{"id":20415,"date":"2022-11-25T09:18:00","date_gmt":"2022-11-25T14:18:00","guid":{"rendered":"https:\/\/me-en.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/20415\/"},"modified":"2022-11-30T23:49:14","modified_gmt":"2022-11-30T19:49:14","slug":"crypto-actually-cryptocurrency-politics-and-metaverse","status":"publish","type":"post","link":"https:\/\/me-en.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/20415\/","title":{"rendered":"Crypto, really. Part III: cryptocurrency politics, and the future"},"content":{"rendered":"<style>.c-wysiwyg blockquote{background: rgb(0 153 129 \/ 10%);}.c-wysiwyg blockquote p{font-style:normal} .img-big { width: 100vw!important; max-width: 66.875rem!important; left: 53%!important; position: relative; transform: translateX(-50%); }.accent{color: #00a88e; margin: 0;font-size:1.5rem;font-weight: 900;}.c-wysiwyg .accented-list li:before {top:1.15rem}.c-wysiwyg .accented-list li{margin-bottom:1.25rem}.c-wysiwyg hr+*{margin-top:2.5rem}.c-wysiwyg hr{border-bottom: 2px solid #00a88e; width: 120px;margin: 1rem 0 -1.25rem 0;}blockquote h5 { color: #00a88e; font-style: initial; } span.accented-quote { display: block; font-size: 60px; font-family: sans-serif; line-height: 20px; margin-top: 30px; margin-left: -3px; }@media(min-width: 40.6875rem){.accent{font-size:2rem}.c-wysiwyg .accented-list li:before {top:1.75rem}.c-wysiwyg hr{border-bottom: 2px solid #00a88e; width: 160px;}}.c-wysiwyg ol>li:before{left: -1.85rem; top: -0.25em; font-size: 2.875rem;}.c-wysiwyg ol>li{padding-left: 1rem;}span.footnotes { position: relative; display: inline-block; border-bottom: 3px dashed #e5f6f3; line-height: 1em;transition: 0.5s; background: transparent; color: #00a88e; cursor: pointer; } span.note { color: rgba(0,0,0,.8); position: absolute;line-height: 1.6em; width: 500px; opacity: 0; visibility: hidden; left: 0; top: 15px; transform: translateX(-50%); transition: 0.3s; background: white; padding: 15px 20px; box-shadow: 0px 3px 7px #ababab; border-radius: 3px; cursor: initial; } span.footnotes:hover { background: #00a88e2e; } span.footnotes:hover .note { z-index:999;opacity: 1; visibility: visible; }@media(max-width:768px){span.footnotes:hover .note{display:block;box-shadow: 0 0 0 4000px #7070707a;}span.footnotes .note {display: none; position: fixed; bottom: 0; top: auto; left: 0%!important; right: 0%!important; width:100vw; box-shadow: 0 0 0 4000px #70707000; z-index: 9999;transform: none;}}.c-wysiwyg .illustration-list { margin-left: 0; display: grid; grid-column-gap: 5vw; grid-template-areas: \"a a\" \"b c\" \"d e\"; } @media (max-width: 640px) { .illustration-list { grid-template-areas:\"a\" \"b\" \"c\" \"d\" \"e\" }  } .c-wysiwyg .illustration-list li { margin-bottom: 2em; } .illustration-list li:before { display: none; } .illustration-list span.accent { font-size: 1em; } .illustration-list img { width: 128px; }.desktop-banner {display:block!important} .mobile-banner{display:none!important} @media(max-width:768px){.desktop-banner {display: none!important} .mobile-banner{display: block!important}}<\/style>\n<p><script>$(function() { function positionFootnotes(note){ const winWidth = $(window).width(); if (winWidth<768) return; const noteWidth = note.offset().left + note.width() + 50; if(winWidth < noteWidth) { note.css({left: winWidth - noteWidth}) }; if(note.offset().left<0) { note.css({left: -note.offset().left + 10}) } }; $('.footnotes .note').each((i,o)=>{ positionFootnotes($(o)) }); $('.footnotes').mouseover(e=>{ const note = $('.note', e.currentTarget); positionFootnotes(note) }); });<\/script><\/p>\n<blockquote><p>Disclaimer: the opinions of the author are his own and may not reflect the official position of Kaspersky (the company).<\/p><\/blockquote>\n<p>\nThe first two parts of this series established that <a href=\"https:\/\/www.kaspersky.com\/blog\/crypto-actually-blockchains-and-cryptocurrencies\/45181\/\" target=\"_blank\" rel=\"noopener nofollow\">cryptocurrencies<\/a> and <a href=\"https:\/\/www.kaspersky.com\/blog\/crypto-actually-non-fungible-tokens\/45597\/\" target=\"_blank\" rel=\"noopener nofollow\">NFTs<\/a> ended up in a place far from where they claimed they were heading. And we might as well have stopped there: after all, our initial line of questioning cynically revolved around the possibility of getting rich off NFTs. So what\u2019s left to say now that we\u2019ve established how unlikely getting rich is? Wouldn\u2019t carrying on be like flogging a dead horse?<\/p>\n<p>Unfortunately, the horse isn\u2019t quite dead. Even though I might have succeeded in dissuading you from entering the cryptocurrency world, and even though that world has experienced a <a href=\"https:\/\/inews.co.uk\/light-relief\/cryptocurrency\/crypto-crashing-why-bitcoin-price-crash-explained-cryptocurrency-will-recover-celsius-1685219\" target=\"_blank\" rel=\"noopener nofollow\">major crash<\/a> recently, powerful forces are at work to ensure not only its survival but also its penetrating deeper into our daily lives. This is why, before we part ways, there\u2019s one final and crucial point I need to make: <strong>cryptocurrencies don\u2019t fulfill anything they promised; but even if they did <\/strong>\u2014 <strong>it would be a disaster.<\/strong>\n<\/p>\n<h2>The bank run<\/h2>\n<p>\nLet us start with a discussion of the current state of the cryptocurrency market. In May 2022, its capitalization fell from <a href=\"https:\/\/coinmarketcap.com\/charts\/\" target=\"_blank\" rel=\"noopener nofollow\">1.8 to 1.2 trillion dollars<\/a>, which is to say that it lost roughly the equivalent of the GDP of Poland. At the time of this writing, we\u2019re now down to $1T. The NFT space also <a href=\"https:\/\/www.theguardian.com\/technology\/2022\/jul\/02\/nft-sales-hit-12-month-low-after-cryptocurrency-crash\" target=\"_blank\" rel=\"noopener nofollow\">drastically shrunk<\/a> in the first half of 2022 \u2014 triggered by severe blows to the ecosystem, in which major actors experienced liquidity problems. This November, one of the biggest exchanges in the world \u2014 FTX \u2014 filed for bankruptcy, and its management is facing <a href=\"https:\/\/edition.cnn.com\/2022\/11\/13\/business\/ftx-bahamas-criminal-investigation\/index.html\" target=\"_blank\" rel=\"noopener nofollow\">accusations of gross misconduct<\/a>. With <a href=\"https:\/\/twitter.com\/wallstreetsilv\/status\/1591189027239387136\" target=\"_blank\" rel=\"noopener nofollow\">liabilities of $10-50<\/a> billion, FTX\u2019s fall is sure to change the crypto landscape forever. But 2022 had already been a rough year: <a href=\"https:\/\/www.investopedia.com\/terms\/s\/stablecoin.asp\" target=\"_blank\" rel=\"noopener nofollow\">stablecoins<\/a> such as <a href=\"https:\/\/tether.to\/en\/\" target=\"_blank\" rel=\"noopener nofollow\">Tether<\/a> or <a href=\"https:\/\/www.terra.money\/\" target=\"_blank\" rel=\"noopener nofollow\">Terra<\/a> \u2014 crypto-assets attempting to maintain parity with the US dollar \u2014 had already <a href=\"https:\/\/www.coindesk.com\/learn\/the-fall-of-terra-a-timeline-of-the-meteoric-rise-and-crash-of-ust-and-luna\/\" target=\"_blank\" rel=\"noopener nofollow\">faced severe difficulties<\/a>. Stablecoins offer a low-volatility (ideally, no-volatility) way of storing capital without leaving the cryptocurrency space. If you expect Ethereum to go down, you can exchange all your reserves against their equivalent amount in stablecoin, and buy Ethereum again at a lower price later. The process is quicker and cheaper than having to cash out to dollars \u2014 even temporarily.