I’ve laboured hard not to engage with cryptocurrency, to turn the page on its scandals and file its many bin fires under “fools and their money being easily parted”. But this has been a mistake, because the story is just getting good.
The PayPal cofounder Peter Thiel said in 2020 that crypto was one of two poles of technological conflict, the other being artificial intelligence. AI could “theoretically make it possible to centrally control an entire economy” while crypto “holds out the prospect of a decentralised and individualised world”. He concluded that AI is communist and crypto is libertarian; it was unnecessary to add which of those he thought was better.
Parking for the time being how communist AI is, let’s take that last bit as read. Naturally, if you unshackle a currency from the state and don’t regulate it, that’s a pretty libertarian proposition. You might even call it the ultimate free market. So how’s that panning out for you, lads? Or should I say bros?
Three years after Thiel’s prophecy, Sam Bankman-Fried has resigned from the cryptocurrency exchange he founded and FTX has filed for bankruptcy. As Bankman-Fried continues to proclaim his innocence, investigators point in court to a $65bn (£53bn) backdoor between his two companies; they’ve also identified tens of millions of dollars of spending on hotels, travel, food and luxury items in under a year.
No question, there will be technical details in here that are hard to understand, but there is a principle that is very easily grasped, that is as universal and intuitive as time itself. Markets have never been free: they are social spaces and, as such, have always been governed by rules, which – since the first time a snake-eyed trader tried to cut flour with chalk – work because they are formally determined. Take away those rules and soon a greedy, clever person might take advantage. He won’t be able to help himself. He needs the rules as much as anyone else, if not more.
I think Thiel is right: crypto is the ultimate technology of libertarianism, the final frontier of discovery. He just missed the second footfall, which is that, through crypto, we will discover that libertarianism is bullshit.
Zoe Williams is a Guardian columnist