Social Science Literature Summaries on Money, Crypto, and Blockchain (Part 1)

Andy Greenberg — This Machine Kills Secrets (2012)

Greenberg provides a detailed history of leaking, whistleblowing, exposing secrets, cryptography, and anonymity. It is overall an excellent text for understanding the autobiographical details of important hackers and leakers, where we get a good sense of their ethical dispositions. The book allows the reader to comprehend how people in whistleblowing movements operate and think. It also addresses how these actors are united by certain core beliefs (but also shows where they differ/diverge) and how this often makes it difficult for them to unite in a mutual goal.

“The Whistleblowers” chapter begins with the story of Daniel Ellsberg, a military strategist who helped strengthen public opposition to the Vietnam War in 1971 by leaking top-secret US documents known as “the Pentagon Papers” to the New York Times. Ellsberg’s story is juxtaposed against a more recent leak committed by Chelsea (Bradley) Manning, a former US Army soldier who disclosed to WikiLeaks classified and sensitive military and diplomatic documents. The purpose of giving this comparative account of the two leakers is to provide a chronological account of how leaking developed.

The author then moves on to talk about the early Cypherpunks, how the group was established, collaborations between members (David Chaum, Eric Hughes, John Young, Jim Bell) discussing their aspirations and commitments to privacy activism. In the chapter, “the Onion Routers”, Tor’s logic and technicalities are briefly explained, where he introduces the minds behind Tor, including Paul Syverson and Jacob Applebaum (Tor’s chief engineer).

“The Plumbers” talks about government employees/contractors appointed to seize government secrets from reaching the public. The chapter discusses Peiter “Mudge” Zatko, DARPA, The L0pht, and introduces Anonymous and how it found common cause with WikiLeaks as both loathed the Church of Scientology. He then discusses Anonymous’s attack on HBGary and Aaron Barr, ends with an NSA analyst named Thomas Drake who was charged for espionage.

“The Globalizers” looks at the international nature of whistleblowing, looking at how whistleblowing is dealt with in Iceland, Sweden, Bulgaria.

The last chapter, “The Engineers” looks at the individuals behind WikiLeaks, introducing “the architect” aka Daniel Domscheit-Berg. At the end of the book, Greenberg seems to suggest in the end that no one seems to be able to address the complex moral problems that arise from whistleblowing.

David Graeber — Debt: The First 5000 Years (2011)

Anthropologist David Graeber opens up the first chapter of the book by debunking the myth commonly taught by economists; that before money, commerce happened through bartering. In popular narratives, “bartering” is often written as something that “makes us human” (i.e. Adam Smith). Graeber disagrees with this, stating that “credit” actually came first (the IOU). He in fact goes as far as to argue that there is little evidence that “barter economies” ever existed in early civilization according to most anthropologists. Lots of evidence points to the idea that early societies actually had sophisticated local economies that functioned using credit (not coins).

Graeber makes an interesting comparison between virtual money and the money system used by ancient civilization (i.e. stone tablets), arguing that virtual currency (i.e. Bitcoin) is nothing new, but simply adopts the same logic of “credit” as early civilization. Credit systems worked because these communities were small and tight-knit (people trusted each other).

Graeber talks about religion and the idea of “primordial debt”, where we come to recognize that the IOU system worked perfectly well for debts that could be repaid. In cases where debt could never be repaid (i.e. debt to god), this is when money started becoming relevant. He argues that the impetus for money and gold wasn’t trading/bartering necessarily but actually “tribute” (since it can never truly be repaid) and this why an IOU system wouldn’t work for “debt that can't be repaid”.

Hence, we see the implementation of coins when it was for repaying “eternal debts” (religious) and for “injurious debts” (settling wrongs) — neither of these has anything to do with commerce. Hard currency takes over commerce during the Axial Age when there is a rise of Roman, Indian, Chinese empires. Graeber argues that the reason metal coinage finally rises is because of war/violence (the military coinage slave complex). Coins are used to support soldiers because can’t pay armies IOUs, as they are too mobile. Metal coinage is also an effective way to enslave a conquered nation via payments/taxes. The conquered must obtain the coins somehow, which puts them at a disadvantage since they have to accept the terms of their own labor.

Graeber makes the important point that all debt, in the end, needs to be considered in relation to its enforcement mechanism. In an economic system where there is IOU, money is a unit of trust where the rules around enforcement of debt are made in a context where people generally know/trust each other. Alternatively, with hard currency, enforcement is not based on trust but rather force, especially when the enforcement is state-backed violence. In other words, hard currency shows up usually in a military or colonial context. For example, the rise of coinage coincided with a rise in organized military power and empire-building. The last chapter of this book is dedicated to discussing more on this and other contemporary financial and political issues; world wars, the US dollar, and the move off the gold standard in 1971.