<\/p>\n<div id=\"attachment_46350\" style=\"width: 1810px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25185905\/crypto-actually-cryptocurrency-politics-and-metaverse-1.png\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46350\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25185905\/crypto-actually-cryptocurrency-politics-and-metaverse-1.png\" alt=\"The exchange rate of Bitcoin over the last year\" width=\"1800\" height=\"900\" class=\"size-full wp-image-46350\"><\/a><p id=\"caption-attachment-46350\" class=\"wp-caption-text\">The exchange rate of Bitcoin over the last year <a href=\"https:\/\/coinmarketcap.com\/currencies\/bitcoin\/\" target=\"_blank\" rel=\"noopener nofollow\">Source<\/a><\/p><\/div>\n<p>Obviously, the stablecoins\u2019 one-to-one parity with the dollar has to be guaranteed somehow \u2014 otherwise they\u2019re just another volatile cryptocurrency on the market. Some rely on <a href=\"https:\/\/www.euronews.com\/next\/2022\/08\/15\/terra-luna-crash-i-alone-am-responsible-says-ceo-do-kwon-in-first-interview-since-collapse\" target=\"_blank\" rel=\"noopener nofollow\">algorithmic means<\/a> to maintain the balance, while others promise they have <a href=\"https:\/\/www.cnbc.com\/2022\/05\/17\/tether-usdt-redemptions-fuel-fears-about-stablecoins-backing.html\" target=\"_blank\" rel=\"noopener nofollow\">enough fiat reserves<\/a> to back the currency. In both cases, recent spikes in attempts to cash out have not gone well and cast legitimate doubt about stablecoins\u2019 ability to maintain their value under strain. This has caused more people to attempt abandoning what looked more and more like a sinking ship \u2014 increasing the pressure on the stablecoins and making the problem worse. Dollar parity was lost. The panic spread. Exchange rates for all cryptocurrencies were affected, and other companies got dragged down as well. Earlier this year, <a href=\"https:\/\/celsius.network\/\" target=\"_blank\" rel=\"noopener nofollow\">Celsius<\/a>, a company that acted as a commercial bank for cryptocurrencies, had to freeze withdrawals and eventually filed for bankruptcy\u00a0<span class=\"footnotes\">[1]<span class=\"note\"> In addition to facing liquidity issues due to customers withdrawing their funds, Celsius had <a href=\"https:\/\/www.thismorningonchain.com\/articles\/defi\/celsius-made-all-the-wrong-moves-and-now-its-dying\/\" target=\"_blank\" rel=\"noopener nofollow\">invested a lot of its Ether<\/a> in a derived product (\u201c<a href=\"https:\/\/stake.lido.fi\/\" target=\"_blank\" rel=\"noopener nofollow\">sETH<\/a>\u201c) allowing them to pre-stake money in Ethereum\u2019s future proof-of-stake validation scheme (see part II). Unfortunately, the switch to proof-of-stake keeps being delayed by Ethereum developers, sETH are loosing their value, and the pre-staked ETH remain essentially locked, worsening the solvency problems of Celsius.<\/span><\/span>. Shortly afterward another crypto-bank, Babel, <a href=\"https:\/\/babel.finance\/article-views.html?id=50\" target=\"_blank\" rel=\"noopener nofollow\">also suspended withdrawals<\/a> due to liquidity problems. The exact same thing has taken place in recent weeks after rumors that FTX might not be solvent surfaced. Doubling down on the already high levels of irony, the ecosystem created to \u201cfree the masses from banks\u201d is experiencing bank-run after bank-run.\n<\/p>\n<h2>Cryptocurrencies are exposed to inflation<\/h2>\n<p>\nThe reasons why so many people have been trying to cash out in the last few months, leading to this crash, are worth looking into. Most observers agree that <a href=\"https:\/\/inews.co.uk\/light-relief\/cryptocurrency\/crypto-crashing-why-bitcoin-price-crash-explained-cryptocurrency-will-recover-celsius-1685219\" target=\"_blank\" rel=\"noopener nofollow\">the root cause is inflation<\/a>\u00a0<span class=\"footnotes\">[2]<span class=\"note\"> Another reason is the fact that due to the prices of energy skyrocketing and exchange rates plummeting, mining is less and less profitable.<\/span><\/span>, currently affecting most real-world economies. Investors become more risk averse in the context of a downturn and individuals need to tighten their belts \u2014 depriving the ecosystem of the influx of newcomers it depends on, and taking capital out of the ecosystem.<\/p>\n<p>This is noteworthy because one of the main arguments heard in favor of cryptocurrencies is how they can be used as <a href=\"https:\/\/cointelegraph.com\/news\/is-bitcoin-really-a-hedge-against-inflation\" target=\"_blank\" rel=\"noopener nofollow\">a refuge against inflation<\/a> and other currency manipulation from governments. After all, monetary creation in cryptocurrencies is set in stone: for instance, the overall supply of Bitcoins will gradually increase until it reaches 21 million, and then stagnate forever. Cryptocurrency enthusiasts are usually quick to point the finger at <a href=\"https:\/\/en.wikipedia.org\/wiki\/Quantitative_easing\" target=\"_blank\" rel=\"noopener nofollow\">quantitative easing<\/a> (QE) as a cause for inflation and proof that governments should not be trusted with currency. It\u2019s actually the other way around: the crypto-market flourished for as long as QE policies flooded investors with free cash. But now that the party\u2019s over everyone\u2019s rushing for the exit.<\/p>\n<p>We already knew that, contrary to early cryptocurrency design goals, government decisions had an impact on the cryptocurrency world \u2014 like when <a href=\"https:\/\/www.nytimes.com\/2021\/09\/24\/business\/china-cryptocurrency-bitcoin.html\" target=\"_blank\" rel=\"noopener nofollow\">China banned mining on its territory<\/a>. Today it\u2019s also obvious that it\u2019s not as decoupled from the real-world economy as its proponents would have wanted.<\/p>\n<div id=\"attachment_46351\" style=\"width: 1188px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25185955\/crypto-actually-cryptocurrency-politics-and-metaverse-2.png\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46351\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25185955\/crypto-actually-cryptocurrency-politics-and-metaverse-2.png\" alt=\"Bitcoin has experienced long periods of high inflation in the past despite its slowly-increasing supply. This reveals how it is impacted by external factors its algorithmic governance cannot correct. \" width=\"1178\" height=\"508\" class=\"size-full wp-image-46351\"><\/a><p id=\"caption-attachment-46351\" class=\"wp-caption-text\">Bitcoin has experienced long periods of high inflation in the past despite its slowly-increasing supply. This reveals how it is impacted by external factors its algorithmic governance cannot correct. <a href=\"https:\/\/coinmarketcap.com\/currencies\/bitcoin\/\" target=\"_blank\" rel=\"noopener nofollow\">Source<\/a><\/p><\/div>\n<h2>The absurdity of apolitical money<\/h2>\n<p>\nWhile part I of this series focused on the notion that cryptocurrencies are not proper currencies at all, a blind spot that remains to be addressed is the notion that they could one day be improved enough to serve this purpose. Many enthusiasts are acutely aware of the flaws in existing blockchain technologies, but remain adamant that <a href=\"https:\/\/blog.cryptographyengineering.com\/2022\/06\/09\/in-defense-of-cryptocurrency\/\" target=\"_blank\" rel=\"noopener nofollow\">future breakthroughs will solve everything<\/a>. They\u2019re wrong, not because mankind\u2019s ability for engineering is limited, but because the idea is doomed from the outset.<\/p>\n<p>Historically, managing money has always been the prerogative of states. Visigoth law in the 7<sup>th<\/sup> century allowed the use of torture to investigate money counterfeiting (in the end the guilty party would have a hand cut off). In the Carolingian Empire (AD 750-900), such crimes were punished \u201cby fire and by death\u201d, while 15<sup>th<\/sup> century Brittany opted for boiling and hanging (in that order). Approaching modern day, counterfeiters were still sentenced to death in France \u2014 right up until capital punishment was abolished in 1981. And today, we live in a world where the homeless get three to six years in jail for <a href=\"https:\/\/www.nycourts.gov\/reporter\/3dseries\/2019\/2019_00371.htm\" target=\"_blank\" rel=\"noopener nofollow\">attempting to buy food<\/a> with fake $20 bills. The message \u2014 still \u2014 is clear: don\u2019t ever mess with money.