What is Co-‐production in Libertarian Networks in Bitcoin?

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: meetup (accessed 18/09/17)

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

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.

2.1 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.

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 21^st 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 paralelnipolis (accessed 13/10/16)

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’.

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).

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:

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:

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.

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).

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.

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

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: yanisvaroufakis (accessed 13/10/16)

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

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

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

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)

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

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

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:

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).

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.

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.

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.

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

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 bitcoinmanchester (accessed 13/10/16)

⁸⁷ Available at upper-‐space (accessed 13/10/16)

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

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

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’.

1.1 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

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 gov uk (accessed 13/10/16)

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 1^st 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 gov uk (accessed 13/10/16)

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

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.

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 blockchain (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

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)

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.

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:

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

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.

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 ukdca (accessed 13/10/16)

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 twitter (accessed 13/10/16)

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

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)

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 blog ethereum (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.

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.

1.1 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,

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.

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.

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

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?

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What is Co-‐production in Libertarian Networks in Bitcoin?

2.1 Co-‐production in Libertarian Networks

1.1 The Enrolment of Bitcoin into Strategies of Power

1.1 The Irony of Cooptation

Conclusion

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2.1 Co-­‐production in Libertarian Networks

1.1 The Enrolment of Bitcoin into Strategies of Power

1.1 The Irony of Cooptation

Conclusion

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2.1 Co-‐production in Libertarian Networks