Bitcoin’s Path From Insurgents’ Talisman to Tool of Big Tech

At first, you didn’t even need a pickax. The earliest prospectors of the California gold rush ventured into the Sierra foothills as solo travelers, sloshing through streams in search of nuggets dislodged by the current. That, at least, is the prevailing image: The individual renegade who headed west to strike it rich by his own initiative. But soon there were too many prospectors and too little easy gold. The task became more resource-intensive, requiring water to blast away the hills. That meant size and scale, to build pipes and aqueducts—out of reach to all but a few.

I thought of that history while reporting, earlier this month, on an alleged pyramid scheme involving the digital gold rush of the 2010s, in which people were sold on the idea that mining bitcoin was a path to self-won bounty. Early in this decade, had I possessed the foresight, I might have set up my home computer as a bitcoin miner and reaped healthy rewards. The key was openness. Bitcoin wasn’t worth all that much then, but anyone could do it. The underlying technology, blockchain, seemed to make sure of that, by eliminating the need for intermediaries. The platform would maintain our independence, our state of decentralization.

Then bitcoin went the way of gold. Why? Because it started making people rich.

With more miners competing, mining got more expensive. Higher demand for electricity meant you needed more efficient servers to yield a profit and, soon, economies of scale. Corporations took an interest. Today mining farms are a massive, government-subsidized business. Bitcoin, in turn, became a financial instrument. The banks invested, along with the pension funds. The Commodity Futures Trading Commission declared it a commodity, just like gold. How do you get bitcoin these days? When I bought a tiny fraction of one bitcoin the other day, after years of stubborn resistance, I did it through a popular investing app that sells my data to hedge funds who use it to better inform their bets. Governments can trace bitcoin transactions with ease, so you can’t even use it for crime or political dissent.

But still the myth endures. The message is that bitcoin, by virtue of its technical underpinnings, is something that sits outside of our world—a tool for people left out of the system. That, at least, was the pitch of the pyramid scheme scammers, who preyed on vulnerable people with the message that shares in a fraudulent bitcoin mining operation would save them when the traditional financial system could not. Many were taken in by that promise.

So Bitcoin has strayed a bit from its cypherpunk origins. But not blockchain, right? The underlying platform offers a Platonic form of decentralization, the cryptographic guarantee of trusting no one, of shrugging off central authority. It looked like the perfect antidote to the centralized internet, a weapon of war against Big Tech.

This year, Big Tech made its move into blockchain, in what may ultimately look like a hostile takeover. It was convenient, just as our national conversation moved, threateningly, to antitrust and privacy. Earlier this month, Twitter announced it was (maybe) “decentralizing” with (maybe) blockchain, despite long ignoring the cries of people asking it to do just that (with readily available, non-blockchain technology). Critics noted that more private tweeting would help it dodge concerns about content moderation. Facebook has developed a cryptocurrency, Libra, that it claims it doesn’t control, but which will certainly entrench its power. That move helped spark China to accelerate its own push into digital currency, which would become a handy surveillance tool. It’s unclear what role blockchain will play in that effort, but in any case, Xi Jinping is trumpeting public investment in the technology for other purposes.

The co-opting of blockchain—its inevitable centralization—should not have come as a surprise. It’s a lesson we’ve learned again and again: We bestow our social values upon technology, not the other way around. We‘ve been through this before. Take the internet. First came the promise that it would unlock knowledge and make us all free—until a dictator cuts the cord and companies track and manipulate our behavior. For blockchain, using words like “decentralization” and “self-sovereignty” doesn’t simply make it so. That takes work: protections for privacy and safety, assurances that networks operate as intended. Like the internet, that doesn’t mean the initial hope and promises were untrue; we were just blind, at first, to alternate interpretations—to manipulations of certain ideals.