<\/p>\n<p>This is a lesson that Facebook, a company that arguably gets away with a lot, learned the hard way when it attempted to launch <a href=\"https:\/\/www.diem.com\/en-us\/\" target=\"_blank\" rel=\"noopener nofollow\">its own stablecoin<\/a>. The idea was for big tech companies (including Uber, Lyft, Spotify, PayPal and MasterCard) to create their own universal currency for the digital realm. But, faced with regulatory pushback from US authorities, they had to <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-01-25\/zuckerberg-s-stablecoin-ambitions-unravel-with-diem-sale-talks\" target=\"_blank\" rel=\"noopener nofollow\">give up on the project<\/a>\u00a0<span class=\"footnotes\">[3]<span class=\"note\"> Interestingly, Cambridge Analytica, the infamous company known for harvesting data from 87 million Facebook users and using it to deliver very targeted ads to voters on the social network, also considered <a href=\"https:\/\/www.nytimes.com\/2018\/04\/17\/technology\/cambridge-analytica-initial-coin-offering.html\" target=\"_blank\" rel=\"noopener nofollow\">launching its own digital currency<\/a>. Its project was described as \u201ca means of being able to basically inflict government control and private corporate control over individuals, which just takes the whole initial premise of this technology and turns it on its head in this very dystopian way\u201d.<\/span><\/span> and sell all intellectual property and assets. Governments immediately recognized this attempt as a challenge of their power, so nipped it in the bud.<\/p>\n<p>When tech firms attempt to release their own coin, they tend to miss a key aspect of money: currency does not exist in a vacuum as one of many interchangeable means of exchange, but is part of a broader economic system that is deeply integrated with the fabric of our societies. Maintaining a stable economy is widely regarded as one of the main roles states are supposed to fulfill. And when they fail you can expect dramatic plot twists. The Great Depression of 1930 is <a href=\"https:\/\/www.loc.gov\/classroom-materials\/united-states-history-primary-source-timeline\/great-depression-and-world-war-ii-1929-1945\/overview\/\" target=\"_blank\" rel=\"noopener nofollow\">considered<\/a> to be a major factor that led to World War II. In 1788 and 1789, right before the French Revolution, two successive years of bad crops resulted in a loaf of bread costing 88% of an average worker\u2019s wages (it didn\u2019t end well for the folks in charge).<\/p>\n<p>Currency should be regarded as part of the toolbox that states can leverage when the greater good is at stake. Central banks can and should devaluate or revaluate currency, and even print more depending on the context. Why? Because otherwise, people die. Arguing that this power should be in the hands of self-interested, private actors (or not exist at all) requires nothing short of blind faith in the stabilizing effects of deregulated capitalism. It is the digital equivalent of saying that we want the people responsible for the subprime crisis to take over the Federal Reserve. If you want a less dramatic example, look no further than the Eurozone: member states have adopted a global currency controlled by the European Central Bank, to which they essentially relinquished monetary policymaking. Now deprived of the tools described above, individual states of the Union have struggled to withstand recent financial crises. <a href=\"https:\/\/www.researchgate.net\/publication\/304721741_Borders_Matter_Why_the_Euro_is_a_Mistake_and_Why_it_will_Fail\" target=\"_blank\" rel=\"noopener nofollow\">Experts<\/a> <a href=\"https:\/\/dailynewshungary.com\/governor-of-hungarys-central-bank-introducing-the-euro-was-a-mistake\/\" target=\"_blank\" rel=\"noopener nofollow\">agree<\/a> <a href=\"https:\/\/www.euractiv.com\/section\/euro-finance\/news\/economic-nobel-prize-winner-the-euro-was-a-mistake\/\" target=\"_blank\" rel=\"noopener nofollow\">this was<\/a> <a href=\"https:\/\/blogs.lse.ac.uk\/europpblog\/2016\/09\/05\/interview-joseph-stiglitz-brexit-euro-mistake\/\" target=\"_blank\" rel=\"noopener nofollow\">a terrible<\/a> <a href=\"https:\/\/www.forbes.com\/sites\/timworstall\/2015\/11\/03\/experts-agree-the-euro-was-a-mistake-in-the-first-place-now-to-abolish-it-perhaps\/\" target=\"_blank\" rel=\"noopener nofollow\">idea<\/a>\u00a0<span class=\"footnotes\">[4]<span class=\"note\"> This statement should not be interpreted as fundamental opposition to a union among European people from my part, on the contrary. My position is simply that the way it was implemented has important shortcomings, in particular where the euro is concerned. For the record, I also don\u2019t believe that it would be realistic to go back at this point.<\/span><\/span>.<\/p>\n<p>The debatable use of devaluation or quantitative easing by states is often used as an argument as to why people should trust cryptocurrencies. There\u2019s no denying that these tools have been used incompetently on numerous occasions, but that\u2019s hardly a good reason to argue that they should never be used again. <strong>Money is so integral to statecraft, it can only be political<\/strong> \u2014 and an essential aspect of politics is its conflictual nature. Politics exists because people disagree on things, including how to manage money. Cryptocurrency\u2019s premise that algorithms should be implemented to solve those disagreements is a symptom of a widespread and worrying belief in the tech space that we can find technological solutions to political problems. Our industry\u2019s stellar rise to power has afflicted many computer scientists with the delusion that their understanding of the computers modern society runs on translates into an ability to understand the problems of society itself\u00a0<span class=\"footnotes\">[5]<span class=\"note\"> Our blissful ignorance of the most basic economic and diplomatic principles is perhaps best illustrated by <a href=\"https:\/\/cointelegraph.com\/news\/why-the-rise-of-a-bitcoin-standard-could-deter-war-making\" target=\"_blank\" rel=\"noopener nofollow\">this interview<\/a>, in which an advisor at Blockchain Capital LLC argues that using Bitcoin as a global currency would prevent wars, because borrowing money would be so impractical states wouldn\u2019t be able to fund long and unpopular conflicts.<\/span><\/span>. This couldn\u2019t be more wrong:\n<\/p>\n<ul>\n<li>The algorithms devised so far have unequivocally failed to fix anything \u2014 as parts I and II of this series demonstrated.<\/li>\n<li>Any algorithm proposed in the future will be shot down as soon as it rises in prevalence, since states have an existential need to safeguard their control over their currencies.<\/li>\n<li>Algorithms were never the right approach to monetary policy in the first place, as this policy should always result from social consensus and be re-evaluated on a periodic basis. As such, it resides purely in the political realm.<\/li>\n<\/ul>\n<p>\nWorse, the idea that management by algorithms would be impartial and therefore fairer is also fallacious. <strong>There\u2019s no such thing as a neutral algorithm; there are only algorithms with hardcoded politics<\/strong>\u00a0<span class=\"footnotes\">[6]<span class=\"note\"> The idea that <a href=\"https:\/\/twitter.com\/santiagoroel\/status\/1447538889263091717\" target=\"_blank\" rel=\"noopener nofollow\">cryptocurrencies are neutral technologies<\/a> and that their built-in transparency is a strong incentive against bad behavior comes up a lot in discussions on the subject. It\u2019s not only false (anyone paying attention is aware of the countless scams and market manipulations plaguing the ecosystem), it also ignores how technological breakthroughs restructure society in ways that are absolutely not neutral (e.g.,\u00a0the printing press, the steam engine, computing, the internet, etc.).