Crypto-Current (043)

§4.4 —Perhaps it is still premature to entirely write-off the prospects of a political orientation mobilized against Bitcoin (which is to say, a game played in opposition to Bitcoin, rather than through it). This is a resistance struggle still to be expected, despite the historical momentum of its target. Realistic estimation of the odds are rarely decisive in such mobilizations and, even when such calculations are made, manifest futility can inspire no less than it discourages, especially in respect to oppositional intensity (as the word ‘desperation’ announces). Bitcoin merits a Luddite backlash no less than any of the mechanical dehumanizations of social process that have preceded it. Yet successfully back-tracking to the primordial fork – where Bitcoin was initially destined or decided – in order to decide differently would require an impractical reversal of established techonomic advance, without obvious precedent. The blockchaining of the Internet is – if ‘only’ virtually – a done deal.[1]

§4.41 — Even at the level of established ideological alignments the politics of Bitcoin strays from the PPD, at least when this is conceived in its strictest political-economic sense. The cryptocurrency has, for instance, already been raised as a topic of concern on grounds of gender discrimination.[2] Race, ethnicity, sexual orientation, and other dimensions of identity-political grievance cannot be far behind, since disparate impact in this case – as in so many others – approaches logical inevitability. Far more important, however – from the perspective of Bitcoin and its future, if not that of a wider ethico-politically tortured world – is the internal struggle for the ‘soul’ of the crypto-currency, conducted in terms that are essentially oblivious to all extraneous agendas. It is here that our pursuit is pulled onto the remote side of the double game, and into alien tracts that Bitcoin itself opens.

§4.42 — Politics is not easy to kill. This claim would be typically interpreted as an extreme understatement. To dismiss it as no more than a truism, however, is to slide into sheer thoughtlessness. Everything is missed this way. One would then no longer be talking about Bitcoin, but rather justifying a refusal to talk about it. This is not uncommon, of course, but it has become less common, and will become less common still. The conditions for politicization, while broad – and, more significantly, systematically broadened by the core modern socio-cultural process – are not without limits.[3] Reciprocally, the scope of depoliticization tends to be underestimated, due to its (merely) theoretical attenuation within the modern mind, which casts everything as arguable in principle, without realizing how little real purchase this presumption brings. Every institution, of any kind, marks a termination of argument. Finally, that is what an institution is. In particular, property is the installed negative of argument. There is a social economy of argument, or motivated contention, and in reference to this the ideal of total politics – ‘revolution’ in its dramatic political-economic sense – is an inflationary fantasy. There is a real argument budget, quite independent of any libertarian construction of politics as a lamentable social cost. Critical attention has radically-finite capacity. Things are not brought into question for free. Cryptographic developments, by vastly increasing revision costs, are able to skew this economic calculus further against the prospects of effective interference. To bring any phenomenon into socio-political question – as a phenomenon – presumes its prior decryption. There is no politicization of that which cannot first be hacked, and then publicly assimilated, as symmetrical, or dialectical, controversy. Between the cryptic and the sub-, pre-, or anti-political there is no sustainable difference. Whatever escapes argument, eludes the political sphere. This point is not, in itself, dialectical, or partisan-controversial. Critics and advocates of Bitcoin-teleology equally subscribe to it. The zero-degree of political opportunity, coincident with the full actualization of algorithmic governance, is the horizon of the Bitcoin-process. Gauging the remoteness of this horizon is the single greatest question of political economy in the current age.

§4.43 — Even on the hard-libertarian and anarcho-capitalist outer fringes of the Bitcoin Ultras, the resilience of politics is not seriously in question. The prospect of algorithmic governance generates positive (supportive) excitement only in proportion to the estimate of the political obstacle – but that is immense. It is ultimately indistinguishable in scale (and much besides) from artificial intelligence as a practical problem. This is to say that the project, in abstraction, requires the provision of robust autonomy to complex synthetic systems. The final techonomic sense of freedom is nothing else.  

