First crypto war may lead to lasting peace
The Russia-Ukraine conflict is the first crypto war. The digital asset front follows only actual fighting in coverage and importance. From the Ukrainian government’s requests for Bitcoin and Ether, to Ukrainian DAO, to stablecoins as financial refuge on both sides, to the angst European and U.S. bureaucrats express at crypto bypassing sanctions, crypto has dominated events.
However the conflict ends, it is undeniable crypto will play a central role in world affairs and global conflict henceforth. And the individual autonomy it brings could mean a more peaceful world provided governments and global standard-setting bodies don’t kill this promise through controlling regulations or forced public alternatives.
Crypto could give citizens of aggressor countries an informal ‘citizens veto’ on war. If people flock to stablecoins amid host-country aggression or international sanctions it could crush a nation’s ability to wage war. This is now happening as Russians ditch the ruble for stablecoins. This may thwart Russia’s ability to finance hostile operations.
First crypto war may return us to more limited wars of the past
In a way this would augur a return to the more limited conflicts of the pre-World War I, gold standard era. As Saifedean Ammous explains in The Bitcoin Standard, before the Great War gold-standard countries were limited by popular sentiment (and their own treasuries) to wage war. Once national reserves sunk governments had to raise to taxes or sell bonds to continue fighting. By leaving the gold standard, countries just printed money until, through inflation, its whole population’s wealth was squandered before winning or capitulating. This had devastating 20th Century results. Returning a ‘citizen’s veto’ via people ditching a nation’s fiat currency would lessen or preempt conflicts all together.
But governments could thwart this more peaceful future in two ways. First is forcing all crypto into a global Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime. The second even worse option is to require everyone to use multi-jurisdictional central bank digital currencies (m-CBDCs), with alternatives banned.
As CoinDesk columnist Nic Carter writes, stablecoins operate at least partially outside AML/CFT confines: “Stablecoin issuers treat the IOUs as bearer instruments, and generally do not seek to police user behavior when a transaction does not involve the issuer. . . . By granting a measure of transactional privacy and not embedding political conditions into transactions, stablecoins are the closest thing to digital cash we have today.”
Government surveillance won’t lead to peace
This may appeal to criminals. But it would be strange to think ne’er-do-wells would rely on traceable, public ledgers as transaction facilitators. The benefit of removing cash’s physical limitations seems far outweighed by the risks of permanent and public recordation. Some have discovered this the hard way, like the New York City couple allegedly sitting on billions but unable to spend it. And even the famous 2016 DAO hacker that almost brought down Ethereum and forced a hard fork has allegedly been unmasked.
Of course, criminals will create new ways to shield transactions that may temporarily succeed. But the public, through democratic means not unelected central bankers and global financial bureaucrats should decide how much of this we are willing to tolerate in return for our privacy.
Further, as the Canadian Freedom Trucker Convey showed, who governments label terrorists expand with political expediency. (Indeed, the Canadian government now admits the protests were not rife with money launderers and terrorists). Regardless, this should be unacceptable in a Western democracy.
First crypto war may catalyze government control through CBDCs
An m-CBDC would be even worse. For example, the coming Chinese model forces every citizen to use the digital yuan and every transaction is monitored, recorded, and factored into people’s social-credit score. Western governments would likely imbue the softer veneer of Environment, Social, Governance (ESG). This could limit a person’s ability to transact with companies deemed insufficient environmental stewards, or with inadequate corporate-board diversity etc. If this sounds outlandish, terrorist designations for peaceful blue-collar protestors would have had a similar ring twelve-months ago.
Neither of these models—granular AML/CFT or m-CBDC allow for citizen vetoes in times of peace or war. We may be, as commentator Vivek Ramaswamy suggests, already fighting a different war. The battle between the Great Reset imposed top down and the Great Uprising from the bottom up. And if so, crypto, with its promise of individual autonomy, control over one’s data and financial transactions, and potential to bypass entrenched institutions will be the main battlefield. If the latter wins, the first crypto war may bring a more peaceful world.
By Jossey PLLC
A version of this piece originally ran in CoinDesk https://www.coindesk.com/layer2/2022/03/12/the-first-crypto-war-may-lead-to-lasting-peace/