<\/span><\/span>.\n<\/p>\n<h2>The politics of cryptocurrencies<\/h2>\n<p>\nWe must therefore examine what political beliefs are embedded in blockchain and cryptocurrency technologies, as this will enlighten us on the risks of widespread adoption. If code is law, which law?\n<\/p>\n<h3>The (g)old standard<\/h3>\n<p>\nOne of the most crucial aspects of how the biggest cryptocurrencies are designed is related to money supply. Bitcoin, as mentioned previously, contains a hardcoded limit of 21 million coins. Ethereum has no upper limit, but still controls monetary creation by ensuring no more than 18 million ETH can appear each year\u00a0<span class=\"footnotes\">[7]<span class=\"note\"> Ethereum further fosters deflation by <a href=\"https:\/\/genesisblockhk.com\/gas-fee-burning-can-ethereum-become-deflationary-sov\/\" target=\"_blank\" rel=\"noopener nofollow\">destroying<\/a> coins paid as gas fees. Constantly deleting money from the pool prevents the supply growing too much.<\/span><\/span>. Bitcoin\u2019s original whitepaper explicitly states that \u201conce a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free\u201d, evidencing resistance to inflation as a key design goal. Never mind the contradiction of having ended up with a financial instrument known for its unpredictable inflationary and deflationary spirals, while still promoting it as a safeguard against either.<\/p>\n<p>Even though we debunked this purported resistance to inflation in a previous section, it remains a major element of the <a href=\"https:\/\/finance.yahoo.com\/news\/crypto-bitcoin-inflation-hedge-231009445.html\" target=\"_blank\" rel=\"noopener nofollow\">pro-Bitcoin discourse<\/a> to this day. It\u2019s no surprise that Bitcoin has been called \u201cdigital gold\u201d in the past, or that its own vernacular contains terms like \u201cmining\u201d, as the theoretical foundations of the cryptocurrency are tightly linked to the idea of the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Gold_standard\" target=\"_blank\" rel=\"noopener nofollow\">gold standard<\/a>. At various times during the 20<sup>th<\/sup> century, fiat currencies were tied to a physical resource (that is, gold or silver), and the state could not issue more currency than it would be able to back with metal. To print extra money, they had to dig up more gold first, but the world\u2019s supply is limited\u00a0<span class=\"footnotes\">[8]<span class=\"note\"> If the U.S. were to go back to the gold standard, it would need to purchase <a href=\"https:\/\/medianism.org\/2015\/12\/11\/is-there-enough-gold-in-the-world-to-go-back-on-a-gold-standard\/\" target=\"_blank\" rel=\"noopener nofollow\">half the world\u2019s gold<\/a> to back its own economy. There isn\u2019t enough gold on Earth for all countries to go back to the gold standard.<\/span><\/span>. In 1972, the US <a href=\"https:\/\/en.wikipedia.org\/wiki\/Bretton_Woods_system\" target=\"_blank\" rel=\"noopener nofollow\">gave up on that system<\/a> forever for many reasons \u2014 including the fact that it constrained the government too much and prevented expansionary policies when they were warranted.<\/p>\n<p>Today, the <a href=\"https:\/\/www.moneyandbanking.com\/commentary\/2016\/12\/14\/why-a-gold-standard-is-a-very-bad-idea\" target=\"_blank\" rel=\"noopener nofollow\">consensus<\/a> <a href=\"https:\/\/www.theatlantic.com\/business\/archive\/2012\/08\/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts\/261552\/\" target=\"_blank\" rel=\"noopener nofollow\">against<\/a> <a href=\"https:\/\/www.wbur.org\/cognoscenti\/2019\/06\/03\/gold-standard-trump-judy-shelton-fed-rich-barlow\" target=\"_blank\" rel=\"noopener nofollow\">the gold<\/a> <a href=\"https:\/\/www.businessinsider.com\/ben-bernanke-explains-why-well-never-see-another-gold-standard-2012-3\" target=\"_blank\" rel=\"noopener nofollow\">standard<\/a> <a href=\"https:\/\/www.yanisvaroufakis.eu\/2013\/05\/30\/austerity-the-gold-standard-and-the-eurozone-todays-guardian-editorial\/\" target=\"_blank\" rel=\"noopener nofollow\">is quasi-unanimous<\/a>. Only a few right-wing think tanks such as the <a href=\"https:\/\/www.cato.org\/blog\/classical-gold-standard-can-inform-monetary-policy\" target=\"_blank\" rel=\"noopener nofollow\">CATO Institute<\/a> (funded by Charles Koch and Murray Rothbard) and hardcore Republicans like <a href=\"https:\/\/www.youtube.com\/watch?v=-ovuo2Ouv10\" target=\"_blank\" rel=\"noopener nofollow\">Ron Paul<\/a> still defend it. It\u2019s therefore surprising to see the gold standard used as a foundation in major cryptocurrencies, then defended as sound economic policy by crypto enthusiasts.\n<\/p>\n<h3>Abolish the Fed!<\/h3>\n<p>\nAnother central idea to the construction of cryptocurrencies is that their decentralized character allows them to operate without the supervision of trusted parties. Again, we can quote Satoshi Nakamoto\u2019s original whitepaper: \u201cthe root problem with conventional currency is all the trust that\u2019s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust\u201d. The point of this paragraph is not to examine the validity of this rejection of central banks, but to recognize it for what it is: a profoundly right-wing idea. Perfect examples of this thinking can be found in an article titled \u201c<a href=\"https:\/\/bitcoinmagazine.com\/business\/central-bank-steals-money-heres-1393570618\" target=\"_blank\" rel=\"noopener nofollow\">Your Central Bank Steals Your Money<\/a>\u201c, or the <a href=\"https:\/\/www.youtube.com\/watch?v=bS0W-Whl0T0\" target=\"_blank\" rel=\"noopener nofollow\">comments section<\/a> of any online content critical of blockchain technology. FTX founder Sam Bankman-Fried <a href=\"https:\/\/www.npr.org\/2022\/06\/19\/1105853170\/crypto-billionaire-says-fed-is-driving-current-downturn\" target=\"_blank\" rel=\"noopener nofollow\">accused the Fed<\/a> of being responsible for the current downturn\u00a0<span class=\"footnotes\">[9]<span class=\"note\"> Arguments claiming that central banks cause uncontrollable inflation by manipulating interest rates fail to account for the fact that these actions are actually taken <em>in response<\/em> to inflation, in order to manage it. In normal conditions, central banks usually target a <a href=\"https:\/\/www.ecb.europa.eu\/mopo\/strategy\/pricestab\/html\/index.en.html\" target=\"_blank\" rel=\"noopener nofollow\">2% inflation rate<\/a> that <a href=\"https:\/\/www.imf.org\/external\/pubs\/ft\/fandd\/basics\/target.htm\" target=\"_blank\" rel=\"noopener nofollow\">orthodox economists<\/a> believe to be the most auspicious.<\/span><\/span> (although recent events have cast doubt regarding <a href=\"https:\/\/nymag.com\/intelligencer\/2022\/11\/5-more-disturbing-revelations-about-sam-bankman-fried.html\" target=\"_blank\" rel=\"noopener nofollow\">Bankman-Fried\u2019s economic expertise<\/a>). At its worst, the cryptocurrency ecosystem dips into <a href=\"https:\/\/slate.com\/technology\/2018\/08\/the-lurking-threat-of-anti-semitism-in-cryptocurrency.html\" target=\"_blank\" rel=\"noopener nofollow\">antisemitism<\/a> and alt-right conspiracy theories involving shadowy elite figures and the <a href=\"https:\/\/www.forbes.com\/sites\/billybambrough\/2019\/09\/22\/bitcoin-messiah-goes-to-war-with-the-deep-state\/\" target=\"_blank\" rel=\"noopener nofollow\">deep-state<\/a> colluding to steal from the middle-class.<\/p>\n<div id=\"attachment_46352\" style=\"width: 239px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190046\/crypto-actually-cryptocurrency-politics-and-metaverse-3.