§4.44 — The primary recomposition of politics within Bitcoin is organized by the anticipation of consensus failures, corresponding to hard forks.[4] Such fermentations correspond by close analogy to threats of secession, or horizontal crises shaped by a potential disintegration of the polity under conditions of intolerable stress. Politics here, no less than elsewhere, exhibits its inner complicity with a notion of imperative unity. It is undertaken in order not to split.  

§4.45 — Any constitution is (already) a protocol. It does not require any appeal to figurative language, therefore, to describe a prospective split as a ‘constitutional crisis’.[5] This was clearly exemplified by the conflict between ‘Bitcoin Unlimited’ and ‘Bitcoin Core’,[6] which escalated into the first Bitcoin hard fork. The controversy has been nucleated upon the ‘blocksize debate’, whose antagonists are divided by the trade-offs between efficiency (system-wide transaction-processing capacity) and decentralization (the reciprocal of technical demand or computational load upon a full Bitcoin node). In this way it recapitulates, and concentrates, the principal polarity within the Bitcoin cosmos, differentiating Mainstreamers and Ultras. The failure of the Mainstreamers to become the mainstream within Bitcoin, at least up to 2019, cannot escape notice. Its grain appears to run against them.

§4.46 — The world of Bitcoin development and commentary[7], then, has its own characteristic spectrum, or primary political dimension, irreducible to the Left-Right PPD by any obvious geometrical transformation. It stretches between poles defined by ‘Ultras’ and ‘Mainstreamers’ – roughly, those prioritizing the integrity of the crypto-currency, and those invested in its maximally-accelerated growth. Of course, the former did in fact come first. Their primary attachment is to robust decentralization. Smooth user-functionality is willingly traded away for security, which is to say: for the practicality of mining. Concentration is resisted in principle. The Mainstreamers, in contrast, tend to envisage Bitcoin as a new Internet application, comparable to any other Silicon Valley product suite, despite its abnormal revolutionary scope. If the erosion of its crypto-anarchist rough-edges is the price to be paid for accelerated adoption, they would accept the deal without hesitation,[8] or at least without paralysis. These groups represent what Krawisz identifies as the “two ideologies” of Bitcoin. They correspond to a fork in the liberal lineage, dividing those primarily inclined to antagonize or to cooperate with the state. In this regard, its axis runs orthogonally – or at least obliquely – to the PPD. There are Left and Right factions at both ends of this spectrum, even if the entire complex of controversy it summarizes tends distinctively rightwards. Sociologically, it tends to differentiate entrepreneurs from investors. In other words, it economically distinguishes between the value of bitcoins and of Bitcoin-related businesses. This articulation is complicated, however, by the emergence of a Bitcoin business-sector that is comparatively indifferent to transaction volume, and thus immune to Mainstream seductions.[9] The block-size controversy, in particular, has brought these mutually-antagonistic tendencies into direct confrontation, and a hard fork.

§4.461 — The Mainstreamers want Bitcoin, above all, to grow – into a mainstream financial platform. Predictably, therefore, their attention is locked upon the scaling problem, which they are compelled to make into a central controversy. From their perspective, block-size is the crucial bottle-neck. Small blocks make transaction processing capacity a scarce resource. This can confidently be expected to make it expensive, when it is not rationed in some still less efficient fashion (by lengthened queuing, most obviously). The infotech sector has become especially accustomed to supply glut as a driver of explosive market growth, in transistor manufacture first of all, and then still more dramatically in software and digital content. This recent techno-commercial heritage often leads its established players to sympathize instinctively with the Mainstreamer case. “Bitcoin offends the sensibilities of resource-conscious and performance-measure-maximizing engineers and businessmen alike.”[10] Larry Summers represents it well, while acknowledging the Ultras in contrast[11]:

My guess is that the tradition from which Bitcoin emanates, which is a kind of hyper-libertarian tradition, is going to be a tradition that – if it succeeds – it will leave behind … And so I think one of the retardants of the growth of these technologies is the hyper-libertarian aura that has surrounded them and that continues to play a role in the statements of some in the community …

In a May 2014 Washington Post interview Marc Andreessen nailed his colors to the mast[12] with a comparable absence of ambiguity: “Bitcoin … came from the fringe. And … is in the early stages of mainstreaming today.”