Decentralization: An Incomplete Ambition by Nathan Schneider (2019)

Media scholar, Nathan Schneider, offers both a brief history and a cautionary tale around decentralization’s use as a rhetorical strategy. Schneider's work is important because it reveals how decentralization is hardly a novel aspiration in many fields, especially digital ones. Political scientists, for example, have talked about decentralization as a design feature of government institutions. In digital cultures, the early Internet, stemming back to its militaristic origins, was imagined as a “distributed” network, where having no single point of failure was believed to make the technology resilient if a nuclear attack was to break out. From the onset, digital counter-cultural movements that emerged as early as the 1960s (like the “hippie” entrepreneurs Steward Brand and the Whole Earth Network) started bringing the San Francisco bohemian scene and the Silicon Valley tech hub together, engaging in decentralization rhetoric to convey their countercultural visions of the early Internet. Many Silicon Valley start-ups soon after began advertising creative solutions for businesses that promised to “cut out the middleman”. Nowhere has this “selling” been more vocal than in blockchain and crypto-based network cultures.

Why is this problematic?

Schneider recounts how, despite decentralization’s frequent use as a self-evident concept, it still lacks specificity: “people operating in each domain have discovered a lack of consistent usage even among themselves” (p. 8). We especially see this in blockchain-based endeavors, where commitments to decentralization have been expressed by left-libertarians, anti-capitalist agitators, to capitalist friendly libertarians. While each of these political strands represents different things, the rhetoric of decentralization is something that seems to cut across all of them.

Schneider describes decentralization as a “floating signifier” — defined as a concept that has no agreed-upon meaning, yet functions in a way that allows individuals coming from different ideological strands to participate in a mutual goal. What this tells us is that, decentralization, as a concept, not only lacks specificity but that when in operation, it can distract us from recognizing the hierarchies that often precipitate from the use and implementation of decentralized systems (especially when the concentration of power starts to form in decentralized systems).

The White Paper — Bridle, Nakamoto, Brekke (2019)

This book conjoins Nakamoto’s white paper with an introductory by media artist and critic James Bridle and a final exegesis by geography scholar and blockchain aficionado, Jaya Klara Brekke. The value of this compilation lies in learning about the historical events around cryptography and other technologies that made Bitcoin imaginable, possible, and successful. Through Bridle’s introduction to cryptography, we recognize how Nakamoto’s Bitcoin was not a decentralized payment system that suddenly just appeared out of thin air one day.

Bridle describes cryptography’s prominent role in the Second World War; he outlines early cryptographic-based technologies like the German Enigma Machine and the Colossus — the first electronic computer developed by British codebreakers that helped break the German Lorenz cipher. From its earliest days, cryptography was defined as a weapon, solely belonging to governments. With the outbreak of the “crypto wars” in the nineties, it was then that cryptography finally managed to escape tight government control and land in the hands of the public. This was thanks to a security programmer by the name of Phil Zimmerman who released a cryptographic-based program, PGP (Pretty Good Privacy) that allowed users to encrypt their email messages from their home computers. Although the program was allegedly only shared amongst Zimmerman’s friends, it ended up on the Internet. This led to a serious federal investigation on Zimmerman that was later followed by a series of digital rights protests.

The next contribution is by author, Jaya Brekke, who critically analyzes Nakamoto’s terminology in the white paper and breaks it down into layman terms. Brekke shows how the idea of “trustlessness” needs to be questioned and debriefs us on why Bitcoin’s narrative on neutrality is a myth: even though the system is designed in such a way that makes it disinterested, this ultimately means that the system at some point becomes its own mediator. And yet, when conflicts arise, there is no systematic way of dealing with them as we have seen in the case of the Bitcoin scaling dispute. While traditional systems offer parties an opportunity for appeal by involving a third-party mediator to assist in conflict resolution, decentralized systems do not.

Breaking down Nakamoto’s terminology into lay terms, Brekke shows how the idea of “trustlessness” should not be taken at its face value. Brekke rightly points out that when we decide to use systems like Bitcoin, in the beginning, we still need to develop some sort of trust toward these technologies. We must also develop trust in the cryptocurrency exchanges where we buy bitcoins. Most importantly, she reminds us that we must develop trust towards ourselves when we handle our private keys — a secret phrase that allows users to access their crypto funds. If you lose your private key, you cannot recover it, and therefore lose access to your crypto funds forever.

In the same vein, Brekke debriefs us on why Bitcoin’s narrative on neutrality is a myth. Even though the system is designed in such a way that makes it disinterested, this ultimately means that the system at some point becomes its own mediator. And yet, when conflicts arise, there is no systematic way of dealing with them as we have seen in the case of the Bitcoin scaling dispute. While traditional systems offer parties an opportunity for appeal by involving a third-party mediator to assist in conflict resolution, decentralized systems do not.