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46352\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190046\/crypto-actually-cryptocurrency-politics-and-metaverse-3.jpg\" alt=\"The idea of running the economy without central banks has long been a pillar of libertarian thinking\" width=\"229\" height=\"350\" class=\"size-full wp-image-46352\"><\/a><p id=\"caption-attachment-46352\" class=\"wp-caption-text\">The idea of running the economy without central banks has long been a pillar of libertarian thinking<\/p><\/div>\n<p>None of this ideology was born with cryptocurrencies. Looking at Federal Reserve detractors outside this sphere, we easily find <a href=\"https:\/\/www.youtube.com\/watch?v=m6fkdagNrjI\" target=\"_blank\" rel=\"noopener nofollow\">libertarian<\/a> <a href=\"https:\/\/www.businessinsider.com\/the-federal-reserve-our-policy-is-to-steal-from-you-2011-7?r=US&amp;IR=T\" target=\"_blank\" rel=\"noopener nofollow\">economists<\/a> (Charles Hugh Smith went on the record about his nostalgia for the <a href=\"https:\/\/www.oftwominds.com\/blogaug22\/gold-window8-22.html\" target=\"_blank\" rel=\"noopener nofollow\">gold standard<\/a>) and <a href=\"https:\/\/mises.org\/library\/leaving-federal-reserve-system\" target=\"_blank\" rel=\"noopener nofollow\">more right-wing think tanks<\/a>. This is also a recurring theme for pundits like <a href=\"https:\/\/www.youtube.com\/watch?v=3NhmZSdmY0s\" target=\"_blank\" rel=\"noopener nofollow\">Alex Jones<\/a>.\n<\/p>\n<h3>Libertarians and anarcho-capitalists<\/h3>\n<p>\nEven if the blockchain technology were apolitical, the people who have defended its axioms for decades certainly seem to share a common vision. The personalities listed previously can be associated with the American libertarian movement\u00a0<span class=\"footnotes\">[10]<span class=\"note\"> Also referred to as \u201canarcho-capitalism\u201d, although traditional anarchist schools of thought reject any affiliation with it due to irreconcilable ideological differences.<\/span><\/span>. The centerpiece of their philosophy is the idea of freedom as a rejection of the state\u2019s tyranny. States, they argue, impose impermissible limits on individual liberties and need to be constrained to their smallest possible form: one which safeguards private property and nothing more. In particular, they perceive any attempt to redistribute wealth or regulate the economy and free trade as an unacceptable invasion into the private lives of citizens.<\/p>\n<div id=\"attachment_46353\" style=\"width: 3410px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190057\/crypto-actually-cryptocurrency-politics-and-metaverse-4.png\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46353\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190057\/crypto-actually-cryptocurrency-politics-and-metaverse-4.png\" alt=\"HateWatch documented the enthusiasm and involvement of far-right extremists in the early days of Bitcoin\n\" width=\"3400\" height=\"2834\" class=\"size-full wp-image-46353\"><\/a><p id=\"caption-attachment-46353\" class=\"wp-caption-text\"><a href=\"https:\/\/www.splcenter.org\/hatewatch\/2021\/12\/09\/how-cryptocurrency-revolutionized-white-supremacist-movement\" target=\"_blank\" rel=\"noopener nofollow\">HateWatch<\/a> documented the enthusiasm and involvement of far-right extremists in the early days of Bitcoin<br><\/p><\/div>\n<p>I\u2019m not saying that all cryptocurrency users would identify themselves as libertarians; however, it\u2019s hard to dispute that the way that blockchains were designed perfectly embraces libertarian ideals. It\u2019s also obvious that the cryptocurrency ecosystem has been a major factor in bringing what used to be marginal economic theories to the forefront of public debate. Without falling into childish moral judgments like \u201cright-wing equals bad\u201d, imagining a society transformed by cryptocurrencies can only be achieved through a critique of libertarianism\u2019s political philosophy. Thankfully, greater minds have already taken up this task for us. Due to my personal leanings, I will provide Noam Chomsky\u2019s account \u2014 he identifies as a <a href=\"https:\/\/en.wikipedia.org\/wiki\/Libertarian_socialism\" target=\"_blank\" rel=\"noopener nofollow\">libertarian socialist<\/a>\u00a0<span class=\"footnotes\">[11]<span class=\"note\"> Just like anarcho-capitalism has little to do with anarchism, libertarian-socialism is significantly different from libertarianism (but is in fact very close to anarchism). Try to keep up!<\/span><\/span> \u2014 but you can pick others from <a href=\"https:\/\/en.wikipedia.org\/wiki\/Criticism_of_libertarianism\" target=\"_blank\" rel=\"noopener nofollow\">this list<\/a> if they are more to your liking. Or, if you are aligned with the idea that a Darwinian clash of market forces is what\u2019s best for society, you may simply skip the next few paragraphs.<\/p>\n<p>Libertarians reject the power of the state on the grounds that nobody agrees to a social contract: we are bound to our country\u2019s laws by birth, and never get a chance to reject them. Liberty being their cardinal value implies three things:\n<\/p>\n<ol>\n<li>All social interactions should be governed by mutual agreements, freely consented to by interested parties.<\/li>\n<li>There should not be any constraints on what types of arrangements can be struck, especially not from the state.<\/li>\n<li>The powers of the state must be as limited as possible, and it should only act as an arbiter that enforces peer-to-peer agreements.<\/li>\n<\/ol>\n<p>\nIt may sound like a great system among equals, but unfortunately that\u2019s not the world we live in right now since people interact from different positions of wealth and power. If Jeff Bezos wants something from me, it\u2019s very likely he\u2019ll get it \u2014 and on his terms. While I\u2019m <em>technically<\/em> at liberty to refuse, any resistance I put up can easily be defeated because the disproportion of power is so vast. Libertarians don\u2019t consider this to be a problem, but rather a feature of the system: it feels natural to them that the most skilled or business-savvy are rewarded with increased power.<\/p>\n<div id=\"attachment_46354\" style=\"width: 470px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190208\/crypto-actually-cryptocurrency-politics-and-metaverse-5.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46354\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190208\/crypto-actually-cryptocurrency-politics-and-metaverse-5.jpg\" alt=\"\" taxation is theft echoed in some bitcoin circles one of the rallying cries libertarians. it embodies their deep objection to redistribution mechanisms width=\"460\" height=\"269\" class=\"size-full wp-image-46354\"><\/a><p id=\"caption-attachment-46354\" class=\"wp-caption-text\">\u201cTaxation is theft\u201d, <a href=\"https:\/\/finance.yahoo.com\/news\/tax-protesters-set-off-bitcoin-202014077.html\" target=\"_blank\" rel=\"noopener nofollow\">echoed<\/a> in some Bitcoin circles, is one of the rallying cries of libertarians. It embodies their deep objection to redistribution mechanisms<\/p><\/div>\n<p>The problem is, the set of rules promoted by libertarianism results in a gradual increase in the concentration of power over time. The powerful can leverage their position to obtain an edge over the rest of the field \u2014 which then puts them in a slightly better position they can leverage even more. Even if we were to magically reset society to a purely egalitarian state (which is absolutely not part of the libertarian agenda), we\u2019d be back to square one after a few generations. It\u2019s no surprise that this ideology is especially appealing to entities already doing well \u2014 like millionaires and multinationals \u2014 who want nothing more than to consolidate their power and create an environment where they cannot be challenged anymore. In true Orwellian fashion, the term libertarianism ends up representing the opposite of what it means: its implementation results in subjugation to a <a href=\"https:\/\/chomsky.info\/072015-2\/\" target=\"_blank\" rel=\"noopener nofollow\">corporate tyranny<\/a> where the private sector effectively holds unlimited, unchecked power.