Even if the mainstreaming camp is rarely quite so definite about its partisan position, the basic inclination is comparatively clear. As Bitcoin development becomes increasingly associated with the prospects of serious money (in the traditional sense), the lure of the mainstream – and all its pragmatic compromises – will inevitably grow.

§4.462 — Aaron Van Wirdum concisely identifies the critical concern of the ‘decentralist’ faction: “Bigger blocks tend to centralize mining.”[13] Large blocks take longer to transmit. As the rate of block propagation declines, it increases latency. Access by miners to the current (or updated) state of the network is delayed, with the result that more mining activity is wasted on obsolete blocks. The miner who finds a block also benefits from a head-start on the next, and as latency increases this advantage widens. Such dynamics of increasing returns incline to concentration. They also incline to cryptographic compromise. When mining activity is anonymized, through the Tor network, latency is compounded, which crushes incentives in proportion to block-size. Hiding is made increasingly expensive, and in fact automatically punished. As block-size rises, therefore, it increases selection pressure against small-scale and anonymous miners – exactly those agents most important to the decentralized nature of the system. Since large publically-exposed mining entities are disproportionately sheltered from these effects, they provide the mainstreaming camp with a natural constituency.

§4.4621 — There is still another centralizing incentive resulting from large blocks: it drives miners to accelerate production through pooling. When a miner enters into a pool, responsibility for block validation is delegated, compromising the dispersion of the system. The individual miner no longer contributes an increment of effective distrust, or check, operating at the level of their own discrete hashing activity. Rather, this distributed policing responsibility is partially re-centralized, at the level of the pool. In other words, the pool itself crystallizes a new species of ‘trusted third party’ through collectivization of the mining security function, becoming an intermediary institution. Trust is a short-cut. In the case of pooling, among many others, trustlessness (security) is compromised for speed. The incentives for individual miners to make this trade-off are sharpened as the processing burden placed upon them is increased. Mainstreaming promotes a relaxation of distributed vigilance. The block-size conundrum thus exposes profound tensions between the freedom from transcendent or ‘third-party’ direction – which Back calls ‘policy neutrality’ – and the pragmatics of ‘corporatization’. In Van Wirdum’s words, “It’s only through decentralization and anonymity that the system can remain free from outside influence, such as government regulation.” Intrinsic Bitcoin politics is thus polarized by the trade-off between security and performance, with ‘security’ translatable as systemic independence and flatness. The same virtues can be conceptualized as ‘social scalability’.[14] They enable secure expansion beyond the bounds of traditional trust mechanisms, as constrained by human neurological capacities for social processing.


[1] If Leninist realism required the coupling of “Soviet power” to “the electrification of the whole country” it is unlikely that any position significantly less accommodating than this will remain plausible for the contemporary or near-future Left in its relation to blockchain technologies (meaning, however awkwardly, Bitcoin). See (once again): V. I. Lenin ‘Our Foreign and Domestic Position and Party Tasks’ (November 21, 1920). https://www.marxists.org/archive/lenin/works/1920/nov/21.htm

[2] For the sexual representation ‘problem’ in Bitcoin, see: http://www.motherjones.com/kevin-drum/2015/04/bitcoin-women-problem

[3] The normalization of mass politics appears to be a distinctively modern phenomenon. While court intrigue appears as a constant of civilization, political decision arises only sporadically – and catastrophically – in societies other than our own. An explicitly articulated ‘social question’ is to a very considerable extent a specifically modern development, and its generalization beyond the confines of quasi-academic political economy is peculiarly susceptible to Utopian fantasy. Whether conceived within the broadest possible evolutionary matrix, or more narrowly as a specifically human social phenomenon, politics competes for time. It is in a certain respect a luxury good, all the more vividly when conditions of extreme economic stress conspire to promote its necessity – as exception. Total politics, to the extent it is not sheer idealization, presupposes – and momentarily incarnates – comprehensive social crisis. This, and only this, is what revolution in its leftist acceptation finally means.

