy could be achieved without the need for an overseeing authority. The absence of such authorities was understood to provide freedom for internet users: freedom from organisations that monopolise information flows, freedom from surveillance, and freedom from censorship. This emphasis on freedom, also emphasised in the subsequent Faircoin case study, brought Feenberg’s imperative back into focus, as the two groups adapted Bitcoin for emancipatory purposes. For Feenberg, experimentations with technology inherently contain emancipatory potential as they reveal new ways in which human action may be structured. Notwithstanding the aforementioned criticisms of Feenberg’s theory, as stated above it is vital that sociological studies of technology investigate how certain technological frames may arise that facilitate new forms of conduct, or what was referred to in chapter two as counter-conduct. As outlined by Dardot and Laval, neoliberal power functions primarily through the governing of subjects’ conduct and, as a result, if this form of governmentality is to be resisted there must emerge ‘forms of conduct opposed to this ‘power-conduct’’ (2013: 319). Challenging neoliberal governmentality, they argue, means moving beyond resistance against forms of economic exploitation and sovereign power alone and developing a new ethic that stands in opposition to individualised responsibility and competition. This involves practices that combine a pursuit of freedom from being governed with substantive conception of what it is to be self-governing. As Dardot and Laval assert, 222
Through counter-conduct people seek both to escape conduction by others and to define a way of conducting themselves towards others (ibid.)
As a form of resistance then, counter-conduct thus requires more than an appeal to ‘negative liberty’ which seeks only freedom from sovereign power. In reviewing the two attempts to appropriate Bitcoin for emancipatory purposes discussed in chapter five, it became clear that only Faircoin constitutes an instance of counter-conduct.
The developers of Faircoin sought to adapt Bitcoin to serve as part of a new economic system that would be run by a community and founded on principles of sustainability and cooperation. This involved a reconstruction of Bitcoin’s ‘mining’ function which was deemed too ‘capitalistic’. In its place was developed a ‘proof-of-cooperation’ function that ensured Faircoin was run by trusted members of the community and could therefore respond to their changing conditions. The design for Faircoin in this way structured activities of social deliberation and participation, forming a new technological frame around Bitcoin. In chapter five I argued that this instance of adaptation was founded on a desire for ‘positive liberty’. The actors from the Catalan anarchist movement desired the freedom to self-govern, and it is this conception of freedom that most clearly shows their activities to constitute an instance of ‘counter-conduct’. As well as seeking to escape conduction by others, those at FairCoop expressed an ‘active refusal to conduct oneself as an enterprise’ (Dardot and Laval, 2013: 320), working to establish a system that prescribed activities based on cooperation and collective responsibility. This technological frame, extended across members of a community, thus comes closest to representing what Feenberg terms a ‘counter-hegemony’ in a way that remains consistent with Latour’s objections. That is to say, Faircoin’s emancipatory potential resides not in some ‘hidden social force’ but in the continuous activities of a sociotechnical network. What threatens to stymie this potential is not ‘hegemonic technological rationality’ but the activities of larger networks which may seek to frustrate or coopt their activities, a process discussed in chapter six.
The groups discussed in chapter six demonstrated the value of constructionism for interpreting processes of technical development. Networks of Bitcoin users in the UK and Prague shared an understanding of Bitcoin as new ‘decentralised’ monetary system set to 223
replace financial institutions. These actors, such as those associated with Bitcoin Manchester, drew extensively on libertarian monetary theory in their understanding of Bitcoin. Each technical aspect of Bitcoin was understood in this way. Its predetermined rate of Bitcoin creation was understood as a monetary policy that prevents debt and inflation. The open source aspect of Bitcoin was considered to be a quality that exposes it in competition with other crypto-currencies in a free market. Additionally, Bitcoin’s peer-to- peer architecture was understood to prevent concentrations of power by ensuring that the running of the network was ‘decentralised’ and ‘distributed’ across nodes in the network. Bitcoin’s technical features were in this way seen as ensuring its success as a new monetary system to replace banks.
In reality however, Bitcoin’s technical features have allowed for concentrations of power. The exponential energy consumption Bitcoin’s ‘mining’ feature requires has entailed that the network now consumes as much energy per year as the country of Uruguay, a nation of 3.3million people (Hileman and Rauchs, 2017: 99). This increasing energy demand led many profit-seeking hardware operators to pool resources together in ‘mining pools’, where they share the tasks of data processing and the resulting rewards. Increasingly however, mining is carried out by commercial enterprises that develop specialised hardware capable of servicing the Bitcoin network. Three of these firms, ‘AntPool’, ‘F2Pool’, and ‘BTCC Pool’ collectively operate 56% of the network hashing rate, meaning that cooperation between only three CEOs could direct Bitcoin’s development in their interests.99
Nevertheless, as shown in chapter six the functionality of Bitcoin serves to strengthen the libertarian convictions of many engaging with Bitcoin. Bitcoin demonstrates to these actors that libertarian ideas work, and are particularly suited to societies mediated by computer networks. Chapter six detailed how two groups, Bitcoin Manchester and the Institute of Crypto-Anarchy, engage in ‘micropolitics’ by seeking to extend their libertarian ‘technological frame’ to other actors. This primarily takes place via social events in which Bitcoin-related practices are explained with reference to libertarian monetary theory. In these activities, Bitcoin serves to ‘translate’ libertarian theory into technical discourse, presenting libertarian ideas back to users in a technical form. This process, I argue, throws
99 This data is taken from Hileman and Rauchs (2017: 92) 224
light on how Bitcoin serves to strengthen the libertarian convictions of actors. In so doing, Bitcoin becomes an ‘agent’, playing an integral role in the co-production of sociotechnical networks.