<\/p>\n<p>Interestingly, this assessment isn\u2019t theoretical anymore. The cryptocurrency world was built upon libertarianism\u2019s precepts, and can be seen as their miniature ideal society. Parts I and II of this series demonstrated, hopefully, how the resulting dynamics indeed concentrated power in the hands of the already very wealthy. The one thing left to do now is conclude that this was the underlying structure\u2019s design instead of an unfortunate side-effect.\n<\/p>\n<h2>The future<\/h2>\n<p>\nI wouldn\u2019t care too much about libertarians living out their own little dystopia if there wasn\u2019t a significant risk it could contaminate the internet as a whole. Although I don\u2019t believe that cryptocurrencies will become mainstream anytime soon\u00a0<span class=\"footnotes\">[12]<span class=\"note\"> At least not in their current form. <a href=\"https:\/\/en.wikipedia.org\/wiki\/Central_bank_digital_currency\" target=\"_blank\" rel=\"noopener nofollow\">CBDCs<\/a> however have great potential for widespread adoption but they\u2019re a very much a different beast so they won\u2019t be covered here.<\/span><\/span>, other new blockchain-based technologies are still being tested and deployed.\n<\/p>\n<h3>Web3<\/h3>\n<p>\nOne such technology is called Web3, and despite still being fuzzy, it represents a new iteration of the overall concept of the internet. The core premise also revolves around decentralization: internet services today mostly revolve around a handful of platforms like Google, Amazon, Microsoft and Facebook, whose leadership, if not contested in meaningful ways, is at least <a href=\"https:\/\/www.eff.org\/deeplinks\/2019\/07\/interoperability-fix-internet-not-tech-companies\" target=\"_blank\" rel=\"noopener nofollow\">criticized<\/a> by many. The idea behind Web3 is that user data, currently hoarded by these companies, will in the future be stored on the blockchain where it can be decentralized again.<\/p>\n<p>Online payments will take place in Ether without the need for third-party processors like PayPal or Stripe, and wallets will be integrated into browsers directly. We\u2019ll resolve domain names by looking them up on the blockchain. Access control will rely on NFTs and smart contracts. You get the idea.<\/p>\n<p>The elephant in the room is whether the very inefficient blockchain technology can sustain the weight of the whole internet. In addition to the prohibitive expensiveness of any blockchain operation, plus other issues mentioned already, a significant roadblock is the ability for the general public to interact with the blockchain. Assuming all the world\u2019s data were migrated there somehow, how would you, as a user or a website owner, access it? Blockchains are supposed to be distributed and decentralized, so surely you can get a copy of the data. Indeed, it\u2019s easy to do so\u2026 provided you have enough storage space. The Ethereum blockchain currently weighs <a href=\"https:\/\/ycharts.com\/indicators\/ethereum_chain_full_sync_data_size\" target=\"_blank\" rel=\"noopener nofollow\">875 GB<\/a> \u2014 a number that can only go up. Granted, you may not need a full copy, but even storing the latest 10% of this single blockchain is impractical in most cases, and absolutely unthinkable for mobile devices.<\/p>\n<p>To circumvent this problem, a few companies, like <a href=\"https:\/\/infura.io\/\" target=\"_blank\" rel=\"noopener nofollow\">Infura<\/a> or <a href=\"https:\/\/opensea.io\/\" target=\"_blank\" rel=\"noopener nofollow\">OpenSea<\/a>, have developed interfaces (that is, APIs) that programmers can query to access the state of the blockchain or blockchain-backed objects like NFTs. This way, you don\u2019t need a copy of the data anymore. You can instead ask a trusted party whatever you\u2019re interested in, and they\u2019ll look it up on the blockchain for you and send back the result. What\u2019s that I just said? \u201cTrusted party\u201d? Oh yes. The task of extracting information from the blockchain is so tedious that it was offloaded to a couple of companies who have become the <em>de facto<\/em> authorities of what it contains. Virtually all blockchain-related websites rely on these services under the hood. It doesn\u2019t matter that the actual information is immutable and distributed if single-points-of-failure control all the world\u2019s representations of this data. Censorship resistance was the last pro-blockchain argument we hadn\u2019t addressed so far, but it doesn\u2019t hold water either. In fact, the ecosystem relies on this to police itself, for instance when OpenSea\u00a0<span class=\"footnotes\">[13]<span class=\"note\"> A platform which holds 97% of the NFT market which, I\u2019m assured, is still decentralized.<\/span><\/span> <a href=\"https:\/\/www.protocol.com\/newsletters\/protocol-fintech\/opensea-nft-frozen\" target=\"_blank\" rel=\"noopener nofollow\">delists stolen NFTs<\/a> to prevent their resale. This power has been <a href=\"https:\/\/moxie.org\/2022\/01\/07\/web3-first-impressions.html\" target=\"_blank\" rel=\"noopener nofollow\">abused unilaterally<\/a> too. One way or another, the blockchain world keeps recreating the exact structures it promises to topple.<\/p>\n<div id=\"attachment_46355\" style=\"width: 760px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190219\/crypto-actually-cryptocurrency-politics-and-metaverse-6.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46355\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190219\/crypto-actually-cryptocurrency-politics-and-metaverse-6.jpg\" alt=\"No matter what the caption says, many entities represented in the Web3 column are companies, not protocols. The objective of Web3 is less decentralization than a changing of the guard\" width=\"750\" height=\"421\" class=\"size-full wp-image-46355\"><\/a><p id=\"caption-attachment-46355\" class=\"wp-caption-text\">No matter what the caption says, many entities represented in the Web3 column are companies, not protocols. The objective of Web3 is less decentralization than a changing of the guard<\/p><\/div>\n<p>I have serious doubts that Web3 is ever going to see the light of day. If anything, we\u2019ve learned so far that blockchains never scale well enough to properly handle real-world applications, yet Web3 has ambitions covering the <em>whole internet<\/em>. Another important hurdle Web3 will have to face is that making everything public on the blockchain is going against the times. The last decade has been defined by successions of debates on the proper handling of user data. A lot of the criticism revolved around profiles or pictures being made <a href=\"https:\/\/medium.com\/s\/story\/facebooks-failure-to-end-public-by-default-272340ec0c07\" target=\"_blank\" rel=\"noopener nofollow\">public by default<\/a>, and several countries passed corresponding legislation. Please get in touch with me if you can explain how personal information stored on the blockchain can ever comply with <a href=\"https:\/\/en.wikipedia.org\/wiki\/General_Data_Protection_Regulation\" target=\"_blank\" rel=\"noopener nofollow\">GDPR<\/a>\u2018s provision against its transfer outside the EU. Some (like Dan Olson in his <a href=\"https:\/\/www.youtube.com\/watch?v=YQ_xWvX1n9g\" target=\"_blank\" rel=\"noopener nofollow\">great video on the subject<\/a>) have framed this new paradigm as an attempt by a new wave of tech start-ups to usurp the existing giants\u2019 throne by contesting their exclusive control of our personal information. And this may be the biggest obstacle to Web3 ever taking off: the current big players have <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-12-21\/jack-dorsey-stirs-uproar-by-dismissing-web3-as-a-vc-plaything\" target=\"_blank\" rel=\"noopener nofollow\">no intention of playing ball<\/a>.