[4] Hard forks are speciation events. Their potentialities in this regard tend to be eclipsed by the implicit ideal of integrity conservation. This orientation is an inevitable outcome of Bitcoin’s lineal generative problems and a developmental history in which forks are defined – with perfect if one-sided accuracy – as consensus failures. Bitcoin was not designed to split. It has nevertheless emerged as something that looks very much like a cladistic engine, or digital disintegration machine. Nakamoto Consensus is already a selection mechanism. It excludes anomalies (modeled as double-spending events). Entirely consistent with this function, although beyond its primary scope, is the operationalization of the fork as an origin of species. Crypto-Current predicts the mutation of certain blockchain lineages in this direction, even if the name ‘Bitcoin’ is reserved – ever more explicitly – for the mainstream tendency that refuses it.

[5] For an explicit acknowledgment of the crypto-currency protocol as a constitution, see: http://www.vox.com/2015/8/18/9168977/bitcoin-constitutional-crisis

[6] The list of crypto-currency terminological ironies can be augmented by the oddity that ‘Bitcoin Core’ is the party of decentralization, at least according to their own account of the stakes. The Core case rests on the proposition that decentralization is facilitated by minimizing the system resources required to run a full node. Disintegration of governance within the Bitcoin ecology has no other rigorous basis. Only those players running a full node are producing security. Their opponents are defined by their comparative (and perhaps even absolute) relaxation on the block-size question (and thus about the prospects of increasing the system resources required to operate a full node).

[7] In the world of code, the line between engagement and commentary is – finally – impossible to draw with confidence. The sense acquired by a ‘comment’ in computer science, to describe a remark attached to a program that will be ignored by the compiler, is of obvious relevance. It is between the formally executable segments of a program and those extraneous elements which have been formally determined as non-executable that the wavering line between ‘action’ and ‘reflection’ is now drawn.

[8] “Accenture’s global head of financial services, Richard Lumb, said that the development was about ‘adapting the blockchain to the corporate world’ in order to ‘make it pragmatic and useful for the financial services sector.’ […] Accenture aims to create a so-called permissioned blockchain — an invitation-only implementation of the technology, and the one currently favored by banks. That’s in contrast to permissionless blockchains, such as Bitcoin, which rely on the fact that they can’t be edited as a means of providing an immutable record of transactions. Accenture insists that the feature would be used only in ‘extraordinary circumstances,’ so that troublesome errors could be undone. […] Blockchain purists, however, seem unimpressed by the idea. …”

It would be difficult to improve upon this illustration of the appetite for fundamental compromise that characterizes Mainstreamer opinion.

https://www.technologyreview.com/s/602434/is-an-editable-blockchain-the-future-of-finance/

[9] As the ‘Bitcoin Unlimited: Articles of Federation’ argues: “In the Bitcoin Core variant … we see a project controlled by a small group of developers employed by finance-oriented for profit startup companies, and the emergence of corporate products (Lightning network, Side-chains and permissioned ledgers) that would materially benefit from a Bitcoin network that is incapable of handling the transactional demand required for a worldwide public good.” https://www.bitcoinunlimited.info/resources/BUarticles.pdf

[10] Szabo: http://unenumerated.blogspot.hk/2017/02/money-blockchains-and-social-scalability.html

[11] Source: https://www.youtube.com/watch?v=UVGq0zaZsNg&feature=youtu.be

[12] ‘Marc Andreessen: In 20 years, we’ll talk about Bitcoin like we talk about the Internet today’: http://www.washingtonpost.com/blogs/the-switch/wp/2014/05/21/marc-andreessen-in-20-years-well-talk-about-bitcoin-like-we-talk-about-the-internet-today/

[13] Van Wirdum’s article was described by Adam Back (on Twitter) as the “Best article yet on what Bitcoin ‘is’ & why decentralisation is necessary.” 

https://bitcoinmagazine.com/21919/decentralist-perspective-bitcoin-might-need-small-blocks/

[14] Szabo: http://unenumerated.blogspot.hk/2017/02/money-blockchains-and-social-scalability.html