In the UK, the activities of libertarians increasingly came up against the commercial interests of entrepreneurial actors. In section 6.2 of chapter six, entrepreneurs were interpreted as a rival ‘relevant social group’ to libertarians, similarly extending their definition of Bitcoin through ‘micropolitical’ activities. This was most clearly seen in the formation of the UK Digital Currency Association, an organisation that aims to develop and maintain a network of entrepreneurs that collaborate on advancing Bitcoin for commercial purposes. The findings discussed in chapter six show how these activities, along with those of libertarians, are taking place in a context where the strategic interests of financial and state institutions are converging around a definition of Bitcoin as an innovation in financial technology that can boost productivity in the finance sector. This state-led strategy to foster innovation in a particular direction is found to have influenced the social networks emerging around Bitcoin in two key ways. Firstly, a demographic change has been observed in Bitcoin networks as more commercially-minded actors engage with Bitcoin, incentivised by increasing business opportunities. Secondly, an attitudinal change has been observed as actors begin to prioritise commercial opportunities ahead of ideological commitments. These changes, I argue, constitute the social aspects of strategic power, which is coopting Bitcoin by enrolling actors into performing programs of action that sustain and energise dominant networks of financial power. As stated in the conclusion of chapter six, this process represents a considerable irony for a technology originally constructed to subvert and supplant financial institutions.
In chapter two I argued that a constructionist approach to understanding technical development should address the following question: which of the networks emerging around new technologies are sustaining and energising dominant networks, and which are transforming them in ways that weaken their control? This thesis has found that networks emerging around Bitcoin in the UK appear to be developing in ways that sustain and energise the financial networks that embody neoliberal power. However, the thesis has also found that this ‘technological frame’ has not yet reached levels approximating fixity. Bitcoin 225
remains in a stage of interpretative flexibility, and as Faircoin demonstrates, it can in the right conditions facilitate the emergence of counter-conducts, vital ways of resisting and transforming neoliberal power.
226
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Appendices
Research Participant information sheet and consent forms
University of Manchester
School of Social Sciences
Radical Technologies - Participant Information Sheet
What is the title of the research?
The title of the research is ‘Radical Technologies’ and seeks to examine innovative technological practices.
Who is conducting the research?
The research is being carried out by one doctoral student only, Tom Redshaw, for the sociology department at the University of Manchester.
What is the aim of the research?
The aim of this research is to explore the social processes that may underlie the development of digital technologies.
Why have I been chosen?
This research aims to investigate a diverse sample of people and organisations involved in the use, development, and/or diffusion of bitcoin/blockchain-based technologies/practices. 236
As someone with active knowledge in this area, you have been chosen to share your experiences.
What would I be asked to do if I took part?
If you are willing to take part I would ask you to meet up and discuss your experiences of bitcoin. I would ask to make an audio recording of our discussion. You would be free, of course, to withdraw from the interview at any time or to speak ‘off the record’ if you prefer. If you are currently participating in events that relate to the discussion, I may ask whether there could be an opportunity to sit-in on these events.
What happens to the data collected?
The data collected from interviews and observations will be used only for the purposes of research. Quotes from interview transcripts and observation notes may be drawn upon for analysis in the writing up of the research. The researcher will abide by the provisions of the Data Protection Act and the University Data Protection Policy: data will be processed fairly, accurately, securely and lawfully; and for limited purposes. The data will be stored in secure computer facilities within the university, accessed by the researcher only.
How is confidentiality maintained?
All participants in the research will be asked whether they wish to remain anonymous. If so, anonymity will be preserved by the removal of identifiers and the use of ID numbers or pseudonyms in all records of the contents of research interviews or observations. Participant identities are to be kept securely within a password protected and encrypted database within the university, accessible only to the researcher.
What happens if I do not want to take part or if I change my mind? 237
Should you decide to withdraw from participation, your decision will be respected and the data you have provided will be destroyed unless you expressly permit its usage, in agreement with the researcher.
Will I be paid for participating in the research?
No.
What is the duration of the research?
All interviews and observations are set to be completed by the beginning of April 2015; the final report by autumn 2016.
Where will the research be conducted?
Interviews can be conducted at a mutually convenient time and place. Spaces within university buildings are available but you would not be expected to travel far for the interview.
Will the outcomes of the research be published?
The main published outcome of this research will be in the form of a PhD thesis that will be available after all examinations have been passed, via request to the University of Manchester library. Some parts of the thesis may also be published in academic conferences or journals.
What benefit might this research be to me or other subjects of the research? 238
I hope that my research will contribute to the understanding of social contexts in technological development; to interpret the roles of various and disparate groups and individuals in innovation.
I hope, also, that research participants will enjoy the opportunity to discuss, in depth, some of the activities that they have been involved in.
Contact for further information
For all inquiries concerning this research: [email protected]
What if something goes wrong?
As noted above, if you agree to take part in the research and then change your mind you may withdraw at any stage – including during an interview. No data relating to your participation will be kept without your express permission.
If you are concerned about the nature of this research or have been upset by any aspect of participating in it then please just let me know on the email address above. If you prefer, you can contact my supervisor at the University of Manchester, Dr Kevin Gillan, by email to [email protected]
239
University of Manchester
School of Social Sciences
Radical Technologies
CONSENT FORM
If you are happy to participate please read the consent form and initial it:
Please Initial Box I confirm that I have read the attached information sheet on the above project and have had the opportunity to consider the information and ask questions and had these answered satisfactorily.
I understand that my participation in the study is voluntary and that I am free to withdraw at any time without giving a reason.
I understand that the interviews will be audio/video-recorded
I agree to the use of quotations that are anonymous/attributed (delete as appropriate)
I agree to take part in the above project
Name of participant Date Signature
240
Name of person taking consent Date Signature
Tom Redshaw