\n<\/p>\n<h3>Third Life<\/h3>\n<p>\nThe thing is, those big players have their own vision of what the brave new world should look like, and they\u2019re at the center of it. <a href=\"https:\/\/www.pcmag.com\/news\/what-is-microsofts-metaverse-strategy\" target=\"_blank\" rel=\"noopener nofollow\">Microsoft<\/a> has unveiled its metaverse strategy. <a href=\"https:\/\/about.facebook.com\/\" target=\"_blank\" rel=\"noopener nofollow\">Facebook<\/a> went so far as changing its name to \u201cMeta\u201d \u2014 a move, we\u2019re asked to believe, that\u2019s solely motivated by its sincere belief in the metaverse\u2019s viability as a concept, and nothing to do with its initial brand having become more radioactive than Fukushima sushi.<\/p>\n<div id=\"attachment_46356\" style=\"width: 906px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190308\/crypto-actually-cryptocurrency-politics-and-metaverse-7.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-46356\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190308\/crypto-actually-cryptocurrency-politics-and-metaverse-7.jpg\" alt=\"The jury's still out on which one is a real boy\" width=\"896\" height=\"598\" class=\"size-full wp-image-46356\"><\/a><p id=\"caption-attachment-46356\" class=\"wp-caption-text\">The jury\u2019s still out on which one is a real boy<\/p><\/div>\n<p>The best way to explain the concept of a metaverse is to use the 2018 movie \u201c<a href=\"https:\/\/www.imdb.com\/title\/tt1677720\/\" target=\"_blank\" rel=\"noopener nofollow\">Ready Player One<\/a>\u201d as a reference. Even if you haven\u2019t seen it, the trailer should explain more than most articles out there. A metaverse is a parallel world accessed through a virtual reality (VR) headset, but beyond the hardware aspect it\u2019s basically <a href=\"https:\/\/en.wikipedia.org\/wiki\/Second_Life\" target=\"_blank\" rel=\"noopener nofollow\">Second Life<\/a>. It\u2019s an extension of the physical space where you\u2019ll be able to move around, hang out with friends, maybe even work. I know what you\u2019re thinking: what would be the point? We can already do all this in real life. Yet we cannot dismiss the idea of the metaverse on those grounds alone: when the internet was introduced, people <a href=\"https:\/\/youtu.be\/fs-YpQj88ew?t=187\" target=\"_blank\" rel=\"noopener nofollow\">were famously skeptical<\/a>. They didn\u2019t get it: mail could already be sent in paper form, newspapers contained all the information you ever wanted, and the idea that you\u2019d order products from online stores without seeing them first felt ludicrous. Yet 30 years later, here we are, because <strong>it\u2019s the modes of production that define consumer needs \u2014 not the other way around<\/strong>. If all social interactions move there, we\u2019ll want the metaverse. Tech enthusiasts describe it as nothing short of a <a href=\"https:\/\/www.prnewswire.com\/news-releases\/metaverse-emerges-as-the-next-big-revolution-in-the-internet-space-but-will-it-sustain-301461860.html\" target=\"_blank\" rel=\"noopener nofollow\">new revolution<\/a> on the same scale as the internet.\n<\/p>\n<h3>Metaverse and the (absence of) blockchain<\/h3>\n<p>\nBut before we ask ourselves whether the metaverse has a chance of ever affecting our lives, we need to clarify one additional thing. What does it have to do with blockchains? Back in 2002, Second Life managed to achieve some level of success with both its virtual world and homemade currency without relying on any of the technologies described in this series. However, with the current concept we\u2019ll be offered different metaverses \u2014 worlds operated by various actors that you\u2019ll teleport to and from like neighboring islands. For the overall experience to be consistent, information needs to be shared across all metaverses. If you purchase <a href=\"https:\/\/about.nike.com\/en\/newsroom\/releases\/nike-acquires-rtfkt\" target=\"_blank\" rel=\"noopener nofollow\">genuine Nike shoes<\/a> for your avatar in Microsoft\u2019s realm, you certainly don\u2019t expect to walk around barefoot when you move to Facebook\u2019s. The solution to this, according to some, is that all \u201cownable\u201d objects in the metaverse should be represented as NFTs, making the blockchain a sort of interoperability mechanism across digital worlds.<\/p>\n<p>It is however very curious that no matter how much Microsoft and Facebook are hyping the metaverse concept at the moment, they hardly ever mention the blockchain. Even though they\u2019ve created a consortium called the Metaverse Standards Forum with Adobe, Nvidia, Alibaba and many others, a quick glance at the <a href=\"https:\/\/metaverse-standards.org\/members\/\" target=\"_blank\" rel=\"noopener nofollow\">members<\/a> reveals that blockchain actors are not even involved. This tells me that no matter what the crypto industry believes, big tech has plans to move on its own. The truth is, there\u2019s a much more obvious solution to the multi-metaverse problem: having a clear hegemon emerge. The major players in the metaverse-space don\u2019t talk about blockchains because currently interoperability is only plan B. They\u2019d much rather kill the competition and only have one giant island (theirs) used by everyone in the world. <a href=\"http:\/\/arbitrarylimits.com\/blog\/2011\/04\/google-android-and-the-myth-of-open-source-part-1\" target=\"_blank\" rel=\"noopener nofollow\">If history is any indication<\/a>, \u201copenness\u201d has a much better chance of being used cynically and strategically to gain traction until such a time that it becomes the right move to lock users in.\n<\/p>\n<h3>Why I worry about the metaverse<\/h3>\n<p>\nIronically, the concept of metaverses worried me less when I was persuaded they too would be brought down by the Midas touch of blockchains \u2014 a technology which, let me remind you, has never led to a single practical application to this day due to its inherent limitations. Taking blockchains out of metaverses doesn\u2019t change the fact that both share the same libertarian-at-heart ideological foundation; and in the case of the latter, their inevitable degeneration into corporate tyranny feels even more obvious\u00a0<span class=\"footnotes\">[14]<span class=\"note\"> Funnily, part of Ready Player One\u2019s plot revolves around wresting control of the metaverse away from its parent company!<\/span><\/span>. Some thinkers call this specific brand of subjection \u201c<a href=\"https:\/\/www.project-syndicate.org\/commentary\/techno-feudalism-replacing-market-capitalism-by-yanis-varoufakis-2021-06\" target=\"_blank\" rel=\"noopener nofollow\">techno-feudalism<\/a>\u201c. After all the controversies about how <a href=\"https:\/\/www.theguardian.com\/technology\/2017\/dec\/11\/facebook-former-executive-ripping-society-apart\" target=\"_blank\" rel=\"noopener nofollow\">social media might be destroying the world\u2019s social fabric<\/a>, do we really want to spend half our lives in digital realms managed by entities that have <a href=\"https:\/\/www.theguardian.com\/technology\/2021\/oct\/25\/facebook-whistleblower-frances-haugen-calls-for-urgent-external-regulation\" target=\"_blank\" rel=\"noopener nofollow\">consistently failed us<\/a>?<\/p>\n<p>We may not have a choice. The companies investing heavily in the metaverse right now are some of the most powerful in the world. They may have the ability (through dominant positions or sheer marketing might) to force-feed us whatever new paradigm benefits them. At the moment, we\u2019re protected by the high price of VR headsets, but this may not last forever. I fear that in 20 years time, there\u2019ll be strong incentives to have one in every home and that resistance to the metaverse will come at the cost of social isolation.<\/p>\n<p><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190400\/crypto-actually-cryptocurrency-politics-and-metaverse-8.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190400\/crypto-actually-cryptocurrency-politics-and-metaverse-8.jpg\" alt=\"\" width=\"850\" height=\"400\" class=\"aligncenter size-full wp-image-46357\"><\/a><\/p>\n<p>I\u2019ll wrap up this section by providing the reason why I think tech companies have an existential reason to fight this battle fiercely: the fact that late-stage capitalism is facing a structural problem. The system demands growth, and in fact can only survive if it keeps growing, but there is a ceiling \u2014 growth has to stop at some point. Not for moral reasons, but simply because eventually our planet will run out of resources. The saying that \u201cthere cannot be infinite growth in a finite world\u201d is often used to advocate for <a href=\"https:\/\/en.wikipedia.org\/wiki\/Degrowth\" target=\"_blank\" rel=\"noopener nofollow\">degrowth<\/a> and moving away from capitalism altogether. Capitalism\u2019s genius answer is to sidestep reality and create new worlds, virtual and infinite this time, where value can be extracted forevermore\u00a0<span class=\"footnotes\">[15]<span class=\"note\"> This also explains why many billionaires are so excited about space exploration and the prospect of colonizing new planets.<\/span><\/span>.<\/p>\n<p>Looking at metaverses from this angle allows us to understand why they\u2019ll primarily be designed as marketplaces \u2014 where all real-life goods can be duplicated and sold again, and with multinationals acting as almighty landlords. The end-goal is the commodification of every single aspect of our lives. I, for one, want no part of it.<\/p>\n<p><a href=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190527\/crypto-actually-cryptocurrency-politics-and-metaverse-9.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/media.kasperskydaily.com\/wp-content\/uploads\/sites\/37\/2022\/11\/25190527\/crypto-actually-cryptocurrency-politics-and-metaverse-9.jpg\" alt=\"Infinite growth of material consumption in a finite world is an impossibility. E. F. Schumacher\" width=\"736\" height=\"714\" class=\"aligncenter size-full wp-image-46358\"><\/a><\/p>\n<h2>Conclusion<\/h2>\n<p>\nIt would be easy to blame blockchains for all their failings and call it a day. The applications they\u2019ve brought us (or still hope to bring) are absurd. Everything is wrong with them. Best case scenario, they\u2019re absolutely useless. More often than not, they wreck our planet and enable whole new forms of oppression. Yet the quasi-religious zeal they often inspire tells us something else. The blockchain dream carries with it the promise of a fairer society, along with a hint of revenge toward the finance world that\u2019s ruined people\u2019s lives time and again. We shouldn\u2019t be surprised that it\u2019s hard to let it go.<\/p>\n<p>What really makes me mad is how exploitative the alternative turned out to be. Read <a href=\"https:\/\/www.theguardian.com\/technology\/2022\/jul\/12\/they-couldnt-even-scream-any-more-they-were-just-sobbing-the-amateur-investors-ruined-by-the-crypto-crash\" target=\"_blank\" rel=\"noopener nofollow\">these testimonies<\/a> of people who lost everything and see if it doesn\u2019t break your heart. It\u2019s not about making questionable financial placements; it\u2019s about modern society leaving many people behind with no hope of bettering their lives beyond means they deep-down know is gambling. And then those means turn out to be yet another secret tool for transferring wealth from the disenfranchised to the rich.<\/p>\n<p>It\u2019s only in the very last paragraph of this series that we finally find the first utility ever generated by blockchains, cryptocurrencies and NFTs. It\u2019s not what they are, it\u2019s what they reveal about the state of the world and the intolerable inequality people have to endure. About what society may become soon unless we do something about it. Beyond this, dear reader, wherever you are, if you\u2019re trying to rise up out of misery, I genuinely hope you make it. But blockchains are not the way.<\/p>\n<input type=\"hidden\" class=\"category_for_banner\" value=\"premium-geek\">\n","protected":false},"excerpt":{"rendered":"<p>In the final part of the series, we take a look at cryptocurrency politics, the future, and the metaverse.<\/p>\n","protected":false},"author":2658,"featured_media":20417,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1226],"tags":[374,1308,1505,1504,2604,2578],"class_list":{"0":"post-20415","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-technology","8":"tag-bitcoin","9":"tag-blockchain","10":"tag-cryptocurrencies","11":"tag-ethereum","12":"tag-metaverse","13":"tag-nft"},"hreflang":[{"hreflang":"en-ae","url":"https:\/\/me-en.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/20415\/"},{"hreflang":"en-in","url":"https:\/\/www.kaspersky.co.in\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/24914\/"},{"hreflang":"ar","url":"https:\/\/me.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/10316\/"},{"hreflang":"en-us","url":"https:\/\/usa.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/27474\/"},{"hreflang":"en-gb","url":"https:\/\/www.kaspersky.co.uk\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/25252\/"},{"hreflang":"es-mx","url":"https:\/\/latam.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/25587\/"},{"hreflang":"es","url":"https:\/\/www.kaspersky.es\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/28129\/"},{"hreflang":"it","url":"https:\/\/www.kaspersky.it\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/27401\/"},{"hreflang":"ru","url":"https:\/\/www.kaspersky.ru\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/34388\/"},{"hreflang":"x-default","url":"https:\/\/www.kaspersky.com\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/46342\/"},{"hreflang":"fr","url":"https:\/\/www.kaspersky.fr\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/19843\/"},{"hreflang":"pt-br","url":"https:\/\/www.kaspersky.com.br\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/20414\/"},{"hreflang":"de","url":"https:\/\/www.kaspersky.de\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/29557\/"},{"hreflang":"ja","url":"https:\/\/blog.kaspersky.co.jp\/crypto-actually-cryptocurrency-politics-and-metaverse\/33037\/"},{"hreflang":"nl","url":"https:\/\/www.kaspersky.nl\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/28660\/"},{"hreflang":"ru-kz","url":"https:\/\/blog.kaspersky.kz\/crypto-actually-cryptocurrency-politics-and-metaverse\/25674\/"},{"hreflang":"en-au","url":"https:\/\/www.kaspersky.com.au\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/31298\/"},{"hreflang":"en-za","url":"https:\/\/www.kaspersky.co.za\/blog\/crypto-actually-cryptocurrency-politics-and-metaverse\/31007\/"}],"acf":[],"banners":"","maintag":{"url":"https:\/\/me-en.kaspersky.com\/blog\/tag\/cryptocurrencies\/","name":"cryptocurrencies"},"_links":{"self":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/20415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/users\/2658"}],"replies":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/comments?post=20415"}],"version-history":[{"count":7,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/20415\/revisions"}],"predecessor-version":[{"id":20436,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/posts\/20415\/revisions\/20436"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/media\/20417"}],"wp:attachment":[{"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/media?parent=20415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/categories?post=20415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/me-en.kaspersky.com\/blog\/wp-json\/wp\/v2\/tags?post=20415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}